Sustainability and Green Business in Latin America during Globalization Waves

Sustainability and Green Business in
Latin America during Globalization
Waves
Geoffrey Jones
Working Paper 19-009
Working Paper 19-009
Copyright © 2018 by Geoffrey Jones
Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may
not be reproduced without permission of the copyright holder. Copies of working papers are available from the author.
Sustainability and Green Business in
Latin America during Globalization
Waves
Geoffrey Jones
Harvard Business School
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Sustainability and Green Business in Latin America during Globalization Waves
Geoffrey Jones, Harvard Business School

 Abstract
 This working paper examines the impact of modern business enterprise on the natural
environment of Latin America during the globalization waves between the nineteenth century
and the present day. It argues that although global capitalism created much wealth for the region,
this was at the cost of massive ecological destruction in Latin America. During the first global
economy considerable wealth was created from the exploitation of natural resources for the landowning elite in Latin America, at the cost of large-scale ecological destruction. During the Great
Reversal in the mid-twentieth century, public policies aimed at “catching up” resulted in the coproliferation of hydro-electric schemes and resulting co-creation of ecological damage by firms
and governments. In the new global economy since 1980, renewed economic growth and
consumerism resulted in mountains of waste in increasingly polluted mega-cities. Biodiversity
and the natural environment have been challenged across the subcontinent. However there were
interesting positives as these ecological horrors also created opportunities for a surprising cohort
of green businesses across sectors ranging from beauty and health to eco-tourism. In the twenty
first century both business and governments in the region needed to address sustainability issues
far more seriously, before a point of no return was reached.
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Sustainability and Green Business in Latin America during Globalization Waves
Geoffrey Jones, Harvard Business School

 This working paper examines the impact of business and the natural environment in Latin
America between the first global economy and the present day. There are now good general
studies of the region’s environmental history (Brailovsky 2006; Miller 2007). However much
less has been written about the specific role and impact of business. This working paper seeks to
provide an overview of the available evidence, with the aim of serving as a catalyst for new
research.
 It has to be noted from the start that the subject of business history and the environment
has not been given the scholarly attention it deserves. Yet three areas of research and debate have
emerged. First, the original topic of interest was the drivers of the growth of regulation and other
responses to industrial pollution since the nineteenth century (Rosen, 1995; Ueköetter, 1999).
Second, when, why and with what consequences some firms in polluting industries such as
chemicals and electricals sought to become more sustainable has been explored (Hoffman, 1997;
Jones and Lubinski, 2012; Bergquist and Söderholm, 2015; Kristina Bergquist & Lindmark,
2016; Berghoff & Rome, 2017). Finally, a new stream of research has focused on when and why
some entrepreneurs established for-profit green businesses which were explicitly focused on
achieving sustainability rather than just making polluting businesses less damaging. This
phenomenon has been traced back to the nineteenth century with early businesses created in
organic food and wind and solar energy (Jones, 2017a; Jones 2018; Bergquist 2017). Strikingly,
most of this research has stayed concentrated on the developed economies of the United States
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and Western Europe, although there has been some recent attention to the non-Western world.
(Austin, 2017)
 This working paper is organized chronologically. The first section looks at the role of
business and environment in Latin America in the first global economy. It is focused especially
on the negative environmental impact of the region’s vast commodity export business. The
second section examines at business and the environment during the Great Reversal. It looks
specifically at the destructive impact of hydro-electricity. The third section looks at business and
the environment during the second global economy. It uses waste management, the beauty
industry, and eco-tourism as case studies. During these decades Latin America became the home
of some of the world’s most ecologically progressive firms.
Sustainability and Green Business in Latin America in the First Global Economy
 In nineteenth century Europe and the United States, it was the pollution arising from
the new manufacturing industries and rapid urbanization which spurred the so-called first wave
of environmentalism, which saw the emergence of new regulations, and the creation of the
world’s first national parks aimed at conservation (Guha, 2002). The application of chemical
fertilizers to agriculture spurred the first natural food entrepreneurs, concerned about the impact
of chemicals on human health and soil fertility (Jones, 2017a). In contrast, Latin America
experienced little capital-intensive industrialization, low urbanization and very low use of
chemical fertilizers, so these environmental stresses were not encountered.
 Nonetheless, the first global economy did have a negative impact on the region.
Ecological stresses that had been underway since before the colonial period rapidly intensified in
the colonial period, and grew exponentially in the first wave of globalization (Dean, 1995) In
Brazil, the arrival of the Portuguese saw massive destruction and depopulation of the Atlantic
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tropical forest, although much less at that time to the Amazon tropic forest. (Pádua, 2010) In the
Spanish colonies, there was also considerable and long-term ecological damage from
deforestation and the arrival of invasive species, and especially mining and resulting mercury
pollution. (Robins, 2017) This damage was magnified by the growth of Latin America as a
source of commodities and food for the developed world during the first global economy.
Western firms were often leading actors in this process, although in Argentina (and elsewhere)
powerful local business groups, such a Tornquist and Bunge, also flourished as exporters of
commodities. Regions typically specialized on particular crops or commodities, creating monocultural agricultures which swept away traditional ecological systems, often alongside the
indigenous peoples who had inhabited the lands (Miller, 2012).
