American company arrives in Brazil to, with a proprietary algorithm, carry out an ESG assessment of the supply chain of large companies, facilitate credit for small and medium-sized companies and connect green suppliers with financiers
A new supply chain financial and climate products solution arrives in Brazil. American fintech arara.io, born from the experience of foreign and Brazilian partners, arrives in the country with the aim of helping companies and their suppliers achieve their ESG goals, while connecting green and sustainable credits with financiers.
“We saw critical economic, environmental and corporate factors in our decision to open the first green supply chain finance fintech in Brazil,” says Felipe Gutterres, CEO and co-founder of arara.io. According to him, there is economic potential in Brazil, the great interest in climate change on the part of companies, civil society and the youth of Brazil. “And while Brazil has made substantial progress in the area of sustainability, there is also a lot of room for improvement – and therefore a place where we can make a significant difference,” he says.
To start operations in the country, the company invested more than 11 million reais, especially in technology, data analytics, marketing and people. The size of the addressable market is around 400 billion reais, and the platform’s objective is to move, in the first year, 3 billion reais and multiply this amount by 10, by the end of the third year of operation in Brazil.
This will be possible because, according to data from the World Bank, there is a financing gap for small and medium-sized companies in Brazil of 100 billion dollars, although the country is the largest market in Latin America. In addition, the financing modalities currently available do not address sustainability and climate issues in a relevant way, focusing only on the financial analysis of credit applicants.
“In this context, arara.io makes the connection between funders, previously registered on the platform, the anchor company and its various suppliers, based on strategic climate and ESG objectives and goals”, says Gutterres.
arara.io allows anchor companies and their suppliers to be analyzed based on their own taxonomy, and ranked by the ASE (Arara Sustainability Evaluation), which measures the climate and sustainable performance of the Supply chain and individually for each supplier.
The classification obtained by the suppliers can give them differentiated conditions for the anticipation of receivables, among other benefits, with lower rates through the group of financiers participating in the platform.
“We know that, of a company’s climate challenges, 30% are within its own structures, but 70% are in the supply. Without sustainable supply chains, companies do not thrive and their longevity is at risk. For this, it is necessary to assess ESG risks and encourage suppliers to evolve in this agenda. We also have to consider the ability to provide liquidity to suppliers, particularly small and medium-sized ones, and what we do is exactly that, we make the ESG assessment of supply chains fast, inexpensive and efficient.”
By Marina Filippe. Posted on 09/02/2022 07:00 am