New Entities Scale Better Through Angel Philanthropy

The opportunity and the challenge of scale are effectively the two sides of the development coin that social enterprises have to deal with, often against the backdrop of a complex socio-economic matrix. Shell Foundation’s quest for creating scale is based on the understanding that is fundamentally about “delivering cost-effective solutions that impact large number of beneficiaries in multiple locations in ways that are ultimately financially viable and self-sustaining”.

Shell Foundation’s Regional Director Anuradha Bhavnani speaking to Sustainability Outlook points out that the Foundation’s quest for scale has had encouraging results on the ground with partners such as Envirofit , Husk Power Systems, Embarq and Agrocel.A key condition for achieving scale, paradoxically, seems to be to find partners who are in the nascent stage of development rather than entities with an established track record.

According to Bhavnani, “We find it striking that in large instances where partnerships achieved scale and measurable impact, it has been with newly created entities that were using new business models that we had jointly developed. We do believe that Angel Philanthropy as a starting point of development change has significant potential to catalyze scalable solutions to global development challenges. For us, Angel Philanthropy is about investing in a new venture without a proven track record or documented impact but with a new business based concept, a new product in a new market which has the intrinsic goal of going to scale, achieving measurable social impact and becoming financially viable.”

With four programs running in India on Indoor air pollution, urban mobility, ethical trade and access to modern energy which address the country’s core development goals, Anuradha feels that the most important factor is to have partners who share an aligned vision on scale and sustainability.

Envirofit, a newly created entity, had a new product: Clean cook stoves. And it wanted to market it in India to counter lethal indoor air pollution that kills two million women and children each year in developing countries.

Anuradha feels that “Building sustainable enterprises that can effectively address development challenges takes time, patience and considerable investment. It involves huge risk to venture with new partners with a new product in new markets.”

There is, of course, the fine line between an enterprise based solution and commercial enterprises that are, for example, looking for fortunes at the bottom of the pyramid. Says Anuradha, “ Being enterprise based is about adopting a mindset and process of thinking rather than an expectation of delivering solely financial returns in a way typified by most commercial enterprises.”

Read the full conversation: “The Future of Supply Chain Management is Sustainability”

Enterprise Driven By Philanthropy

“The approach is market-based and we are looking at the poor person as a customer and not a beneficiary”. Shell Foundation Regional Director Anuradha Bhavnani’s observation sums up the approach that resulted from the transition that Shell Foundation made when it moved from supporting NGO run projects that tended to fall by the way side and moved to investing in businesses that provide enterprise-based solutions to poverty-linked issues.

Ahona Ghosh and Gauri Kamath of India’s Economic Times assess three organizations that have taken a marked based approach to philanthropy in a special feature on Philanthro-capitalism.

The thought is echoed by the Chairman of Naandi Foundation which is promoted by India’s three leading industrialists K Anji Reddy, Chairman of Drug maker Dr Reddy's; Anand Mahindra , Vice-Chairman and MD, Mahindra & Mahindra; and Rajendra Prasad Maganti,Chairman of infrastructure company Soma Enterprises. The three promoters along with DANONE.Communities have invested in Naandi Community Water Services (NCWS) to supply safe and affordable drinking water to Indian villages, at a nominal price. Says Reddy, “ To provide high quality safe drinking water and collect user fees from communities, one needs a team with an entrepreneurial outlook that is driven by passion, efficiency and the creation of an economic surplus."

Chairman of Piramal Group, Ajay Piramal, makes the point, “For-profit ventures give a greater push in getting more customers and delivering high-quality service at minimum costs."

According to Bhavnani, history has shown that results don't last with plain-vanilla charity, as "there are simply not enough grants available." So, the new approach to philanthropy for Shell is solving developmental issues through the creation of scalable, sustainable enterprise-based solutions. Shell Foundation India has committed $16 million to the eight enterprises it supports.

The report points out that as investors with business partners, Shell hopes to achieve its twin targets of scalability and profits, which will ensure sustainability in the long run as it means less reliance on continued grants and the end customer benefit from innovations that are required to deliver affordable goods and services.

