Fundación Chile’s Redesign to Address a Post-pandemic Sustainable Recovery

• The three crises – social, economic, and sanitary – led the entity to focus on medium and long terms as well as in other countries. In line with this, it seeks to play a key role in the green hydrogen industry, pushing for job retraining and evaluating the creation of three new investment funds.

• This interview was published by Diario Financiero on August 17, 2020.

At the outbreak of the health crisis, Fundación Chile (FCh) focused on carrying out initiatives to address the effects of the pandemic with the Colaboración y Vida initiative, focusing on older adults, health front-line, and students.

But soon after, they began to look at what some European Union countries, such as Germany, were doing to address post-pandemic economic recovery. It was concluded that these countries, in addition to dealing with the urgency, were working for the medium and long terms, investing in green hydrogen, digital infrastructure, 5G, and 6G networks, and in artificial intelligence or cyber security policies and initiatives.

This diagnosis, explains Marcos Kulka, CEO at Fundación Chile (FCh), led them to rethink the entity’s focal points and programs in the light of a sustainable and resilient economic reactivation.

In a sort of ‘redesign’, they defined four areas: labor reconversion, education, start-ups, and Small and Medium Enterprises (SMEs) and Sustainability.

All of them under the umbrella of SER (for the accronym in Spanish for Social, Scale, and Speed), which implies aiming at the social problems, providing a greater scale to the initiatives, and progressing swiftly.Kulka states that the problems that FCh was aiming towards have been given much more emphasis as a result of these three crises.  In order to tackle the increasing unemployment, poverty, student desertion, and the fall of the Gross Domestic Product (GDP) estimated between 8% and 10%, ‘the initiatives cannot merely be small-scale, they must have a larger scale’, he says.

-In the case of entrepreneurship support, what does the re-design entail and how will FCh scale up?

-On the one hand, we are investing in startups that target the crisis, for example, in the Zippedi robot that sanitizes supermarkets, or in Citizen, sensors for the city, which have been instrumental in analyzing people’s mobility during the pandemic. But we also invested in Wheel the World, we wanted to give a strong message by investing, in the midst of the crisis, in a startup that addresses disability issues in tourism. The idea is that the startups we support will aim at this new vision of development and well-being. In the last three months we have invested US$ 1.5 million on four ventures. We are creating a CLIN II fund, which we hope to have complete by the end of the year, to start by January 2021.

In addition to CLIN II, do you plan to raise new investment funds for sustainable recovery?

-We aim to have at least two or three additional funds. There has been an increase in large companies’ investment, in corporate ventures (corporate risk investment), innovation companies are installing internal funds that allow them to connect with startups, which is what we did in CLIN with Engie, Entel, and Zoma Capital. The new funds have similar structures, where the idea is to include corporate ventures, since they have the resources, the challenges, and the distribution channels for solutions.

We are exploring a medium and long term reactivation fund for digitalization and circular economy together.

We are also exploring a green hydrogen fund, for infrastructure associated with new energies. Just as Fundación Chile did in the solar field, green hydrogen represents tremendous prospects for a third of the matrix running on this fuel in the future. And we are also exploring a development fund for cities that arises in the context of the social crisis. The resources are not currently available, but they are part of the larger scale redesign and focus on reactivation in the medium and long run. We are in conversations to raise the funds, but we cannot yet specify the amount or the possible partners.

Automation and Labor Reconversion

Is the pandemic forcing an accelerated retraining of the workforce?

-A very important part of the reactivation is the digital labor reconversion. If we previously had the risk of having to replace several jobs with automation, the pandemic has increased this risk.

The Covid accelerated the digital emphasis, what we once thought was going to happen in automation and digitalization, is much larger today. We estimate that the current shortage of workers with digital skills is of 5,000 people, but it must really be higher. We see a misalignment between people studying IT careers, which is mostly linear, and the increase in turnover in the digital industry, which is tripling. One of our main projects is the intelligent labor reconversion that we are currently seeing with Sofofa. If you combine artificial intelligence with the occupational profile databases, you can tell who to train to transform them into a digital position and give them a greater chance of employability.

Before defining new focuses, FCh was implementing the Digital Talent program with several participants. Any changes there?