 There were many examples. The banana plantations of the United Fruit Company and
other US firms were notorious for damaging the soil: the firm would simply move to another
region when the ecological damage was too great. A key problem was that the companies
focused on single type of banana, the Gros Michel, which proved vulnerable the fungal infection
known as Panama disease (Miller 2007, 129-33). Elsewhere market forces stimulated equally
damaging developments. During the second half of the nineteenth century Cuba largely
abandoned coffee production, in response to serious hurricanes, and focused heavily on
sugarcane, which was less susceptible to high winds, even if destroyed, could be replanted and
return to profitability in a single year. Compared to coffee, sugar consumed forests for space and
for firewood, and depleted soils. (Perez 2001) There was a huge expansion of Cuba’s sugar
industry following the establishment of US military government over the island. This rapidly
destroyed the forests in Camagüey in east-central Cuba. Much of the land cleared for sugar cane
was unsuitable and an aggressive African shrub took over the land. (Funes, 2004)
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 Resources which had built up over millennia were rapidly depleted. A classic
example was the Peruvian guano industry. From the 1840s, Europeans identified Peruvian guano
as possessing high concentrations of nitrogen, making it the best accessible fertilizer. It was
exploited under contract to the government by British and other merchants, who mined the
product from coastal islands and promontories, and exported worldwide. Their application
resulted in a huge rise in yields in the West, but by the 1870s, Peru had largely run out of guano.
(Cushman, 2013). The Peruvian state responded by managing and protecting guano birds, often
by killing predatory birds, and the recovering supplies were used to enhance national agriculture.
However a boom in the fishmeal industry, used to feed the chickens and pigs that transformed
Western diets after World War 11, depleted fishing stocks, caused bird populations and guano
production to decline again (Cushman, 2013)
 There were many other cases of ecological devastation caused by supplying global
markets. In Venezuela, egrets were protected in 1917, but only after hunters had almost
destroyed the population in order to harvest the breeding plumage, used for adorning women’s
hats. Most efforts at conservation were ineffective. From Argentina and Chile’s Andean slopes,
chinchilla pelts were exported to North America and Europe from the 1820s to manufacture fur
clothing. By the last decade of the nineteenth century, exports averaged nearly half a million
pelts per annum. A long fur coat required as many as 150 pelts. Chinchilla reproduction was
limited by small litters, usually one set of twins, and populations crashed at the start of the
twentieth century. In 1905, Argentina exported about 200,000 pelts. By 1909, exports had fallen
to 28,000. Despite an international agreement in 1910 between Argentina, Chile, Bolivia, and
Peru, which outlawed the trade, one species became extinct, and the two remaining, endangered.
The demise of some native species was considered progress by some modernizing elites. In
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Argentina, the native deer, the huemul, was driven to near extinction by overhunting and by the
introduction of the larger, more aggressive European red deer. (Miller 2012)
 Mining was hugely destructive of the natural environment as mountains were destroyed
and landscapes scarred by new and powerful technologies. Occasionally, however, it stimulated
interesting innovations. For example, solar energy was successfully employed by British
engineers in the late nineteenth century to power water desalinization plants in Chile’s Atacama
Desert, the home of the country’s vast nitrates industry. Later the Guggenheims, the large
American mining company, made further investments in the technology in the Atacama desert
(Arellano and Roca-Rosell, 2013; Arellano, 2015). The emergence of the new petroleum
industry in early twentieth century Mexico and Venezuela caused extraordinary ecological
devastation in both countries (Santiago, 2006).
 As was the case elsewhere, there was little concern about ecological damage either in
businesses or in governments. There were a handful of conservation efforts of the kind seen in
Europe and the United States. Mexico was almost as early as the United States creating national
parks. Mexico established Desierto de Leones as a forest preserve in 1876, and this became a
national park in 1901. However while business, in the form of railroad companies seeking to
expand their tourist markets, were important influences on the creation of the national park
system in the United States (Jones 2017a), in Mexico governments drove their creation. By 1940
Mexico had 40 parks, all but two of which were designated in the 1930s by President Lázaro
Cárdenas. Cardenas saw national parks as tools of the revolution, and attempted to incorporate
within them the needs of farmers, ranchers, loggers, scientists, and the urban dweller, which
explains why most were located near large cities in the central valleys. Mexico’s interests
focused on reclaiming already degraded landscapes, places of important cultural heritage, and
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locations that were accessible to large sectors of the population which needed spaces for
recreation. A significant figure in the Mexican conservationist movement was Miguel Angel de
Quervedo, a French-trained hydraulic engineer who campaigned to protect Mexico’s depleting
forests and founded the Mexican Forestry Society in 1922. He was far more concerned to
preserve the forests than peasants and the indigenous, who he blamed for deforestation. (Guha
2002)
 In general, Mexico appears to have suffered great environmental damage during the
first global economy. Business and government co-created ecological destruction. Particular
damage was done by the draining of lakes and wetlands during the Porfirian export boom. The
primary aim was the pursuit of fertile soils and irrigation water, but the draining of lakes was
also motivated by the belief that they were health risks. The result was deforestation, flash
flooding and enormous social costs because of the displacement of traditional peasant
communities. (Tortolero, 2004). Mexico City’s Grand Canal, completed by the British engineer
Weetman Pearson, drained Lake Texcoco, which periodically flooded the city, but at enormous
social and ecological cost. It speeded up the subsidence of the city, which sank by seven and a
half meters over the course of the twentieth century (Miller 2007, 142-147).