This approach is evident in the investment in Envirofit and dealing with the challenges of marketing improved cook stoves to rural households. The challenges to scale in the case of enterprises seek to market products that combat indoor air pollution range from raising awareness to enabling financial options and ensuring distribution reach to the smallest and furthest villages.

Read the full feature on: A look at three models of philanthro-capitalism

Envirofit Among Finalists Of Sankalp Clean Energy Technology Awards

For Envirofit, being a finalist for Clean Energy Technology in the Sankalp Awards 2011 was yet another testimony to the difference that its stoves had begun making in rural India.

Over the years, the Envirofit stoves have become in a sense one of the symbols of the battle to bring a market-based solution to the challenge of Indoor Air Pollution.

Ever since 2007 when Envirofit started working with Shell Foundation in India to tackle the problem of Indoor Air Pollution, the challenge has been to put in the market a line of durable clean cookstoves which reduce emissions, improve fuel efficiency and reduce cooking time. The Envirofit stoves have done that and more, if market acceptance is a measure.

In the words of Harish Anchan, Managing Director of Envirofit India, “We are delighted that these cookstoves, which have been well received in rural India and have sold over 200,000 units, impacting the lives of an estimated one million people, are today being recognised by SANKALP as a significant contributor to dealing with a global challenge. The stoves sold are predicted to save over US $30 million for India’s lowest-income consumers through fuel-saving over their lifetime. The recognition of the effectiveness of the stove will also help take the product to a wider audience.”

Anuradha Bhavnani, Regional Director of the Shell Foundation, said: “There are an estimated 1.9 million deaths per year due to the toxic fumes created when people cook on open fires or use inefficient stoves in poorly ventilated homes. Over the past four years, Envirofit has successfully scaled up its model of creating a market for improved cookstoves in India and the African continent. We are working with Envirofit India in all three areas of building distribution, awareness and affordability. This is being achieved by engaging rural entrepreneur networks, microfinance institutions and by running awareness campaigns.”

Envirofit cookstoves reduce toxic emissions by almost 80% while using 50% less fuel and reducing cooking time by 40%. Envirofit utilizes rigorous product-development methodology and protocols used in modern industry to develop and commercialize energy-efficient, pollution-reducing technologies that have the greatest potential positive impact on global environmental, economic, and public health issues. Envirofit India’s enterprise-based model has created over 500 local jobs and supported enterprise development through the growth of its 400-strong network of manufacturing, sales and distribution partners.

In 2011, Envirofit will complete the registration of the Voluntary Carbon Programme developed in conjunction with Eco-Securities, making it the first stoves carbon programme of its kind in India. This will allow Envirofit to reduce the consumer price or reinvest funds in addressing some of the key market barriers and, as market growth continues, Envirofit will shift further towards localised assembly and manufacture in India so as to continue efforts to lower end-user costs.

Read the full story on:  Envirofit Makes It To Finals Of Sankalp Awards 2011 On Clean Energy Technology

Julia Roberts To Star In Saving Lives In Rural Kitchens

The Pretty Woman is getting her hands dirty and for a good cause. The Global Alliance for Clean Cookstoves has announced that Academy Award winning actor Julia Roberts will serve as Global Ambassador, helping to bring attention to the deadly smoke from unsafe and inefficient cookstoves. 

According to a GACC Press Release, Julia Roberts will help raise awareness about the millions of people who face health effects, accidents or death in developing countries due to the reliance on traditional cookstoves and open fires that use wood, coal, charcoal, or animal waste for fuel. 

“Nearly 2 million people around the world – mostly women and children – die each year from an activity that many of us take for granted: cooking for our families,” Roberts is quoted as saying.

United Nations Foundation President Timothy E. Wirth.

