Macro Forum: The Street View
Equality in Latin America
Putting D&I into practice in Latin America: “A team that allows people to have different ideas...will always have better and more creative results”.
There is a growing consensus that having a substantive commitment to polices around diversity and inclusion (D&I) is good both for society and for the businesses that operate within it. Having a broader range of contrasting views from people with diverse backgrounds should, the theory goes, mean better decision making, a healthier working environment and a greater understanding of a company’s role in the community. Actis is a firm supporter of this trend towards greater D&I in the companies we invest in: we believe such policies mean improved financial performance and more positive impacts in the countries and communities where we operate.
Only 58% of companies in Latin America had at least one woman on the board, compared with a global average of 85%
Studies back this belief with hard numbers. A 2015 report by the McKinsey Global Institute entitled “The Power of Parity” suggested that advancing women’s equality could add $12 trillion to global Gross Domestic Product (GDP) in 2025 if all countries matched their best-in-region country in progress toward gender parity. Latin America was one of the regions with the highest relative potential gains in this scenario: the report found its GDP would be higher by 14% in 2025 compared to the situation if nothing changed.
Observers say the region has seen a significant growth in D&I awareness among businesses in recent years, driven in part by a new generation of younger leaders who embrace such policies to a greater degree than their predecessors. However, research backs up the assertion that Latin America has lagged behind others when it comes to implementing such policies. Santiago-based Cristina Manterola, a Principal and Member of leadership advisory firm Egon Zehnder’s D&I council, noted that only 58% of companies in Latin America had at least one woman on the board, compared with a global average of 85%. “Things have improved in the last few years,” she said, “but not as fast as in the US or Europe.
“That is partly down to culture: many people have traditionally viewed the role of women as being to stay at home. But it’s also down to the way our economies have been structured. Compared to elsewhere, there are many strong families that still control a lot of the businesses: in these cases, the boards are run by family members and do not have advanced corporate boards. These families still tend to promote their own, male, successors. Things are changing, but we still have a lot to do.”
Cecilia Milesi, the founder and CEO of Global Change, a social enterprise providing advisory services to multilateral and global organizations, believes such changes are necessary because D&I is a basic human right. She too has noticed a difference in attitudes in recent years. “There has been a cultural and political shift in the region,” she said. “It began with a shift in politics - in countries like Argentina and Bolivia there are now gender parity laws in Government and parliament, and in most Latin American countries there are strong feminist and women’s rights movements - these cultural and political shifts in public life that have been happening in the last few years are having an impact in the corporate sector. So I am quite positive.”
We believe that as well as being the right thing to do, having a diverse range of perspectives at all levels means policies are more rigorously analysed and decisions more broadly assessed for their overall impact before they are taken. In the long run, this means a more sustainable economy, as well as improved financial returns for investors. And it is as true for Latin America as it is for elsewhere. Indeed many of Actis’ portfolio companies in the region are in the vanguard of efforts to demonstrate the value greater D&I can bring: - to their employees, to the businesses themselves and to the communities they operate in.
Mexico’s renewable energy platform Zuma Energía, for example, believes having a strong D&I policy means being able to employ the best talent from the most diverse group of people. Chief Executive Adrián Katzew said: “We are a genuinely local company in an environment where most businesses are international, and we want to provide a working environment where people from all backgrounds can develop their skills and contribute fully to growing our company.”
When building D&I policies, Actis also believes it is vital that they are applied throughout the firm and are consistent across all the markets a company operates in. Atlas Renewable Energy for example has operations across Chile, Mexico and Brazil, so has created a standard compensation and benefits structure across all levels to ensure the commitment is clear everywhere.
“There has been a cultural and political shift in the region,” she said. “It began with a shift in politics - in countries like Argentina and Bolivia there are now gender parity laws in Government and parliament, and in most Latin American countries there are strong feminist and women’s rights movements - these cultural and political shifts in public life that have been happening in the last few years are having an impact in the corporate sector.
However, D&I doesn’t just begin and end with the individual company: it is just as important to put greater emphasis on ensuring it extends to helping local indigenous communities. Chilean renewable energy business Aela Energía has run community projects aimed at generating economic development and increasing empowerment since 2013. After noticing that 65% of the attendees at Aela’s community meetings were female, it decided to focus on enhancing the skills of local women to improve their economic prospects and foster entrepreneurship. Constanza Correa, Aela’s Head of Communications said: “Many had already started complementary activities to supplement their incomes, such as making and repairing clothes and selling cosmetics. But they wanted to develop their knowledge further so they could get jobs or establish their own businesses.”
Cecilia Milesi believes part of the process towards greater D&I has been driven by a new cohort of leaders. “That generational shift here in Latin America is being felt hugely,” she said. “People are more open minded than perhaps they were in the past, and concepts such as sustainability and diversity are more integrated in their thinking. It is more real for them. This new generation – business people perhaps in their 30s or 40s - has very clear principles, and they will be very straightforward in terms of setting boundaries against discrimination and promoting clear environmental standards. I hope they will do things differently”
A strong commitment to Diversity and Inclusion, therefore, can benefit all company’s stakeholders. Aela’s Constanza Correa said: “We want to build capacity so that the communities we work with do not depend on us. We want to help them build the skills, knowledge, resources and links to continue growing without us.”
Egon Zehnder’s Cristina Manterola added: “What I am completely sure about is that a team that allows people to have different ideas - to let people speak up - will always have better and more creative results compared with a team where you can only speak if you have the same view as the rest.”
“It’s about fairness for all, but I am also sure that businesses will achieve better performance if they work in this way.”
“What I am completely sure about is that a team that allows people to have different ideas - to let people speak up - will always have better and more creative results compared with a team where you can only speak if you have the same view as the rest.”
You can find out more about the way Zuma and Atlas are implementing D&I policies elsewhere in this edition