Costa Rica: Leaders in Sustainable Productivity

By leveraging Sustainable Productivity as a way of doing business, Costa Rica has become home to world-leading multinationals, who are achieving true ROI and triple bottom line impact

When the term sustainability is mentioned, our mind automatically races to green-related, ecological subjects. However, even if the term does imply having nature and its safekeeping in mind, it is crucial to broaden this perspective. When discussing these questions, the conversation should revolve around a term that holds much more weight, depth, and importance, as well as many other areas: sustainable development. 

Sustainable development involves meeting the needs of the current generation, without sacrificing the capacity of future generations. The latter brings a much more comprehensive and holistic vision to the table, one that borders (and is often considered) as both a moral obligation and a universal objective for the world to accomplish.

Sustainable Productivity 
At the heart of the Americas, Costa Rica – a country that represents 0.03% of the world’s territory and yet holds 6% of the world’s biodiversity – has placed Sustainable Development at the top of its agenda for more than 60 years. Coordinated by the Ministry of National Planning and Economic Policy, the country is working towards the achievement of many of the UN’s Sustainable Development Goals (SDGs).

In 2016, as an immediate action after COP21, Costa Rica became the first nation to sign the national pact for the advancement of the SDGs, an agreement which involved a large consultation process with over 1,500 different entities. In 2017, just one year later, the country presented its first voluntary report, which included the structure and governance to be followed for the implementation of these SDGs at a national level. According to the latest report presented in 2020, 59% of the SDGs have shown a positive outcome.

 One of the main actors in executing this plan for SDGs is CINDE, the Costa Rican Investment Promotion Agency (IPA), which has implemented, measures and reports upon four of the UN’s goals: #4 Quality Education, #5 Gender Equality, #8 Decent Work and Economic Growth, and #9 Industry, Innovation, and Infrastructure. Rated the #1 investment promotion agency in the world on 4 consecutive occasions by the United Nations’ International Trade Centre, CINDE has even gone beyond the recognised concepts of sustainability and sustainable development, to forge a mindset of their own, called Sustainable Productivity. 

“Costa Rica’s commitment to sustainability is our flagship to develop the right conditions for multinational companies that are looking to invest with purpose,” says CINDE’s Managing Director Jorge Sequeira. To do so, sustainable productivity is built upon three large, symbiotic pillars: People (social sustainability), Planet (environmental sustainability), and Prosperity (economic sustainability). 

Costa Rica’s greatest resource
Knowing the value of its people, Costa Rica decided to abolish its army in 1948. It was declared that the budget allocated for this activity would be redirected towards education, health, and infrastructure. This mindset still influences the country’s decision making, as it invests 7.4% of its GDP in education, which is free, universal for girls and boys, and mandatory since 1870. Moreover, Costa Rica commits 14% of total government expenditure towards elementary, high school and post-high school education, nearly double the average 7.9% of OECD countries (OECD, 2019). This unique approach has reaped its benefits, as Costa Rica is the #1 Latin American Country in Workforce Skills and Quality Education according to the World Economic Forum’s 2019 Global Competitiveness Report. According to the same publication, the country is also #1 regarding Skills of Current and Future Workforce in Latin America as well as Digital Skills of the population.

Leading environmental sustainability 
When it comes to the planet, in 2021 Costa Rica became the recipient of the Earthshot Prize, in the Protect & Restore Nature category, by saving its once devastated forests, becoming the only country in the world to reverse deforestation: an astounding 59% of its territory is today covered by forests (World Bank, 2021). Founded by the Royal Foundation of the Duke and Duchess of Cambridge, these prizes aim to incentivise change and help repair the planet over the next ten years. Moreover, 26% of Costa Rica’s land is protected under schemes such as national parks, conservation schemes, and nature reserves. 

In 2019, Costa Rica was declared the world’s first Champion of the Earth, the highest environmental honour awarded by the United Nations, highlighting Costa Rica’s role in protecting nature and its commitment to ambitious policies to combat climate change, especially manifested in its National Decarbonization Plan, in line with the Paris Climate Agreement and the UN’s Sustainable Development Goals. The plan includes bold targets to significantly impact transportation, energy, waste, and land use; Costa Rica aims to achieve net-zero emissions by 2050, meaning it will produce no more emissions than it can offset.

Nearshoring multinationals
Multinational companies have seen the benefits of this unmatched, constantly updated human talent, as well as the country’s active role and commitment towards the care of its natural ecosystems. These factors, as well as the country’s Free Trade Zone Regime, have fuelled the decision-making process of multinational companies to continuously allocate more of their resources and business functions towards the country. The Costa Rican Free Trade Zone Regime comprises the set of incentives and benefits that give the establishing companies a much more favourable financial outlook to begin their operations, as well as to hit the ground running since they can quickly access the productive inputs they need, enhancing the possibility of reaching true ROI. 

This regime benefits not only the companies, but also Costa Rica. Promotion of exports, diversification of local products and services, an increase in the amount and complexity of productive linkages (43% of productive inputs used from multinational companies are bought from local Costa Rican companies by 11.00 different suppliers), and the adoption of new technologies and knowledge transfers are some of the benefits that cascade from this FDI. Above all, Costa Rica greatly benefits from the creation of quality employment, which improves the quality of life of its people. 

