Reflections on SOCAP and the private sector world of impact investment

Reflections on SOCAP and the private sector world of impact investment

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Date: 10th November 2023
Author: Karen Hildahl
Type: Feature

Karen Hildahl from FFLA-CDKN Latin America shares her learnings from impact investment private sector perspectives relevant to locally-led adaptation (LLA), gender equality and social inclusion and Water Funds in Latin America. 

What is SOCAP and who participates?

With Fundación Futuro Latinoamericano (FFLA) and the Climate and Development Knowledge Network (CDKN) programme, I recently participated in SOCAP 2023, Impact at the Speed of Trust, a global impact investment conference that takes place annually in San Francisco in October. Impact investment aims to generate social and environmental benefits as well as profit, and SOCAP brings together investors, donors, philanthropists, justice funders, NGOs, entrepreneurs, and the list goes on. 

We wanted to explore possible linkages with the private sector, potentially attracting finance for the Water Funds we collaborate with, and learn about their perspectives in relation to climate change, gender equality and social inclusion in the Latin America and Caribbean region. We attended with a delegation of five travelling from Colombia and Ecuador, including myself, Karen Hildahl, and Paola Zavala from FFLA-CDKN, Felipe Guerrero from the Medellín Water Fund Cuenca Verde, and Andrea Yañez and Andrea Torrado from the Bogota Water Fund Agua Somos. We were also joined by Georgina Kemp from the International Development Research Centre (IDRC), one of CDKN’s donors. 

Venturing into the private sector world

In the world of NGOs and international cooperation, we continually speak about the need to work with the private sector but seldom find ourselves in the same room. We took a chance applying for a session in this impact investment space and were accepted for a delegate-led format, exploring in a participatory manner the topic of “Shifting Power and Decision-Making to the Local Level: Locally-Led Adaptation in Practice”. Locally-led adaptation can be summarised as shifting power away from donors and intermediaries, ensuring that actors at the lowest appropriate level (such as local governments, NGOs and communities) are the ones making decisions about their priorities and needs and receiving finance to support this - a concept we actively endorse as FFLA-CDKN. 

During our event, the Water Funds showed their example of locally-led adaptation in practice. These are multi-actor (public, private, NGO, communities) governance spaces and financial mechanisms in which water users finance conservation, restoration and sustainable use activities to protect water sources for both local and downstream users. For Water Funds to be successful, they need to work hand-in-hand with local actors. This model originated in Quito, Ecuador, 20 years ago and has now been replicated all over the world. We aimed to showcase this innovative model and explore potential links with private sector finance outside of their watersheds. 

Over the three days of SOCAP, in addition to holding our own session, we attended meetings, panels and events to explore different views from the private sector.

SOCAP Blog image
Karen Hildahl

Learnings from this impact investment space

From these interactions, I’ve identified ten main reflections pertinent to our FFLA-CDKN work and beyond: 

  1. Like us, the private sector also continually speaks about the need to connect across sectors to work together to address our current, multiple environmental and social crises. 
  2. There is a challenge in Latin America and the Caribbean of moving private sector capital towards solving the most pressing issues in the region, connecting with and trusting local actors and understanding the particularities of each local context. 
  3. Water is an excellent entry point as it is fundamental for people and ecosystems and brings together the needs and interests of multiple actors (business, government, local actors, etc.).  
  4. We need to give more visibility to models such as Water Funds that are achieving multiple environmental and social benefits (water and biodiversity conservation, climate change mitigation and adaptation, gender equality and social inclusion, etc.).
  5. We are only scratching the surface of what a gender equality and social inclusion investment lens can do, and the impact of women and indigenous entrepreneurs, fund managers and leaders, and these perspectives need to be brought front and centre into finance discussions. 
  6. The private sector also notes the need for metrics to evidence the impacts of activities to attract finance and direct it towards where it is most needed and can have a greater impact, but at the same time, some actors emphasise the importance of understanding impacts through the identification of critical needs and priorities of local actors.
  7. Adaptation is barely on the agenda and the link with the private sector can be complicated (requires patient funding, opportunities are less understood, etc.). 
  8. There are models from the private sector showing how we can do locally-led adaptation in practice, such as just transition investment communities to move funding towards regenerative, transformative practices, trusting communities at the frontlines of climate change and shifting not just resources but power to them. 
  9. The climate justice private sector actors advocate moving investment risks away from communities to financers upstream and promote co-creation processes and capacity building and technical resources for local actors with long-term, patient capital, low interest rates and minimal reporting burdens. 
  10. We need to be prepared to change the rules, rethink formats and mechanisms so that they are locally appropriate (considering language, local dynamics, etc.) rather than conforming to Western mechanisms such as pitch sessions and likely co-create the blueprint as we go along, as there are few models to follow.  

Next steps to foster collaboration between NGO and international cooperation practitioners and the private sector

We aim to continue exploring collaboration possibilities with private sector actors both inside and outside of the Water Fund watershed areas. FFLA-CDKN has been supporting an Andean Water Fund Platform that brings together ten Water Funds in Colombia, Ecuador and Peru with great interest in exploring such opportunities. We have created a landing page to facilitate potential private sector links, such as water footprint compensations, green products (conservation coffee, sustainable milk, etc.), and corporate social responsibility through these long-term (60 plus year) initiatives. 

We plan to set up bilateral meetings with private sector actors and attend impact investment conferences in Latin America, such as FLII (Foro Latinoamericano de Inversión de Impacto) and Latimpacto. Perhaps in the future we can organise our own event and invite private sector actors to visit the Water Funds. There is much we can explore together, cross-pollinating and building connections and trust as a community of people nurturing this type of sustainable, and even regenerative, work. 

Final thoughts

As a final note, I want to mention that due to unforeseen circumstances, my 6-year-old daughter attended SOCAP with me, likely becoming the youngest participant in the event’s history. Watching her, I hope we all figure out how to ensure the work we do contributes to human and planetary well-being. I aspire for her generation to grow up in a world that is building on the momentum I witness in spaces that bring together changemakers, where we can dare to be optimistic, valiant and inspire change. 

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