 Latin America received its own chapter in William Vogt’s book Road to Survival,
published in 1948, which presented a stark picture of the world’s environmental stresses amidst
growing populations. Vogt knew the subcontinent well as he had served as a high level official in
a US Federal agency, the Division of Science and Education of the Office of the Coordinator in
Inter-American Affairs (Jones, 2017a). The chapter was entitled “The Land on the Edge.” It
presented a bleak picture of ecological destruction in a region which had a harsh natural
environment, large estates whose owners were motivated solely by profits, and governments
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characterized by “corruption and incompetence,” which meant they were incapable of
“responsible and intelligent management of natural resources.” He was particularly concerned
about the destruction of forests for fuel which he saw as resulting in huge soil erosion problems.
Waters, he observed, “freed of the leash imposed on them by the plant cover of the uplands, are
ripping away the surface of the soil, carrying heavy loads of silt, flooding towns and cities,
blocking navigation.” Although highly critical of local governments and poorly educated
populations, Vogt strongly criticized “American lumbermen and American capital,” which he
argued had played an “important and disgraceful role” in the “destruction of a continent.” In
Latin America, Vogt noted, “there is neither organized public opinion nor sufficient technical
knowledge to protect these basically poor countries against the despoilers
 During the first global economy, then, Latin America’s natural environment was badly
impacted by its role as a supplier of commodities and food to the West. Public Policy was largely
oblivious to the damage being caused, although the case of Peru and guano was an exception.
Both foreign and local businesses manifested evident ecological concerns. Latin America was
simply seen as a region to exploit for the benefit of producers and consumers in the developed
nations (Vogt 1948, chapter 7)
Sustainability and Green Business during the Great Reversal 1929-1979
 The onset of the Great Depression after 1929 saw a reversal of the levels of integration
seen in the global economy as tariffs, exchange controls and other policies dramatically reduced
cross-border flows of trade, capital and migrants. This was bad for incomes, but might have had
positive environmental consequences. However Great Reversal saw the focus on exporting
commodities being replaced by strategies to promote national economic development. This drove
a new set of sustainability challenges. Many countries on the subcontinent lacked fossil fuels,
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although a handful – Mexico and Venezuela – did have large oil deposits. The response
elsewhere was massive investments in dam construction, and the generation of electricity needed
for electricity from hydropower. By 1900 a number of small hydro-electric power stations had
already been established near large cities in Latin America. More dams followed during the
interwar years, and there was a surge in dam building from the 1940s.
 Brazil built the largest hydro-electricity capacity in Latin America. Both
multinationals and governments were involved. In response to fuel shortages during World War
1, large multinational utilities including American & Foreign Power and the Canadian-owned
Brazilian, Light and Traction Company began building hydro-electric facilities. However in
1937 a new Brazilian constitution prohibited companies with foreign shareholdings obtaining
new hydro-electrical concessions. (Hausman, Hertner and Wilkins 2008, 211). As a result
between the 1950s and 1970s most of the foreign electricity utilities withdrew from the country.
However Brazilian Traction, renamed Brascan, remained active until 1979, when it sold the
business to the government. (Hausman, Hertner and Wilkins, 2008, 248-250). By 2000 South
America had over 900 large dams over 15 meters high, and 500 of them were in Brazil. As
Miller has noted, most dams in Brazil - and indeed all of Latin America - were not built to meet
demand for electricity, but to create demand. They were tools of development strategies (Miller,
2007, 160-1).
 Hydro-electricity became hugely important in Latin American countries. In 2015
Brazil produced 9% of the world’s hydro-electricity, in third place after China (28%) and Canada
(10%). In that year hydro-electricity accounted for 62% of Brazil’s electricity, 66 % of
Colombia’s, and 75% of Costa Rica’s. Mexico and Chile were much less dependent on hydro – it
accounted for 10% and 32% of national electricity relatively. In those two countries combustible
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fuels (coal, gas and oil) accounted for 81% and 63% respectively of electricity generated. Wind
and solar energy has remained unimportant until the present day with a handful of exceptions
such as Costa Rica, which had 10% of its electricity generated by wind power by 2015. (United
Nations Energy Statistics Yearbook)
 The good news about the heavy reliance on hydroelectricity was that, after climate
change was scientifically verified in the 1990s, Latin America did not rank as a major culprit. A
ranking of the world’s countries by 2014 per capita fossil fuel carbon dioxide emission rates
ranked Qatar as number one and the United States at number 14. Famously “green” Sweden was
ranked number 87. Chile was just a little higher than Sweden (85), while all other Latin
American economies were more lowly ranked, including Mexico (98), Brazil (120), Peru (128),
Colombia (138) and Costa Rica (143) (http://cdiac.ess-dive.lbl.gov/trends/emis/overview.html).