The establishment and reinvestment of multinational companies has resulted in an ecosystem of a different sort: a technology-enabled, integrated, and collaborative business ecosystem, one where multinational companies can thrive and innovate thanks to a dynamic mix of resources and capabilities where converging industries meet; in one word, prosperity (economic sustainability). Costa Rica is LATAM’s most sough-after nearshoring destination, home to over 350 multinational companies across a vast array of industries: corporate and business processes, creative industries, digital technologies, manufacturing, tourism infrastructure, wellbeing, and life sciences. Within these industries, the names of big players and leaders can be found; Intel, Amazon, Microsoft, Accenture, Boston Scientific, Roche, and Bayer, to name a few. These and other companies have reinvested in the country over several years, with expansions aimed at increasing their headcount, as well as adding more value-added processes to the initial functions they started out within the country. Following Costa Rica’s mindset to not grow at any costs, but to grow it in the best way possible, a large group of these companies have manifested their commitment towards economic, social, and governance (ESG) standards, as well as SDG’s. Examples of these companies include Boston Scientific, ICU Medical, Intel, McKinsey & Company, AstraZeneca, GlaxoSmithKline, Microsoft, Procter and Gamble, and Edwards LifeSciences.

Intel, for example, which today has over 2,400 employees in Costa Rica, has been a pioneer when it comes to environmental sustainability. In 2011, Intel’s Wellness Center became the first building in Costa Rica to become LEED certified, which stands for Leadership in Energy and Environmental Design, the most widely used green building rating system in the world. Today, Costa Rica has a staggering 72% of its industrial parks and multinational companies as LEED certified, which amounts to a total of 1 million square metres. Managed by the US Green Building Council, LEED certifications provide a framework for healthy, highly efficient and cost-saving green buildings and stands out as a global recognition in terms of sustainability. Moreover, in 2019, Intel was able to accomplish several feats still in environmental sustainability, as it reduced its greenhouse gases by 14.2% when compared to 2017. In that same year, the company was able to save 3,300 cubic meters of water, thanks to the installation of a dual water reuse system.

For social sustainability, Intel is focused on increasing gender diversity among its employees, as well as to the continuous upskilling of its Costa Rican workforce. For example, the company has implemented a series of programmes for collaborators that have physical, mental, intellectual, or sensory disabilities. Additionally, Intel’s STEM program was able to reach 7,000 students during 2019, which empowers boys and girls in this field of knowledge by introducing them to interactive, STEM-related educational content. An additional example of a company striving to implement SDG’s both environmentally and socially comes from Boston Scientific, one of the most thriving and innovative companies in Costa Rica’s Life Sciences sector. For example, to tackle climate change, the company achieved carbon neutrality in its Costa Rica operation back in 2016. Additionally, they also became ISO14001 (Environmental Management Systems) and ISO50001 (Energy Management Systems) certified. This served as an inspiration for its corporate leadership, which after taking the example from their Costa Rica operation, decided to set the goal for global carbon neutrality; The company aims to be using 100% of its electricity from renewable resources by 2024, and by 2027, the company expects that 90% of this renewable energy comes from multiple sources. Just by installing themselves in Costa Rica and plugging into the country’s energy grid, Boston Scientific (as well as the rest of multinational companies already established in the country) benefits from an energy grid 99% powered by renewable resources such as air, wind, water, sun, and geothermal.

Furthermore, Boston Scientific has also implemented programmes to impact people-related SDG’s. For example, their 3 Level Up 2023 program focuses on diversity, equity, and inclusion (DE&I), fostering the creation of environments where collaborators can feel valued and secure, enabling them to reach their maximum potential both in the company, as well as in their community. They also want to provide a safe and inclusive working environment for women in the organisation, which they have done so by attaining the INTEGR8 Gender Equality Certification, resulting in a 43% of female representation in managerial roles within their Operations Department. 

Planning and working towards goals, such as those described above, has positively affected the sense of belonging that the collaborators of Boston Scientific have towards the company: more than 92% of their employees claim that Boston Scientific is both socially and environmentally responsible. Also, 8 out of 10 of their employees in Costa Rica consider that Boston Scientific offers an inclusive working environment. Finally, 9 out of 10 affirm that they work in a company where they are treated in a fair way, regardless of their traits.

Seeing that these actions not only impact the economic wellbeing of the company, but many other areas, sustainable development is becoming increasingly adopted; July’s 2020 Report by the Governance and Accountability Institute states that 90% of the S&P500 companies presented sustainability reports in that same year, which is a large, upward variation, considering that only years before, in 2011, a mere 20% of the same group of companies did so.

For now, Costa Rica has been able to prove that sustainability is more than environmental sustainability (the most known one) and has gone beyond to show that to attain true triple bottom line impact, social sustainability and economic sustainability must also be considered, thus, resulting in a sustainable natural and corporate ecosystem,
one where companies can grow better, instead of at all costs.

For further information:
www.cinde.org