Talento Digital  is a public-private program (to train and generate employment opportunities). In its redesign, we are envisioning short training programs, ranging from five to six months, but adequate enough to achieve a significant employability rate. Last year 1,500 people took them, 3,000 took them this year, and 40,000 have applied. We aim to reach 35,000 people with an associated cost of US$ 100 million so they can achieve employability in matters of the future. Originally, the goal was to retrain 16 thousand people in four years.

“We definitely want to be a major player in terms of green hydrogen”

-What role does Fundación Chile want to play in the development of green hydrogen in the country?

-The results of the Chilean Institute of Clean Technologies (Corfo and SQM Salar Agreement), where we are applying, are not yet available. The only way to move forward is with regulations, but through concrete projects. We are betting on projects or the structure of funds that are not exclusive. A thrust is needed to generate progress; it is exactly what happened with solar energy. The first projects we developed were the ones that somehow faced certain regulatory dilemmas, which led to progress.

Green hydrogen, especially due to the low cost of renewable energies that are put into the electrolysis process, can be seen as a reality for the first time. The security myths have been addressed, the Ministry of Energy has declared it and the roadmap for green hydrogen in Chile is being created. We definitely want to be a major player in terms of green hydrogen.

-The Fundación articulates the Water Scenarios 2030 initiative. What is coming up next in water in terms of resilient reactivation?

-We also want to give water a scale, not only regarding investment and infrastructure, but also concerning nature-based solutions, which involve less investment, are cost-effective, and protect a lot of resources, such as CO2 capture, greater water availability, and improving the quality of the resource or biodiversity.

The water problem is 44% management, and that has to do with institutionality. In the compendium of 200 solutions we developed, there are several that have to do with infrastructure, but there is an important part that has to do with natural ecosystems, with conservation, which are very efficient and many times more efficient in their implementation over time. The implementation of a reservoir can take 13 to 15 years, and these systems are faster. For instance, you have to improve the scale of water storage -in aquifers-, in reuse, in technified and autonomous irrigation.

There are different formulas. In the case of desalination, one proposal is to share infrastructure to reach small and medium sized mining. In the case of water, there are several possible solutions.

-What are you doing in mining?

-With mining we have different things, the open innovation platform in mining Expande and we recently launched with Alta Ley and Corfo the digital roadmap for mining. Now we are working on a challenge with BHP on a global scale to find solutions for tailings disposal and reusing parts of these wastes.

The mining industry is critical for us, it will be one of the key industries that will help us out of the crisis. Mining has been capable to maintain operational continuity and copper became a much more appreciated material during the pandemic due to its bactericidal properties. In addition, mining is taking an important step towards social value, which is one of the paradigms that we will have to address in the future, being it the new role of companies.

A Reset in 5 Areas

-Is a paradigm shift coming our way?

-It is part of this reset that the World Economic Forum talks about in five areas. The economic one – countries used to be measured only by GDP growth, and that metric does not suffice due to inequity or inequality; there will be changes in parameters to measure how countries grow with well-being.

There is a resetting in society with issues associated with the valuation of the self. A technological reset, which led us immediately to telework, but it is much broader than that. A geopolitical reset, how much will the local solutions be versus the global ones, and the role of the State and the private sector. And there is an environmental reset, Chile established important goals in the Nationally Determined Taxes) and carbon neutrality. The Davos conversations in January will aim at this reset. We are moving into a new era where there are tons of paradigm shifts. For example, there are several surveys that say 40% of people will continue to telework and that business travel will be reduced forever.

When in the Business Roundtable, where 200 of the world’s most important CEOs meet, it is said that the companies must play a role in society, there is a complete shift of paradigm. Today, large investment funds, such as Black Rock, do not invest in companies that are not environmentally friendly, that do not treat their employees fairly, or that do not treat society fairly.

Chile in general, from the private point of view, has been trying to connect with this. We are at a turning point.

  • 1.5 MILL

    The US invested in 4 startups in the last three months

  • 22 MILL

    The US has mobilized FCh to take on sustainability initiatives in 2020

  • 163

    businesses supported through ChileGlobal Ventures and Expande

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