 The construction of dams themselves was highly damaging to the environment. Tens
of thousands of people, typically indigenous peoples, were displaced from their traditional
homes. The dams modified the region’s landscapes on a vast scale. They involved massive
displacement of communities. In Brazil, the Itaipu and Sobradinho dams displaced 50,000 and
70,000 people respectively (Miller, 2007, 161). Often there was significant deforestation. This
caused the destruction of the ecosystem and releasing carbon dioxide into the atmosphere. In
some cases forests the size of small European countries were submerged. As reservoirs flooded
land, there was decomposition of organic matter, and more methane and carbon dioxide
emissions. As dams were developed, river ecosystems were fragmented, leading to an
accumulation of sediments upstream and preventing vegetation downstream from being
replenished. Despite initial plans to incorporate locks and recreational features, most dams ended
up producing only electricity at the expense of fisheries, farms, and forests. In the Amazon, dams
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sometimes even altered local concepts of time and season. Farmers, who relied on the region’s
annual flooding not only to fertilize their fields but to indicate the time to plant, were confused
by rivers that began to run clear and with little deviation in volume. In lowland regions, new
reservoirs sometimes bred mosquito populations so large as to make their shorelines
uninhabitable. (Miller, 2012, 157-166)
 The decades of the Great Reversal witnessed a further deterioration of the natural
environment of Latin America. Hydro-electricity dams and giant cattle farms had very negative
impacts. While this was an era of fledgling new, if still small, green start-ups in Europe and the
United States, in industries ranging from food to renewable energy (2017a), there appeared to be
few equivalents in Latin America.
Sustainability and Green Business in the New Global Economy
 During the new global economy which began in 1979, Latin American environmental
fundamentals deteriorated sharply alongside fast economic development and fast urbanization.
There was mounting environmental pollution, deforestation, and declining biodiversity. It was in
this period that the Amazon rainforest experienced dramatic reduction in the forest cover.
(Pádua, 2010, 131). Indeed, between 2000 and 2010 Brazil accounted for over 50 cent of total
world forest destruction. (Luna and Klein, 2014, 252).
 Yet there was also a new awareness of environmental issues. Many Latin American
countries established environmental protection ministries, which were often based on the
Environmental Protection Agency created in the United States in 1970. (McNeill and Engelke,
2014, 198) A new Chilean constitution in 1980 included a clause that Chilean nationals had “the
right to live in an unpolluted environment.” It was Brazil, however, which took a lead. The first
ecological association in Latin America was founded in 1971 in Brazil. In 1985, after the fall of
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the military government, a Ministry of the environment and Urban Development was founded.
(Luna and Klein, 2014, 248-252). The United Nations Conference on Environment and
Development, was held in in Rio de Janeiro in 1992, and this event encouraged greater
interaction between environmentalists in Brazil and elsewhere. (Hochstetler and Keck, 2007).
There were examples of advanced urban, ecological planning. An example was the southern
Brazilian city of Curitiba, which from the 1970s invested in use of water resources, creation of
parks, and a vibrant public transport system. (Schwartz, 2004; McNeill and Engelke, 2014, 125).
 There were considerable variations between countries. In Chile, Orihuela, (2014) has
shown how a new generation of bureaucrats after 1990 introduced tighter environmental controls
over the long-established Chuquicamata smelter, which had contributed to the growing pollution
of the capital city if Santiago. In contrast, the Peruvian government sold the highly polluting La
Oroya smelter to the US multinational Doe Run Company in 1997, and then proceeded to
exercise little control over it. Doe Run was pursued for multiple environmental violations in the
United States. In 2007 an American NGO identified La Oroya as one of the ten most polluted
places on earth. (Blacksmith, 2007). Meanwhile a massive wave of Chinese multinational
investment in commodities across the region was accompanied by further extensive
environmental damage. (Peters, 2012).
 In a number of countries green companies were created which became some of the most
sustainable in the world. These included Brazil’s Natura and, on a much smaller scale, many ecotourism companies, especially but not only in Costa Rica. At the other end of the spectrum, some
Brazilian lumber companies engaged in illegal logging which increasingly devastated the
biodiversity of the Amazon. (Greenpeace Brazil, 2015). So-called “eco-trafficking” grew as a
multi-billion dollar business run by transnational organized crime networks that spread
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corruption, violence and environmental destruction. (Bargent, 2014) In some industries, the
region was a distinct laggard. Although Chile may have had the world’s leading organic wine
company, Emiliana Vineyards, only 3% of total acreage was organic in 2014, compared to 8% in
France. (Karlsson, 2014; Jones 2018).
Urbanization and Waste
 Among the greatest drivers of environmental problems was fast urbanization. While 7%
of Latin Americans lived in towns in 1910, the urban share had risen 57% by 1970 (McNeil,
2000). By 1975 Mexico City, with a population of 10.7 million, was one of the world’s three
mega-cities together with Tokyo (27 million) and New York/Newark (15.7 million). Latin
American cities teemed with squatters. By 1990 there were a reported nine million Mexico City,
and three million in São Paulo. (McNeill and Engelke, 2014, 115). By 2016 Latin America had
four of the world’s largest mega-cities: in fifth place Sao Paulo (21.3) million), in seventh place
Mexico City (21.1 million), in 13th place Buenos Aires (15 million), and in twentieth place Rio
de Janeiro (13 million) .(United Nations, 2016)
 These mega-cities consumed energy on a massive scale. As they largely lacked quality
public transport, and countries such as Brazil made explicit decisions to invest in roads rather
than railroads during the 1950s, a growing number of automobiles generated greenhouse gases
and air pollution. Winter inversions and mountain valley locations kept foul air trapped in cities
such as Mexico and Santiago (Miller 2007, 179). Skyscrapers with glass facades consumed huge
amounts of energy because of heat loss. Latin American cities, including Caracas, San Pedro
Sula, Acapulca, and Fortaleza, also regularly topped lists of the world’s most violent cities. The
region also had cities with bad air pollution, like Coyhaique in Chile, Lima in Peru, La Paz in
Bolivia, and Santa Gertrudes in Brazil, but none of them reached the highest ranks of the world’s
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most polluted cities. In 2018, according to the World Health Organization, fifteen of the world’s
most polluted cities were in India, and the remainder elsewhere in Asia and the Middle East.
