Unlocking the potential of Green Enterprises in Peru
Lessons learnt from our Peruvian partners Libelula's support for the Collective Benefit Enterprise Initiative
In February 2021, the congress of Peru passed the Collective Benefit Enterprise (BIC) law, a major milestone for the green economy within the country. The law aimed set up a certification programme for organisations that allowed them to show their green credentials. It was also meant to help consumers become more aware of green enterprises, as well as how they differentiate from more traditional organisations, and promote the collective benefits of these enterprises. However, due to the 2022 Peruvian political crisis, the BIC initiative was put on hold. Though the initiative has since resumed, progress has been very slow.
The Green Economy Coalition saw an opening to promote and revitalise this programme. To that effect, GEC coalition member Libélula Institute for Global Change (Libélula) ran an audience and narrative project aiming to identify key stakeholders, finding ways to boost the profile of the BIC Initiative, and increase the number of organisations that joined it.
Collective Benefit What?
Libélula found that the BIC initiative is not at all well known within Peru. Awareness of it is minimal among organisations that could consider joining, and consumers who might want to seek more ethical products. The path to reaching BIC status is also cumbersome. There is no clear guidance available, even from the government, which makes it hard for organisations to get the certification and discourages them from even bothering. It was also found that smaller enterprises would struggle to absorb the costs of compliance, and larger ones would find changing their set up to meet the requirements too cumbersome to be worth it.
“ Key stakeholders across all sectors of the Peruvian economy have made it clear that if the BIC initiative is to be successful, then the onus must fall on the government to lead it and promote it.”
As a result of these limits, there are currently only 45 organisations in the country with BIC status and most of these are either universities or organisations that deliberately sought it out.
Barriers and opportunities
Libélula identified several main barriers to and opportunities for improving the BIC initiative.
Firstly, a clearly defined purpose. BIC organisations can choose to either contribute towards the achievement of the UN Sustainable Development Goals (SDGs) or an equivalent goal. However, many entrepreneurs aren’t aware of the SDGs, and those that are, won’t always be sure how to define a clear benefit for the SDGs from their organisation.
Secondly, legal formalities. Organisations have to match their purpose and status to BIC requirements, however this can be difficult for anybody not familiar with the legal processes. Having to hire external support to get around this simply raises the cost and makes it less worthwhile. There are orientation services and cheaper options available. However, these can be limited. A government service called ‘Tu Empresa’ designed to give advice to MSE entrepreneurs also exists. However, employees of this service were found to know little about the BIC, limiting the impact the service can have.
Finally, impact reports. These must be produced annually, giving evidence of the positive contributions organisations have made. However, this adds yet another cost for certified organisations. There is also no consistent format or methodology requirement for these reports, making it hard for the government to monitor them. There is also little clarity on how reports are regulated, undermining the credibility and goals of the entire initiative.
Lessons learnt and ways forward
Key stakeholders across all sectors of the Peruvian economy have made it clear that if the BIC initiative is to be successful, then the onus must fall on the Innovation, Technology, Digitalization, and Formalisation Department (ID Produce) within the Ministry of Production as the key stakeholder and ‘owner’ of the initiative to lead it and promote it. ID Produce is currently planning to re-activate the initiative, but this work is yet to be finalised.
We recommend that private sector organisations, academia, NGOs, and financial institutions such as rural banks could all also play a major role in expanding the BIC community. Private sector organisations and academia could help with provision of guidance on the process (with some Universities such as University of Lima already offering this process), NGOs can help with promotion and comms around the initiative, and rural banks and other financial institutions could become significant in promoting BIC values, especially among the smaller SMEs that might be interested.
If ID Produce can properly lead this process, reach out to the right stakeholders, and address the barriers identified, then the initiative could become an effective and useful process to encourage the development of small green enterprise in the country.
The ‘Tu Empresa’ service seems ideal to use as part of this. Its mandate already covers providing support that could help with addressing the barriers. Additional in-depth training for the staff who provide the advice could also help boost sign-ups and engagement.
We also found that existing stakeholders such as green SMEs are simply unaware of each other. Finding ways for them to engage and learn more from each other would be very valuable in promoting the initiative. Libelula have been working towards creating networks of Peruvian SMEs by creating new platforms for entrepreneurs to connect, share information and campaign collectively for action – including via https://economiaverde.pe/, an online portal space for green SMEs to promote their enterprise.
- Alisdair Brown