Cookstove smoke contributes to a range of chronic illnesses and acute health impacts such as early childhood pneumonia, emphysema, lung cancer, bronchitis, cardiovascular disease and low birth weight.  The smoke from inefficient stoves continues to contribute to global climate change by producing harmful greenhouse gas emissions such as carbon dioxide and methane, and aerosols such as black carbon.  Reliance on biomass for cooking and heating also increases pressure on local natural resources and forces women and children to spend many hours each week collecting fire wood – an especially dangerous task for women and girls in refugee camps and conflict zones.

UNEP-WMO Study Says Tackling Black Carbon And Ozone Can Retard Global Warming

A study by UNEP and the World Meteorological Organization (WMO) states that reducing black carbon and tropospheric ozone will slow the rate of climate change within the first half of this century. According to the study, “Integrated Assessment of Black Carbon and Tropospheric Ozone”,  scientific evidence and new analysis demonstrate that control of black carbon particles and tropospheric ozone, by quickly implementing emission reduction measures, would have immediate and multiple benefits.

The report is quick to caution that this does not by any measure mean letting CO2 off the hook. On the contrary, the success of CO2 containing measures is likely to encourage additional activities to address the short term impact of black carbon and tropospheric ozone.

The issue of black carbon and the significance of its impact on the climate has been identified but little understood till date. In the absence of definitive research, the impact of reduced soot on climate change has not been well understood.

Now, the UNEP-WMO study claims that reducing emissions by fully implementing identified measures would have immediate impacts on climate change including reducing future global warming by 0.5˚C. Further, it would have substantial benefits in the Arctic,the Himalayas and other glaciated and snow-covered regions.

Indeed, the report contends that the measures of reducing emissions could reduce warming in the Arctic in the next 30 years by about two-thirds compared to the reference scenario, with all the associated lowering of risk of changes in weather patterns and increase in global warming.

The measures that would reduce black carbon emissions range from installing diesel particle filters for road and off-road vehicles to elimination of high-emitting vehicles in road and off-road transport. The UNEP-WMO report lists a series of measures in the residential space including replacing coal by coal briquettes in cooking and heating stoves, introduction of pellet stoves and boilers, using fuel made from recycled wood waste or sawdust to replace current wood-burning technologies in the residential sector in industrialized countries and the introduction of clean-burning biomass stoves for cooking and heating in developing countries.

The report recommends substitution of clean-burning cookstoves using modern fuels for traditional biomass cookstoves in developing countries, replacement of traditional brick kilns with vertical shaft kilns and Hoffman kilns and replacement of traditional coke ovens with modern recovery ovens.

Photo Courtesy: Global Alliance For Clean Cookstoves

Sustainable Energy Access for Africa: Cleaning Up Homes And Climate

Focusing on Energy Access as a means of delivering health benefits for millions is also increasingly being seen as a way of combating the challenge of climate change. Initiatives such as the Energy for All 2030 Project, an EU-wide initiative for more and better funding for energy access projects in Sub Saharan Africa, is now part of a broader trend of trans-national initiatives that not only develop strategies but also drive action on the ground.

Swedish researchers from the Stockholm Environment Institute (SEI) in Stockholm, Sweden, Fiona Lambe and Patricia Tella, say the Institute is playing a leading role in highlighting the issues for Swedish and European Policy makers. They are working to create a platform for dialogue between African and European civil society as well advocating more policy focus and financing at the EU level for the goal of universal energy access.

According to the authors, “Supporting developing countries to scale-up access to sustainable energy for cooking will not only bring positive effects for climate change; it will improve the health and economy of the world's most vulnerable households. What's more, the cost of achieving universal energy access in the coming decades is surprisingly low.”

The initiatives on Energy access are focused on developing viable alternatives in critical areas such as improved cook stoves that can make a significant difference.

Indoor Air Pollution and the impact of soot from cook stoves on the climate are both issues that have a ready solution in improved cook stoves.

The researchers point to the success of the ethanol fuelled “CleanCook” stove, originally Swedish technology, in Ethiopia. Ethiopian NGO, Gaia Association has pilot tested these stoves in households in Addis Ababa and in a number of refugee camps with very positive results. Commercial distribution of stoves will start soon as Ethiopian households have shown readiness to switch completely to ethanol.

