Emerging Markets / December 13, 2018

Sustainable Development, Social Responsibility & Investment

Even though many countries in Latin America, including Colombia, do not require that investors in the national mining and energy industries process their commodity output in country, many multinational companies end up doing so because of practicality. In many cases, companies that become active in a specific country or region develop ties with those specific markets and communities, which leads to the incorporation of supply chain processes within those very spaces. Additionally, multinational companies give back in the form of corporate social responsibility projects and initiatives. These socioeconomic dynamics are particularly important when the foreign investment develops activities in rural and underserved regions of the country because in many cases the industry becomes the lifeblood of the community in terms of employment, health services, education, infrastructure, and even cultural survival.

Simultaneously, many governments and communities do have understandable preoccupations when it comes to foreign investment in specific regions and industries, which is why countries like Colombia have legislation requiring that at least 90% of every foreign company’s workforce consists of Colombian citizens. Moreover, in Colombia, companies that employ members from specific underserved communities, such as displaced farmers or conflict victims, as well as those that integrate green policies and sustainable development practices into their operations receive additional fiscal incentives and qualify for specific tax credits. Likewise, multinational companies operating in Colombia can qualify for incentives through which their social responsibility operations, such as the construction of schools or health clinics, are credited as part of their tax payment.

Sustainable Development, Social Responsibility & Investment

In a country as biodiverse as Colombia, foreign investment, particular that which is directed towards extractive industries, is also highly regulated by the ministry of the environment and local authorities to make sure that health and safety standards are upheld throughout the lifetime of any given operation. In some instances, local communities have the right to object to the development of extractive operations that might be deemed too detrimental to either the natural environment or the public health of the region.

In the specific case of Colombia, the country has some of Latin America’s largest gold, emeralds, uranium, copper, phosphate, iron, and coal reserves, many of which have not been exploited because of their remote location and because of the country’s violent conflict during the 20th century. However, over the last decade, Colombia’s gold and mining industry has picked up again, drawing large amounts of foreign investment as multinational companies are impressed with the unique quality of the mines still untapped, the likeness of which are no longer found in the region.

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