Latin American deaths from air pollution were way below those of Asia and Africa. (World
Economic Forum, 2018)
 Big urban populations generated mountains of waste. While in poor rural communities
waste was generally recycled. In urban communities, it was thrown out. This caused massive
ecological issues, and when simply dumped, resulted in big emissions of greenhouse gases. This
was a problem faced by all industrial and urban societies, but in some developed countries over
time policies were adopted which mandated recycling and less damaging forms of disposal. By
2012 Japan, 70% of household waste was turned into energy, most of the remainder was
recycled, and only 1% put in landfills. The Latin American situation was very different.
Overwhelmingly, waste was put into damps or slightly less ecologically damaging landfills.
Mexico had the highest recycling rate in Latin America, and it amounted to 3% of total waste
disposal. (Hoornweg and Bhada-Tata, 2012, Annex L)
 Latin American countries came to feature vast dump sites, such as La Chureca in
Nicaragua, and the enormous 927acres landfill Bordo Poniente in Mexico City, eventually closed
down in 2012. In the same year the equally huge Jardim Gramacho in Rio de Janeiro was closed.
These dumps were massive generators of greenhouse gases, becoming significant contributors to
global warming.
 Yet these damps also provided jobs for tens of thousands of scavengers. This was a
bottom of the pyramid occupation on the margins of society. This marginal status was reflected
in the fact there were different names for scavengers in each country: for example, catadores in
Brazil, guajeros in Guatemala, and cartoneros in Argentina. The work and lives of the scavengers
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was hard and unpleasant, but their ecological impact was not necessarily negative. Brazilian
catadores were estimated to recover about 90% of the post-consumer materials recycled by
industry in that country in the 2000s. (Medina 2007).
 The waste pickers also increasingly formed large formal organizations. The first
membership based organizations of waste pickets in Latin America founded in 1962 in Medellin,
Colombia. In 1980 the first such organization was founded in Ecuador in Cochabamba. In Brazil
during the 1980s Catholic NGOs began organizing waste pickers in the main cities of the south
and southeast. The first attempts to integrate waste picker co-operatives into municipal solid
waste management also occurred in Brazil in Porto Alegre and Sao Paulo in Brazil, and then in
Belo Horizonte in 1993 and Santo Andre in 1997. The 2000s saw the creation of the Brazilian
national movement of waste pickers. By that decade a regional organization had bene formed.
The Latin American and Caribbean Network of Recyclers, Red LACRE, was a representative
and integrative organization of the national movements of waste pickers of the continent, made
up of delegates from 17 countries. (Chen 2015)
The Consumer Society and Beauty
 The growing amount of waste reflected the fact that rising incomes during the new
global economy, combined with income inequality, permitted a rapid growth of discretionary
consumer spending. As in the developed West, consumerism contributed to growing
environmental problems through wasteful packaging and other means.
 The beauty industry provides an important example. Before the 1950s, perhaps before
the 1980s, Latin American consumers spent little on beauty products, as few had the income for
such discretionary spending. This changed greatly during the new global economy. Brazil had
grown to be the fourth biggest market for beauty products in the world in 2017, after the United
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States, China and Japan. Mexico was ranked seventh and Argentina sixteenth. Brazilian spending
on beauty products was $148 on an average for each Brazilian, the highest amount in Latin
America. That of Argentina and Chile is just a few dollars less. Although individual Americans
and Europeans spent more, Latin Americans stood out among emerging markets as spenders on
beauty. Thais, South Africans and Russians spent well under half the amount of Argentines,
Brazilians and Chileans. Chinese spent three-quarters less. Indians spent less than one percent
than people do in these three Latin American countries. In addition Brazil, Mexico, Colombia
and Argentina regularly featured in the top ten countries for cosmetic plastic surgery, alongside
the United States and South Korea. Brazil, which offered a tax reduction for such surgery, was a
world leader in breast implants and liposuction. Latin Americans are associated with developing
a range of beauty enhancements, from the “Brazilian wax” to "jeans Colombianos." (Jones,
2017b)
 Latin American beauty culture was the product of capitalist enterprise. From the
interwar years Western multinationals built markets and created consumer desires. (Jones, 2010)
Colgate-Palmolive which pioneered the radionovela concept in interwar Cuba, and pioneered the
telenovela in 1958, when Televisa’s Canal 4 showed the Colgate-Palmolive- sponsored Senda
prohibida.) Over time, as the beauty business became established, it also acquired a life of its
own. Beauty salons and institutes flourished. The beauty industry became a means out of poverty
for many women. Beauty pageants became big business. As television came to the sub-continent,
they attracted good audiences, and television companies invested in promoting them. The growth
of Venezuela’s large beauty industry has been ascribed to the growth of the Cisneros business
group, the owner of the Venevision channel from the 1980s. (Jones, 2017b)
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 The beauty industry was the opposite of sustainable in multiple ways. Typically
brands are sold in expensive packaging, which was later disregarded. The industry encouraged
an emphasis on female appearance and body shape, emphasizing ideals which most women
found hard to match. The U.S. and European firms which created the Latin American industry
celebrated White beauty, which aligned well with the deep-seated racism throughout the region.
