AN ACTUAL ‘IMPACT INVESTMENT’ FOR COMPANIES AND COMMUNITIES
‘Impact investments’ are those directed towards addressing tangible challenges of Sustainable Development, which should be measurable and result from intentional decision-making.
However, in order to be identified, strategically evaluated, and implemented, it is necessary for organizations to effectively take into account environmental, social, and governance (ESG) factors in their analyses and decisions.
It is in this context that actions aimed at preserving the so-called Ecosystem Services (ES), driven by ESG considerations, are included as ‘impact investments’.
Currently, the term “Ecosystem Services,” coined in the 1980s, refers to “the benefits that people, including companies, obtain from ecosystems” (Millennium Ecosystem Assessment – MEA).
In other words, when discussing ES, it is immediately necessary to consider their potential beneficiaries, directly relating environmental (E) factors to social (S) factors of ESG investments and practices.
The MEA (2005) classified ES into four categories: support, regulation, provisioning, and cultural.
Support services maintain habitats for living organisms and their genetic diversity, thus representing the foundation for the maintenance of the other categories (nutrient cycling, primary production, biodiversity maintenance, among others).
Regulation services are directly related to the ability to regulate natural processes and the environment, such as controlling extreme events (such as floods), maintaining drainage, irrigation, and natural precipitation, and maintaining climate and atmospheric gas balance.
Provision services refer to those directly exploited by society, such as obtaining water, food, and fuels.
Cultural services pertain to the non-material goods that society acquires from nature, such as leisure and tourism, as well as those related to the relationships produced by the interaction between people and nature over centuries, such as spiritual, cultural, educational values, and knowledge generation (both formal and traditional).
Therefore, to ensure the provision of ES, it is necessary to generate a positive balance in the extent and functioning of natural ecosystems through investment in environmental restoration, including ecological restoration.
This means using a wide diversity of species to not only increase the vegetation cover of a particular area but also restore the ecological functioning of that region.
In this context, to present our clients with alternative impact investments that can benefit ES and, consequently, their beneficiaries, Ferreira Rocha has developed a methodology based on five subsequent steps:
• Develop a diagnosis of ES based on environmental and socioeconomic assessments and monitoring that may have already been conducted to support the environmental licensing process, seeking to characterize, in an updated manner, the ES within the four identified typologies.
• Identify which of these ES have been impacted by our clients’ operations – and by other activities in the area – and to what extent.
• Validate these assessments through perception interviews with community and institutional stakeholders, combining the technical and perceptual perspectives that link the services provided by nature to the benefits they bring to their users.
• Propose action plans aimed at leveraging ecological restoration alternatives, prioritizing them based on the magnitude of impacts identified through the technical and participatory diagnosis.
• Discuss and validate these alternatives initially with our clients and then with the actual beneficiaries of the ES.
Keep in mind that organizations themselves can be positively affected by several of these actions, such as the preservation of natural resources that ensure the continuity of their operations. For instance, the beneficial effects of increased climate regulation on maintaining water flow in a hydrographic basin for energy generation purposes.
The Serrote Project, by Mineração Vale Verde (MVV), is already in operation located in the state of Alagoas, comprising an open-pit mine and a beneficiation plant for ore processing and copper concentrate production.
The work carried out by Ferreira Rocha was developed to comply with the action guidelines established by the Performance Standards of the International Finance Corporation (IFC) and, consequently, the Equator Principles that guide the project’s financing agents.
Another successful case refers to the strategic planning, for União Química Farmacêutica Nacional, of the prior business decision to plant one million seedlings over a period of 15 years.
Based on a pre-diagnosis grounded in georeferenced analysis of satellite images in the direct influence areas of the company’s different operations in Brazil, areas were identified where this planting will have a real positive effect both on the environment and on the beneficiaries of the natural services enriched by these plantations.
In summary, through a strategic mindset aligned with compliance with environmental licensing obligations, commitments to financing agents, or even the implementation of business decisions aimed at explicit adherence to the highly valued ESG culture in the current market, Ferreira Rocha aims to effectively contribute to the generation of shared value for our clients and the population of the territories where we operate.
In other words, it means valuing the economic and financial investments of companies to give them a greater purpose and impact on the development of regions and the improvement of the quality of life of their populations, thus materializing organizations as effective promoters of Sustainable Development.
As a consequence, and through proper strategic and synergistic communication of these initiatives, the social legitimacy levels of the enterprises will also be privileged.
Thanks for reading!
Delfim Rocha
Chief Executive Officer
Ferreira Rocha Assessoria e Serviços Socioambientais