Citigroup backs sustainable business
26 July 2002 – Rio de Janeiro - Financial services giant Citigroup is encouraging sustainable enterprise in Latin America through its work with the World Resources Institute on the New Ventures initiative.
Through a series of competitions open to entrepreneurs across Latin America, a panel of experts selects small and medium sized enterprises whose business ideas promise sustainability while respecting social and environmental factors. Selected companies attend an international investment forum, and can win access to business mentoring services.
As part of their partnership with New Ventures, Citigroup provides financial experts for the Mentoring Programme they helped develop. Volunteer corporate advisors help entrepreneurs tackle everyday challenges such as meeting short-term financial needs, finding long-term investments, gaining access to new markets, overcoming operational challenges, and acquiring information on obtaining patents. Advisors also provide ideas on strategic planning and networking.
“Our employee voluntarism resource is very important,” said Pamela Flaherty, Senior VP for Global Community Relations at Citicorp. “The mentors who take part in this programme are some of the best people we have – some work at a very high level, six or seven days a week – and you find people who are excited to put their expertise into these kind of problems.
“It’s a good way for bankers to take what they know and do good for a country.”
Entrepreneurial schemes to benefit from the New Ventures initiative include ecotourism operators, and producers of shrimps, charcoal, wood, coffee, and electric vehicles for delivering goods in densely populated cities. One Argentinean firm is dedicated to the sustainable breeding of the guanaco – a wild Patagonian camelid – for its wool.
In Brazil, Ouro Fértil is one company to benefit from Citigroup’s support. A finalist in the 2000 New Venture selection process, the company uses coconut fibres to create biodegradable and organic products for sale on the local and international markets.
Originally, Ouro Fértil produced humus and flower bulbs. A Citigroup mentor helped them develop a business plan and get funding. They now supply a range of natural fibre products including filler for car seats and mattresses, tubes for pine seedlings, and a vase whose sales reached 50000 units a month in its first six months on the market. Ouro Fértil now plans to expand production further to meet a growing demand for coconut fibre as a non-polluting alternative to synthetic fibres.
Luiz Ros, Director of the New Ventures Sustainable Enterprise Programme, said Citigroup’s participation gives the scheme credibility, particularly at the investment forum. He said: “Randolf Freiberg of Salomon Smith Barney / Citigroup chaired the selection panel and was a key-note speaker. For a sector that isn’t always seen to be credible, having a co-host like Randolf Freiberg helped bring investors we otherwise couldn’t attract.
According to Mr Ros, the forums act as a pipeline for international funding, and help bridge the gap between small enterprises and potential “green” investors.
He said: “In Latin America, the investment market is not developed. There are commercial banks, but they can require 3:1 collateral. These small companies don’t have it. The only way for them to accumulate capital is to over-exploit labour and natural resources.”
“I have learnt that grants are great, but not sustainable in the long run. Companies come back to you every few years. It’s not socially, environmentally or financially viable,” said Mr Ros.
“That’s what’s exiting about New Ventures,” he said. “It’s really about encouraging companies to succeed in the long run. We help SMEs to move away from the process where they over-exploit labour and the environment, and move towards sustainable development.”
According to Ms Flaherty, Citigroup strives to make each community where they operate a better place, saying that economically healthy communities are necessary for business success. She said: “I think that as a global company, in more than a hundred countries, we have to be perceived as adding rather than taking away in countries where we operate. And we have people with skills to offer that can be really useful in these countries.”
Citigroup say their core philosophy is based on high standards of ethics, fair lending and fair access to financial services, customer privacy, diversity in hiring, and cultural and environmental sensitivity.
Ms Flaherty believes the partnership with WRI helps the group put these values into practice. She said: “New Ventures really know how to harness business in a way that benefits people and the environment.”
Based on the success of the Latin American scheme, the two groups are working together on encouraging sustainable entrepreneurship in Asia. The new programme is due to be launched in October.