In recent weeks, newly elected leaders have captured global attention with promises to defend national interests and restore prosperity. These declarations echo throughout history – spoken by well-intentioned leaders from diverse nations. Yet, the real issue is not their ambition, but the glaring disconnect between their proposed strategies and the urgent challenges we face. In an era flooded with misinformation, it is imperative to anchor our discussions in solid economic and environmental realities.
There is no serious economic debate that ignores environmental imperatives. The global economy is intrinsically linked to sustainability. Climate change is not a distant threat – it is a present crisis with severe economic repercussions, arguably the greatest challenge of our time. A study by the National Bureau of Economic Research reveals that every 1°C rise in temperature results in a 12% loss in global GDP. The UNDP warns that by 2030, 132 million people will be pushed into extreme poverty due to climate change, alongside countless other social crises affecting hundreds of millions.
Yet, while impact assets under management total $1.6 trillion, according to GIIN, fossil fuel subsidies reached $7 trillion in 2022 – a staggering $2 trillion increase since 2020, as reported by the IMF. This amount also surpasses the $2.4 trillion global defense budget in 2023, according to the Stockholm International Peace Research Institute (SIPRI).
Climate risk
The misalignment extends to investment priorities. ANDE’s research shows that 78% of investors lack structured processes for assessing climate risks, and only 59% intend to implement them in the near future. A sustainable economy demands a shift beyond traditional financial models toward holistic, long-term impact strategies.
There is no viable solution to the climate emergency without acknowledging its systemic nature. Climate change is not confined to borders; it is an interconnected global crisis demanding coordinated action. No single country or institution can solve it alone – collaboration between governments, the private sector, and civil society is essential.
Yet, this collaboration is falling short. The current financial landscape fails to adequately support impact investments in emerging markets and developing economies. Despite Latin America’s crucial role in global environmental stability – home to 57% of the world’s primary forests – total impact capital allocated to the region totals roughly $4.7 billion, a fraction of the $1.6 trillion in global impact assets under management.
Beyond its natural assets, Latin America is also rich in critical minerals like copper and lithium – essential for the low-carbon transition, including electric vehicles and renewable energy. The World Economic Forum estimates that financing the energy transition requires $4.5 trillion annually, yet developing nations receive only 15% of these funds. Closing this gap is not a favor to Latin America – it is a necessity for global stability.
Economic inclusion
Sustainability is not just about the environment; it is about people. Impact investments must integrate social dimensions into their frameworks. The private sector holds a unique opportunity to drive economic inclusion by investing in education, healthcare, and financial services. While fintech and e-commerce have attracted significant capital, much more is needed to ensure investments reach underserved communities and drive systemic change.
Yet, Latin America remains one of the world’s most unequal regions, with 32.1% of its population living in poverty and 13.1% in extreme poverty. Despite the region’s strategic importance, investment flows remain inadequate. The paradox is clear: while the Global North depends on Latin America and other Global South nations for its energy transition, it fails to direct the necessary capital toward their sustainable development.
Latin America is not a passive beneficiary of impact investments – it is a central player in the global transition toward a sustainable and impact-driven economy. Unlocking its full potential requires a paradigm shift in capital allocation. The Global North cannot achieve its climate and economic objectives without meaningful collaboration with the Global South. Impact investing in Latin America is not charity – it is a strategic imperative for the planet’s future.
Bold action
To those leaders distracted by short-term political rhetoric: the path forward is complex, and time is running out. The progress made cannot be reversed, and much more is needed. The urgency of the climate crisis, combined with deep social inequalities, demands bold, immediate action.
We are not going anywhere. Latin America holds the key to a more resilient and impactful world. In Brazil, we are not holding back in our efforts to strengthen the country’s impact economy. Through a multi-stakeholder approach, we are advancing transformative initiatives that mobilize capital, empower entrepreneurs, and build a thriving ecosystem.
Some key examples include:
- Eco Invest Brazil. A pioneering Brazilian program, Mobilização de Capital Privado Externo e Proteção Cambial, designed to attract vital foreign private investment to accelerate Brazil’s ecological transition.
- Impact funds. With over 20 active impact funds, Brazil has built extensive expertise in financing transformative projects – ranging from opportunities for smaller investors to large-scale institutional investment. Discover more: Investir com Impacto.
- Impact entrepreneurs. Visionary businesses are driving financial sustainability and economic inclusion. Trampay, for example, is revolutionizing access to credit for gig workers and delivery drivers. Learn more: Trampay.
- Enimpacto: A national strategy for the impact economy. This initiative unites all four key pillars of the impact ecosystem – supply, demand, intermediaries, and regulators aligning efforts to shape the next chapter of Brazil’s economic transformation.
Shared responsibility
Brazil is not just participating in the impact economy – it is leading the way. Through strategic investments, innovation, and collaboration, we are setting the course for a more sustainable and inclusive future.
Mabebio, Telos Conecta, and Alga Earth also exemplify innovative entrepreneurship in Brazil, each addressing distinct challenges through technology and sustainability.
Mabebio, a São Paulo-based textile innovation center, explores the potential of Brazilian biodiversity to develop plant-based materials that coexist harmoniously with the environment. Telos Conecta focuses on technology education and professional development, bridging talent with opportunities while promoting social transformation and equal access to careers in tech. Alga Earth empowers businesses of all sizes to achieve their climate goals by streamlining carbon offsetting and biodiversity preservation, connecting companies with high-impact sustainability projects worldwide.
Grupo Gaia and FINAPOP are two successful initiatives driving sustainable finance for family farming in Brazil.
Grupo Gaia provides credit to support small-scale farmers, funding working capital, equipment acquisition, and factory construction for seven cooperatives that produce food for Brazilian consumers using sustainable practices. FINAPOP, born from a movement advocating for healthier food systems, specializes in raising funds and investments to strengthen sustainable family farming, ensuring long-term financial support for responsible agricultural production.
As investors, policymakers, and business leaders, we have a shared responsibility to direct capital where it is most needed – toward solutions that drive lasting, positive impact. The question is: will you join us before it’s too late?
At Alianca pelo Impacto, Vitoria Junqueira is head of mobilization and Ricardo Ramos is executive director
