The world is changing at full speed. And this change has also reached the way of understanding economic relationships. One of the signs of these new times is that more and more entrepreneurs are betting on starting up projects with social and environmental impact.
Now, investors' money is involved in promoting this new paradigm that breaks the classic risk-return binomial and also adds a third variable at the same level: social impact. The projects of EthicHub They point in this direction.
What is impact investment?
The most accepted definition of this concept is that of an investment made with the intention of generating social and environmental impact, without giving up the objective of generating a financial return.
Another way to explain it is a formula that is located in a middle ground between philanthropy, that is, selfless help to others, y traditional investments, those that focus solely on achieving profitability.
Achieving a balanced formula to achieve both goals seems, at first, an impossible mission. Almost a chimera. However, EthicHub has achieved it.
The EthicHub formula
The mechanism that EthicHub has successfully tested is that of a formula that has been in operation for many years: the crowdlending. Basically the idea is that many small investors lend small amounts of money in exchange for a financial return.
The great contribution of this Spanish startup has been to use very intelligently the resources made available by the Blockchain technology, which enables the free circulation of money.
In this way, by eliminating traditional financial intermediaries (banks and financial institutions), management costs are considerably reduced. This benefits both investors, who maintain the profitability of their investments, and their recipients, who can thus access the credits that allow them to maintain their businesses and their way of life.
EthicHub Impact Projects
Good examples of how this theoretical concept of investing with social impact can be put into practice can be found in the EthicHub projects, which have shown that the idea works. This is demonstrated by the figures: 3 over million managed and caand 600 projects brought to fruition in the last five years.
These projects are developed in different Latin American countries, especially in regions with a long coffee-growing tradition. Below, we review some of the most successful cases:
Sierra Azul Gourmet Coffee (Mexico)
Sierra Azul Gourmet Coffee is an organization of small coffee producers from the Sierra Chiapaneca region, southern Mexico. More than 250 small farmers and their families work on their own plots, which are part of the El Triunfo Biosphere Reserve, one of the richest ecosystems in biodiversity in the country.
The coffee produced in this region has organic certification. Furthermore, the cultivation methods used are respectful of the flora and fauna of this reserve. In this case, in addition to the social impact of this investment, we would also have to add its environmental impact.
This project has managed to raise more than 92.000 euros. Investors, who will receive their return in October of this year, have achieved a return of 5,9%. But the most interesting thing is that it is allowing producers to finance the costs of harvesting and marketing organic coffee, making it possible to export it to Japan, the United States, Canada and the countries of the European Union.
The end result is that the coffee community stays alive, which also means that its members can continue with their family business and preserve their livelihood.
Association of Women Coffee Producers “La Labor” (Colombia)
Another good example of the effectiveness of EthicHub's social impact investment model is the project that has involved the Association of Women Coffee Producers “La Labor”, in CColombia. This is a small family business with more than 20 years of experience whose motto reads as follows: “Agriculture has no gender.”
The project funded through EthicHub focuses on helping these women cover all the expenses and carry out the necessary procedures to export their delicious coffee to the rest of the world.
En this specific case there have been 27 private taxpayers or investors who have contributed the necessary capital to reach the target figure of 92.000 euros. All of them have achieved an interesting profitability of 8%, in addition to the satisfaction of knowing that have contributed actively and directly to supporting the initiative of these women and their families.
Idea
The idea of EthicHub has received much praise and recognition at an international level, especially because it does not remain in theory, but has proven its real effectiveness: a new way of investing that generates a social, economic and environmental impact.