A study by Bailis, Ezzati and Kammen says that without systematic changes, household biomass use will result in an estimated 8.1 million Lower Respiratory Infection (LRI) deaths among young children in sub-Saharan Africa alone between 2000 and 2030.

The projected number of people who use traditional biomass as wood and manure would rise from 2.7 billion today to 2.8 billion in 2030 (according to International Energy Agency (IEA) and reported by InDepthNews) and this, will only exacerbate the situation even further.

IAP causes health hazards on one hand and on the other is afflicting climate change. Black carbon or soot from stoves is thought to be the second biggest contributor to global warming after CO2.

Read the full story on: Sustainable energy access for Africa: a win-win solution for climate and development
Photo Courtesy: Project Gaia

Organisations Join Hands Across Borders To Encourage Clean Cookstoves

Concerted action on the ground is enabling global players in the improved cook stoves space to propagate awareness of the issues associated with Indoor Air Pollution. It also means they increasingly tap into local communities to better understand behaviour, cooking methods, fuel economics and challenges of access and affordability.

From Africa to Asia, international organisations, alliances, regional and local experts and institutes, along with global and local research entities, are joining hands to transfer knowledge and technology. They also gain valuable experience on the ground that they can then take back to their labs for further analysis and a view to solving the holy grail of cook stoves – how to create quality product that sell for less than $10.

One such recent effort was in Vientiane where 34 experts, academics and entrepreneurs from around the region got together to discuss and test cleaner, more efficient cookstoves.

The Stove Design & Testing Workshop, the first of its kind in Lao PDR, bought together participants from Laos, Cambodia, Vietnam, and Thailand, as well as trainers from Aprovecho Research Center.  The workshop was organised by SNV and the Lao Institute for Renewable Energy (LIRE) and funded by USAID and US EPA as part of their innovative Lower Mekong Initiative (LMI).

The Vientiane workshop helped build networks between major regional stakeholders working on combating indoor air pollution through deployment of improved cook stoves. The workshop also sought to set the ball rolling on a process that is expected to eventually lead to the distribution of half a million stoves over the next eight years, impacting the lives of at least two million people in Laos. Participants shared methods to design, evaluate, and commercialize improved-stoves that use less fuel and produce less smoke.

Such congregations take on added meaning when the national governments are themselves key players in finding solutions. In the Lower Mekong Regional, governments and NGOs are actively invested in efficient cookstove project.

According to WHO estimates, there are over 6,000 premature deaths in Laos every year due to the use by 69 per cent of rural Lao people of wood and charcoal. According to a WWF study, 70 per cent of Lao’s greenhouse gas emissions are a result of deforestation.

Read the full story on: Recipe for Success: Improving Cook Stoves in Lao PDR  and                               U.S. Embassy Supports First Clean Cookstove Workshop in Laos

Raising Cook Stove Awareness And Funding On Facebook

In the words of Lisa P. Jackson, Administrator of the Environmental Protection Agency (EPA), clean cookstoves in the developing world is a women's issue, a childrens' issue, and an economic issue. As this significantly affects the lives of the women and children, who sit near cooking hearths for hours together and risk their lives, International Women’s Day seemed to be the perfect day for Entrepreneurs of the World to raise money for clean cookstoves by reaching out to people on Facebook.

Where Burkina Faso would possibly be just another country on the map of Africa to remember from school room days, it became for Facebook users a place where they could make a difference to the lives of women and children by donating a small sum.

The Foundation L’Occitane in partnership with Entrepreneurs of the World - Burkina Faso (EoW – BF) raised funds through Facebook with the operation “1 fan = 1 € ” between March 8 and March 16.

The operation collected € 6976 which EoW-BF used to fund training of 1380 women in Burkina Faso on forest preservation. These funds were also used to subsidize 50 per cent of the cost of improved cook stoves.

