IntroductionSituating the LATAM ESOP into the project objectives
The "LATAM ESOP Viability Study" is a Report prepared as part of the ADELANTE2 Initiative "New Frontiers for Employee Ownership in Latin America". The initiative seeks to strengthen the capacity of strategic actors in Argentina, Colombia, Mexico, and Peru to advance the United Nation (UN)'s Sustainable Development Goals (SDGs) related to economic growth, reduction of poverty and inequality through the promotion of broad-based employee ownership. This effort involves collaboration between academic institutions, business representative organizations, non-profit organizations, and more. Drawing on France's rich experience with employee ownership (EO) and the innovative European ESOP model introduced in Slovenia, the initiative aims to adapt and implement these practices in the LATAM context. Specifically, with the support of the Institute for Economic Democracy (IED), which has been pioneering the implementation of Employee Stock Ownership Plans (ESOPs) in the European Union (EU), the project aims to create a specialised ESOP model tailored to LATAM countries' unique legal and cultural environment. The output of the consultancy by IED is a comprehensive study that serves as a cornerstone for understanding and applying employee ownership principles to address key development challenges in LATAM countries, in line with the SDGs.
To achieve the Initiative's objectives and ensure the promoted employee ownership models are effective at advancing the UN's SDGs, certain criteria need to be met.
- Firstly, it is important that the promoted employee ownership models are broad-based and inclusiveas to prevent that financial and decision-making participation is be limited to well-paid employees alone. Only when the vast majority of employees participates, employee ownership can effectively promote the UN's SDGs.
- Secondly, to ensure socio-economic benefits, it is crucial that employee ownership is scaled substantially. As shown by international practice, this can be achieved by granting legislative, institutional, and advocacy support to models of employee ownership that are intuitive, easy to implement and that address widespread needs, such as that of business succession. Employee ownership is most effectively scaled up through employee ownership models which can be easily implemented in mature businesses through employee buyouts, and whose diffusion is not driven exclusively by newly established businesses.
- Finally, promoted employee ownership models need to be sustainable and designed to anchor ownership among active employees in the business. Disintegration of employee ownership should be actively prevented as to avoid speculative, short term-oriented practices.
The LATAM ESOP Viability Study defines the standards of inclusive, sustainable, and broad-based employee ownership and outlines a strategy for scaling up such kind of employee ownership in the LATAM context. The aim is to support and provide guidance to efforts to advance the UN's SDGs through institutional and legislative support of employee ownership.
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