As the industry grew, it remained profoundly White, reinforcing rather than challenging ethnic
norms. (Jones, 2017b)
 However, and perhaps surprisingly, a number of the locally owned cosmetics firms
developed an early and persistent commitment to sustainability, health and societal concerns.
This development is aligned with some recent research which has suggested that some firms in
emerging markets pursued wide-ranging strategies focused in the social and environmental
responsibility of business (Austin, Dávila, and Jones, 2017). An early example was in Colombia.
Labfarve laboratories was founded in 1971 by Jorge Piñeros Corpas, a prominent Colombian
doctor and scientist, who initially sought to make more affordable medicines for the poorer
sections of society using plants and traditional practices, sourcing ingredients from the peoples of
the Amazon. The company soon diversified into cosmetics and has made multiple innovations,
including developing a natural Botox from an extract of the acmella plant. The wider Corpas
Group came to include a hospital and a medical school and annual revenues reached $7 million
in 2010s (Interview with Gustavo Urrea, March 4 2010)
 It was in Brazil, however, that a cluster of local beauty companies formed with health and
sustainability concerns. Examples included O Boticário, founded in 1977 by Bolivian-born
Miguel Krigsner, which built a big business with 4,000 franchised shops in Brazil targeting the
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upper-middle segments of the market through eco-friendly products. In 1990, the firm
established a non-profit organization to preserve the natural environment. (Jones, 2017b)
 Social and environmental responsibility was a principal concern of what became the
largest Latin American beauty company. Natura originated in 1969 by Antonio Luiz da Cunha
Seabra as a small laboratory and cosmetics store in the city of São Paulo. Guilherme Leal and
Pedro Passos later joined the business. The company adopted a direct selling model in 1974,
forming an unusual three-man leadership. Seabra became increasingly convinced that the
fragmented world needed to discover a new way of thinking, based on a holistic view of life and
the idea of “trying to share in a proper way” (Jones, 2010).
 Natura’s direct selling business was a beneficiary of Brazil’s so-called “lost decade” of
the 1980s, as many retailers collapsed, while Natura was able to recruit thousands of female sales
representatives who needed a source of income. By 2005, when the firm went public with an
IPO, it had revenues of $1.5 billion and employed 480,000 sales consultants throughout the
country. By then Natura has been ranked as the fifth most valuable brand amongst all Brazilian
public companies. By 2018 it had 1.6 billion consultants in Brazil.
 Seabra and his colleagues were at the forefront of expanding corporate commitment to
social and environmental responsibility. Between 1992 and 2001 Natura had a partnership with
the Matilde Maria Cremm public school in Sao Paulo which became the basis for multiple other
partnerships with the public sector. Natura became the first company in Brazil to adopt the 2001
Global Reporting Initiative. It has been carbon neutral since 2007.
 Both marketing and sourcing strategies were targeted at achieving sustainability. In
contrast to the perceived stereotypes of Brazilian body-worshipping, Natura criticized
exploitative advertising and exaggerated promises. Seabra described the use of manipulative
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advertising in the cosmetics industry as a “cultural crime.” In 1992 the company launched the
concept of “The Truly Beautiful Woman” which asserted that beauty was not a matter of age but
of self-esteem. In 2000 Natura launched the Ekos brand, made from Brazilian biodiversity
products in a sustainable way. In 2007 Natura became a founding member of the non-profit
Union for Ethical Bio-Trade. Leal was personally prominent in the Brazilian section of the
World Wildlife Fund, and even stood as the Partido Verde (Green Party) vice-presidential
candidate in Marina Silva’s unsuccessful campaign in 2010. The Partido Verde had been
founded in 1986, and in 2010 came third place in the presidential election with 20 per cent of the
national vote. (Luna and Klein, 2010, 250)
 Natura’s willingness to walk the talk was evident in the international strategies of the
firm. It avoided markets like Russia where environmental sensibilities were low. It also avoided
markets such as China, which was rapidly growing as the world’s second largest beauty market,
and for which Natura’s brands and pricing appeared a perfect fit. However China also mandated
animal testing which Natura strong opposed. This led the firm to walk away from acquiring a
prominent Australian natural brand, Jurlique, which met all the firm’s requirements for ethical
and sustainable business, except that it made large sales in China (Jones, 2012). Instead Natura
opted to acquire another Australian natural beauty brand and retailer, Aesop, which among other
things had a strong position on avoiding animal testing. In 2017 Natura also acquired the historic
British natural beauty retailer The Body Shop, which had not flourished since L’Oréal had
acquired it in 2006, and which never sold in China.
 In 2014 Natura became the largest (by then it had sales of $2.6 billion), and first
publicly traded company in the world to obtain B Corp certification, designed to encourage the
highest standards of environmental and social stewardship and transparency in business.
