Rethinking impact finance in Medellín: five hot ideas from Latimpacto’s fourth annual conference

Taking place this week in Medellín, Colombia, Latimpacto’s fourth annual ‘Impact Minds’ conference is aiming to take inspiration from the remarkable progress of its host city.

Opening the event on Tuesday, Latimpacto CEO Carolina Suárez (pictured above) said that Medellín, which in the 1990s was notorious for drugs cartels, extreme poverty and violence but has since been recognised as one of the world’s most innovative cities, was a symbol of what the network aimed to achieve.

“It’s a privilege to be in this city…which is a symbol of resilience. It is an innovative city which is moving forward,” she said.

Pointing out that the world faces political instability, conflicts, an ever worsening climate crisis and more, Suárez said the event, which brings together more than 700 members of the impact investing community across Latin America and the Caribbean as well as others from further afield, aimed to foster a spirit of hope and collaboration to find solutions to global challenges.

She added: “The Latin American region is full of opportunities and we have the capacity to build solutions together. Knowing the talent that is gathered here, I invite you to make a culture of collaboration a priority.”

One of the key themes, said Suárez, was rethinking finance, and “how capital can catalyse more sustainable solutions”. This topic was developed by Karim Harji, impact management and measurement lead at the Innovative Finance Initiative, a network of impact finance experts who are exploring new approaches. Harji took to the stage later on Tuesday morning and urged the audience to take a fresh look at how impact finance was developing.

“We are in a moment where there is more capital flowing in the name of impact than ever before,” he said. “But there is a mismatch between the flow of capital and the impact on the ground.”

He pointed out that impact finance was beginning to “hit some limits”. As impact investing had matured, he said, it was facing “trade offs” such as scaling impact and having deep impact, and mobilising capital and ensuring that it was delivering at the right level.

“Impact investing has definitely accomplished a lot,” he said, “but we still have big questions around whether it is enough…If we simply count the success of impact investing by how much assets under management we have, that is not enough any more – it's a starting point, not the end point.”

As the event progresses, discussions focus on how capital can be deployed more effectively for impact across Latin America and the Caribbean. Reporting from the event, Pioneers Post’s Anna Patton and Julie Pybus identify five potentially transformative ideas that could push impact finance towards making the positive changes that Latin America and the world so desperately need.

1. Adopt impact-linked finance for enterprises to achieve a vital shift in the balance of power

Linking financial rewards for impact enterprises to positive outcomes could make impact finance more effective. 

Speaking on Tuesday morning about the challenges facing the global impact investing market, Karim Harji, impact management and measurement lead at the Innovative Finance Initiative, offered a number of suggestions for change, including more widespread adoption of impact-linked finance – a concept which was first tested in Latin America. He said: “What if we flip the tables and say you will receive additional rewards, bonuses and intentional capital if you actually have more impact? If they are doing a great job, why not reward them? It’s almost elegant in its simplicity.”

The finance mechanisms for enterprises could range from straightforward incentive payments to preferential financing terms, such as lower interest rates or reduced payment obligations when pre-agreed outcomes are achieved. 

Pointing to work carried out by Roots of Impact, which pioneered the approach, Harji said: “The power dynamic is ‘prove your impact and I'll fund you’. We are trying to shift that to say, ‘deliver your impact and you'll get rewarded’. It’s a subtle shift, but it is fundamental if we really want impact investing to realise its true potential.”

It’s a subtle shift, but it is fundamental if we really want impact investing to realise its true potential

In 2016, Roots of Impact worked with a Mexican enterprise, Clinicas del Azucar, which offers diabetes care, to reach out to lower economic groups using a funding mechanism called ‘social impact incentives’. More than 35 investors and catalytic funders now use impact-linked finance in various forms, according to Roots of Impact, which at the event launched a new instrument, the ‘simple agreement for future impact’, or SAFI.

• Read more about social impact incentives in Mexico and beyond in: Better terms, better impact – but can impact-linked finance overcome a chicken-and-egg situation?

2. Harness the power of the bioeconomy to save the Amazon

Significant commercial interest in the bioeconomy of the Amazon could be a positive force, said Tim Radjy, founder and managing partner of Swiss impact investing manager AlphaMundi. “If we can harness the power of the bioeconomy, then we will find more value in preserving the forest than in destroying it,” he said. The rainforest was “an incredible repository” of natural solutions to ailments, for example. “If we can document that, organise it, scale it, commercialise it, we might have a better chance of preserving the Amazon than just saying: don't destroy the trees.”