According to Armel, Social Business Manager at Entrepreneurs du Monde in Burkina Faso, “In 2010, over 70 bricklayers were trained by GIZ to build 3-stone improved cook stoves. This stove helps fight deforestation, while respecting local customs and the health of its users.”

EoW-BF actively uses medium of mass communication and social networking sites to not only raise awareness but to invite participation for their cookstove initiative in Burkina Faso.

Radio as a medium has higher number of audience in women owing to their routine, where they listen to radio programmes while attending to their house chores. EoW-BF has intelligently used this medium to raise consciousness on one of the hard pressing global issues of smoke in the kitchen and its consequent hazards.

Entrepreneurs of the World is working in nine countries presently and supports micro-entrepreneurial initiatives with five different tools.

"We Need More People Playing That High-Risk Angel Investor Role To Crack Development Problems"

At the core of the Shell Foundation’s enterprise solutions to poverty lies the belief that if you treat the poor as consumers and deliver the goods that the consumer wants, you are more likely to deliver sustainable and scalable solutions. After all, for any set of solutions to development issues, the alternative is to have an inexhaustible source of funds that will support it.

This basic philosophy was outlined in an interview of Chris West, Director, Shell Foundation to Sukalp Sharma of the Financial Express during his recent visit to India. According to Chris, Shell Foundation acts like an angel investor at a very early stage for social entrepreneurs. However, he believes that is more than money that counts in this stage of development of the enterprises.

According to Chris West, 

           “What we are trying to do with this enterprise approach is to show that working  like a business in tackling development issues is a more scalable and sustainable approach to solve problems of energy access. The conventional model has been one of ease on both sides. It's easy for people to write a cheque and it's easy for people to ask for only money.We need more people playing that high-risk angel investor role to crack these problems.”

Chris also believes that Shell Foundation stays close to Shell’s core activities by tackling global development challenges related to industry as it can leverage resources of Shell in the areas of its domain expertise.

Read the full interview in the Financial Express.

Shell Foundation’s Enterprise Based Solutions: A New Approach To Indian Development Challenges

Shell Foundation’s recent elucidation of its approach to development challenges by building scalable and sustainable enterprises argued that that such enterprises could be built only after investing in core capacity and systems. Equally, such enterprises required more than grant finance to become sustainable: They needed business advice, market access and governance support.

While this basic approach has been tested out in many parts of the world, as outlined in the “Enterprise Solutions to Scale Report”, the touchstone for Shell Foundation could well be its activities in India where new business models were tried out, a slew of programs underwent gestation and where the Foundation had both a fertile entrepreneurial context and a complex matrix of economic challenges.

On the occasion of a Round Table on “Maximizing Impact through Enterprise Development Solutions”, Shell Foundation released the Country study on the Scale Report, titled “Shell Foundation in India: From Traditional Philanthropy to  ‘enterprise-based' solutions".

India has been the single largest country recipient of Shell Foundation investment to date. Says the report, “The country presents a sea of opportunities fueled by the same size and dynamism that make its development journey complex. What has been referred to as ‘India’s urban awakening’ and the growth of India’s rural consumer market are just two examples: recent figures suggest that there will be 700 million new residents in Indian cities by 2050. Such trends present both challenges and opportunities to our own partners in India.”

The country report makes the point that the success that Shell Foundation has had in building scalable partnerships has resulted in creating new business models and a new approach to the Indian development challenges.

One such partner profiled in the report is Envirofit India which is addressing the greatest energy poverty issue that challenges India: inefficient stoves in poorly ventilated homes that lead to premature deaths of over 500,000 women and children in India. Shell Foundation has worked with Envirofit to develop a viable business model and establish distribution and sales networks for a durable clean cookstove.

In 2011, Envirofit will complete the registration of its Voluntary Carbon Programme developed in conjunction with Eco-Securities, making it the first stoves carbon programme of its kind in India. This development will enable Envirofit to reduce the consumer price or reinvest funds in addressing some of the key market barriers by building local assembly and manufacturing capacity.