20
Eco-tourism
 During the new global economy Latin America also developed a large international
tourism industry. Weather and geography enabled the creation of multiple types of tourism.
There was cheap mass tourism in Cancun and Rio de Janeiro, scientific tourism in the Galapagos
Islands, and cultural and heritage tourism at Machu Picchu and other sites in Peru, and
elsewhere. Frequently, as in the case of Machu Picchu, a World Heritage Site, accelerating
tourist arrivals resulted in declining sustainability, both ecological and social.(Johnston and
Rivas, 2013) There was also, however, a strong growth of eco-tourism. Costa Rica grew as the
world’s leading eco-tourism destination by the 2000s.
 The conventional beach tourism industry which grew from the 1960s in Costa Rica was
mostly created by local entrepreneurs for the local and other Central American middle classes. It
soon attracted growing numbers from North America also because of the convenient location.
Overall tourist arrivals increased from 155,000 in 1970 to 1.1 million in 2000. The country’s
tourism ministry provided incentives and tax breaks after 1985 and encouraged foreign
investment for luxury tourist resorts. Costa Rica also received substantial aid from the World
Bank, the IMF, and the US agency USAID, some of it explicitly to attract such foreign
investment. Large US and European hotel chains invested in the country during the 1990s,
mostly in large resort and vacation home developments along the coast. (Jones and Spadafora,
2017)
 Mega resorts and beach tourism was a recipe for ecological destruction, but a distinctive
feature of the Costa Rican tourism boom was that it came to include a significant ecological
21
interests. By the late 1990s, a survey suggested that the average foreign tourist spent
approximately two-thirds of his or her time in Costa Rica in protected areas or traveling to them.
 There was no simple resource endowment explanation for the growth of Costa Rica in
eco-tourism. This small country, the size of Denmark, had attractive rainforests and considerable
biodiversity: it was said to have 850 bird species, 6000 kinds of flowering plants, and 35,000
species of insects. However neighboring countries in Central America (and elsewhere) had even
more bio-diversity and natural wonders. Honduras had extensive beaches located on its Atlantic
coast, which included the unique Bay Islands with world class coral reefs. Guatemala had both
vast biodiversity and the Peten region which contained uniquely impressive Mayan heritage.
 Costa Rica’s growth as an ecotourism hub rested on a co-creation by multiple actors,
including business. The country had a longstanding and well-functioning democracy, and
abolished its army in 1948 after a brief civil war. By the 1970s it had invested substantially in
health care systems and education, achieving the highest literacy rate in Latin America. The
country became an oasis of peace and stability at a time when Central America was otherwise
overrun by guerrilla conflicts, government-supported death squads, and ruthless gangs. If such
stability was a draw for tourists, whether green or not, the country was also open to foreigners
who wanted to buy businesses. There were no restrictions on foreign people or corporations
buying property, providing the potential to act as a host economy for expatriate, especially
American, investors and entrepreneurs. (Jones and Spadafora, 2017)
 These institutional factors favored all types of tourism, but some specific factors helped
ecotourism. Foundational work was performed by non-profit scientific organizations, which both
emphasized the country’s multiplicity of microclimates, its rainforests, cloud forests, and coastal
wildlife areas, and also brought the first groups of visitors from abroad, especially from the
22
United States. Scientists at the University of Costa Rica and various US-Costa Rican institutions
such as the Tropical Science Center, and the Organization for Tropical Studies promoted
biodiversity studies, conservation, and the creation of private forest reserves. Researchers from
abroad visited these establishments and promoted them by word of mouth; by 1976, such
“science tourism” generated an estimated $1 million in revenues. They also inspired Costa
Ricans, led by Mario Boza, to advocate for a national park system, which was established in
1969, funded by the national government and international philanthropic support. No lodges or
guided tours, and few visitors’ centers or trails, were made available anywhere by the park
service itself. (Jones and Spadafora, 2017)
 The parks became a significant draw for private tour companies, making it worth
investing to operate tours. Both expatriate and local Costa Rican entrepreneurs were active in
developing such businesses. They were motivated by a love of nature and/or ecological views:
given that the market was unproven and difficult at the beginning, this was not an activity likely
to attract people hungry for large profits. The pioneering entrepreneurs shared the view that forprofits businesses could help sustainability rather than disrupt it. (Jones and Spadafora, 2017)
 A pioneering tour company was Horizontes Nature Tours, founded in 1984 by Tamara
Budowski and Margarita Forero, both then aged twenty-four. Budowski was the daughter of a
prominent forest biologist whose work frequently took the family abroad for research in the wild.