One initiative aiming to help that to happen is AmazonBeEco, which launched in summer 2024 and aims to boost the bioeconomy in the Amazon across Brazil, Colombia, Peru, Ecuador, Guyana and Suriname. The project is led by Conexsus and supported by the Inter-American Development Bank and the Green Climate Fund. During a workshop at the event, its participants described how the project aimed to strengthen community-based bio-businesses based in the Amazon (such as small producers of cocoa and rubber, and fishing enterprises) boosting families’ incomes and ensuring that the forest is managed sustainably. 

“These agricultural workers need to be equipped so they can respond to the markets,” said Wain Collen, executive director of Fundación Aliados. “This will help to solve the global problems [of deforestation and food production].”

Franciso von Hildebrand of the Gaia Amazonas foundation in Brazil said the Amazon was often discussed solely from an environmental and climate perspective. That was important, but these conversations “should not only be held with a minister of the environment, but also with the ministry of finance, as well as with public and private stakeholders”. His organisation recently worked with partners including the World Bank and Inter-American Bank of Development to quantify and value the critical ecosystem services provided by the Amazon’s “last flying river” – the last contiguous stretch of non-degraded rainforest, and an area that generates 20% of the world’s and 70% of Latin America’s rainfall.

For Fernanda Camargo, founding partner of Brazil-based Wright Capital Wealth Management, an important next step for impact investing in Latin America was ensuring “we use the ‘E’ from ESG to help the ‘S’”. Many agroforestry funds helped small producers to get access to credit, which can transform their business – but more could be done, she argued. “A lot of investment is coming to this area for climate, and we need to transfer it to people. When you say, ‘I’m going to regenerate 600,000 hectares of soil’, fine, [but] with whom? Where are the people? We need to train people. I think this is a huge opportunity.” 

3. Keep an eye on Peru: it’s ready to take on the impact investing ‘monster’

Among the countries newer to impact investing is Peru, where Aliados do Impacto, the national partner of GSG Impact, was created in 2023. Executive director Luis Alberto Lira described to Pioneers Post that impact investing was a “new monster”. He said: “It’s a big thing, with so many arms and eyes and things that you need to try to understand how this works to determine how you're going to implement your own strategies.”

There’s plenty in Peru’s favour: a strong economy and stable currency – and organisations looking to “share their wealth in order to develop certain parts of the country”, according to Lira.

At a recent event, bosses of some of the country’s biggest companies were speaking, and all “had very positive opinions” about taking a proactive role. “They also said that they don't know how to attack this problem, or how to use the tools that we are providing,” suggesting a willingness to learn, he added. That’s a feature of the wider ecosystem: “[We want] to understand how things work in other countries and bring the best experiences from them and develop them in Peru.” 

4. See how Colombia’s small but sturdy B Corp movement is making waves 

Sandra Sainz, a managing director at Sonen Capital, said she was seeing “a significant increase”, both in impact funds and in the pipeline of companies focusing on solving social and environmental issues in Latin America. “That obviously gives us a bit of confidence and a positive outlook,” she said. 

Among the many impact companies are B Corps – now numbering more than 1,300 in Latin America and the Caribbean, including 160 in Colombia. That’s just a tiny fraction of the 5m businesses in the country, said Camilo Ramirez, executive director at the Colombian branch of Sistema B, the nonprofit that supports B Corps and manages certification in the region. 

It’s not about the number, it’s about the symbol and the engagement that these companies create

But, in an interview with Pioneers Post, he added, “we have brands that people love, that people get involved with in everyday interactions, like Alquería, CasaLuker and Crepes & Waffles. It’s not about the number, it’s about the symbol and the engagement that these companies create.” He added that one in every four Colombians knew the B Corps brand. 

Restaurant chain Crepes & Waffles is one of Colombia’s best-known B Corps. Founded 45 years ago, the family business employs 9,000 people, more than 90% of them single mothers. Another well-established B Corp is Urbania, a specialty coffee company that was created to support producers, the local community and young jobseekers through various partnerships.

5. Be inspired by Medellín’s story of transformation

The transformation of Colombia’s second-largest city is largely thanks to significant investments in infrastructure and transport, with public-private partnerships playing a key role.   

One of the tours organised by Latimpacto on day one of the conference was to Comuna 13, a once extremely dangerous neighbourhood that is now home to colourful street art, outdoor escalators to help navigate the steep hills, and many tourists. Fernanda Camargo, who joined the tour, said she was struck by the transformation, and hoped it could offer lessons for Brazil.

“[In the favelas] at the moment we are living in one of the worst times. The violence is insane. The amount of deaths, crime, it’s out of control,” she said. “I kept asking: how did you do it?”

Pioneers Post is a media partner of Latimpacto, and our attendance at the conference was financially supported by Latimpacto. Check back soon for more coverage.