Both Budowski and Forero broke with family expectations in order to work in the travel
business. They met at a college which offered a new degree program in tourism, Budowski later
studied marketing in Miami, where she was alerted to the problems of mass tourism
development. In Costa Rica, they struggled to get a conservation-oriented travel company
started. Lacking capital, they initially only secured an outbound-only license. They finally broke
23
through by making an alliance with Sergio Miranda, a family friend of Forero who was
beginning to develop the Marenco private reserve near Corcovado National Park, and who also
owned a hotel. This arrangement, and Miranda’s financial resources, allowed Budowski and
Forero to bring eco-tourist into the country, first by offering nature tours of the national parks to
the wholesale travel trade, primarily in the United States, in 1986. (Jones and Spadafora, 2017)
 Horizontes initially focused on group business from the United States and Canada by
creating tours for conservation and educational organizations. Such groups made up about 75%
of their business in 1992, at which time the firm had expanded to employ 28 full-time staff, a
majority of them women. It donated to numerous local causes, including the national zoo, as well
as scientific and conservation organizations, and offered a free training course to forty guides
working for other companies to improve their biological and ecological knowledge. Budowski
publicly asserted that environmental sensitivity and protecting nature from overdevelopment
were also good business. She was also firmly committed to the view that private business and
non-profit scientific organizations were the key to building the industry, largely in the face of
indifference from the government. (Jones and Spadafora, 2017)
 If tour companies like Horizontes were important in getting ecotourists to the country,
the creators of lodges and other forms of accommodation gave them somewhere to stay. Private
nature reserves were by now the main attraction. Serendipity played a large role in the
emergence of the first lodges. An early example was the Savegre Mountain Lodge. This
originated in 1954 when brothers Efraín and Federico Chacón, who worked on a coffee
plantation, got lost and ended up finding a beautiful location in the mountains. They returned
with their families and created a farm. Access was only possible on foot or horseback, and they
supported themselves through agriculture and selling cheese off the farm. Tourism started thanks
24
to Efraín introducing a few trout into the river, and it became a fishing destination. In 1971 the
first cabins were built for visitors. (Jones and Spadafora, 2017)
 It was at that time that the area was visited by two orchid-hunting Harvard botanists, who
happened to remark in print on the large population of birds known as resplendent quetzals.
These scientists and others, Efraín Chacón later recalled, “told [him] about how important it was
to keep the environment and also [he] saw some people’s interest in nature.” The quetzals proved
a huge attraction. In 1982 faculty and students from Southern Nazarene University in Oklahoma
began visiting the area. Eight years later they created a field station to enable longer visits. In
time, ecotourism reshaped the family’s business. In the mid-1980s they shut down their cattle
farming. (Jones and Spadafora, 2017)
 The Costa Rican ecotourism industry came to benefit from strong clustering, as the
entire country grew as a green brand. This lowered entry barriers for new ventures, which could
focus on establishing the credibility of their own firms; the argument and the infrastructure were
by now in place to support tourism. By 2000 sixteen airlines had service to San Jose airport.
Tourism became Costa Rica’s principal source of foreign exchange in 1993, surpassing bananas.
The category was estimated to employ ten percent of Costa Ricans in 2000, many in rural areas.
A virtuous circle of investment, ecological education, and sound environmental policies drove
the recovery of Costa Rica’s forests, which had been restored to cover more than 40% of the
country’s land area by 2002.
 Trade-offs, however, were also apparent. Even the most environmentally sensitive
international tourists arrived chiefly by fossil-fuel-burning jets. And even so-called “soft” nature
tourists seek comfortable accommodations. Many who traveled to Costa Rica because it had
become fashionable and had little interest in nature beyond beaches. These new types of
25
consumer created opportunities for boutique hotels and luxury eco-lodges, but as the expansion
of the Internet in the 1990s opened up new travel booking options, the challenge for such
businesses was to remain committed to sustainability. Although ego-tourists were often quite
affluent, they more often as not used internet comparison shopping sites, which focused
primarily on price. During the early 2000s, Tamara Budowski took the real lack of interest of the
new eco-tourists, the building of more and more golf courses, the polluting practices of cruise
ships and the commercialized killing of sharks and other animals in Costa Rica as a sign that,
“despite all the efforts,” ecotourism “wasn’t working.” She continued to run her business until
2008, but found herself troubled by it and retired to seek new horizons in esoteric religion and
the global eco-village movement. (Jones and Spadafora, 2017)
Conclusions
 Modern capitalism since the nineteenth century has created much wealth, but at the cost
of massive ecological destruction, which has been particularly severe in Latin America. During
the first global economy considerable wealth was created from the exploitation of natural
resources for (primarily) the land-owning elite in Latin America, at the cost of large-scale
destruction of the natural environment. During the Great Reversal, strategies to “catch up”
resulted, among other things, in the proliferation of hydro-electric schemes which caused further
environmental damage co-created by both governments and business. In the new global
economy, renewed economic growth and consumerism has resulted in mountains of waste in
increasingly polluted cities. Biodiversity and the natural environment have been challenged
across the subcontinent. However there were some interesting positives as these ecological
horrors also created opportunities for a cohort of green businesses across sectors ranging from
beauty and health to eco-tourism.
26
 It was never going to be easy to protect the natural environment in a sub-continent
which has been characterized since the nineteenth century by fragile and often corrupt
governments, high levels of poverty and inequality, macro-economic instability, and closely-held
business groups heavily invested in preserving family wealth. It was evident in the twenty first
century that both business and governments needed to address sustainability issues far more
seriously, before a point of no return was reached.
Acknowledgments
I would like to thank the participants of the Business History in Latin America Workshop, held
at the Universidad del Pacifico, Lima, Peru, March 16-17 2018 for many helpful comments on a
previous draft. I would also like to thank the Division of Research and Faculty Development at
the Harvard Business School for funding the research on which this Working Paper is based.
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