Realizing Environmental Sustainability and Resilience to Climate Change in Developing Countries by IDEX Insights & Fellow Publications

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

1 Introduction ................................................................................................................................................................. 1 2 CHALLENGES FACED BY DEVELOPING COUNTRIES ................................................................................. 1 2.1 Environmental Sustainability ...................................................................................................................................... 1 2.2 Resilience to Climate Change ........................................................................................................................................ 3 3 Role Played by Conventional Industries ........................................................................................................... 4 4 Role Played by Social Enterprises ....................................................................................................................... 5 4.1 In Ensuring Environmental Sustainability and Resilience to Climate Change ....................................... 5 4.1.1 Case Study: Sampurn(e)arth Environment Solutions , Mumbai. .......................................................... 6 4.1.2 Case Study: Kilimo Salama, Kenya. ................................................................................................................ 11 5 Systemic Challenges faced by Social Enterprises ....................................................................................... 16 5.1 Finance ............................................................................................................................................................................... 16 5.2 Market ................................................................................................................................................................................. 16 5.3 Legal Status ...................................................................................................................................................................... 17 6 Recommendations ................................................................................................................................................... 18 6.1 To Government and Regulators ................................................................................................................................ 18 6.2 To Support Organisations ........................................................................................................................................... 18

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

Abbreviations and Acronyms ASAL

Arid and Semi-‐Arid Lands

CO2

Carbon dioxide

CSR

Corporate Social Responsibility

DEFRA

Department for Environment, Food and Rural Affairs

ESRC

Economic and Social Research Council

FAO

Food and Agriculture Organisation

GCMs

Global Climate Models

GoK

Government of Kenya

HFCs

Hydrofluorocarbons

IPCC

Intergovernmental Panel on Climate Change

Ksh

Kenya Shillings

MFIs

Microfinance Institutions

MH4

Methane

M-‐Pesa

Mobile Money Service

MSW

Municipal Solid Waste

N2O

Nitrous dioxide

NGOs

Non Governmental Organisations

ODI

Overseas Development Institute

PBL

Planbureau voor De Leefomgeving

PPP

Public-‐Private Partnership

SEs

Social Enterprises

SESP

Social Enterprise Strategic Partnership

SFSA

Syngenta Foundation for Sustainable Agriculture

SLCP

Short Lived Climate Pollutants

SMEs

Small and Medium Enterprises

SWM

Solid Waste Management

TSCR

Third Sector Research Centre

USAID

U.S. Agency for International Development

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

Units of Measure: Kg

Kilogram

Km2

Square Kilometre

Millimetre

Metric Tonnes

List of Figures: Figure 1: Sampurn(e)arth Zero Waste Model .................................................................................................. 7 Figure 2: Sampurn(e)arth Outcome and Impact of Services……………………………………………….10 Figure 3: Agricultural Challenges Addressed by SEs based in Kenya…………………………………..12 Figure 4: Kilimo Salama Purchase Process………………………………………………………………………..14

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

Foreword Low-‐income countries will remain on the frontline of human-‐induced climate change over the next century, experiencing gradual sea-‐level rises, stronger cyclones, warmer days and nights, more unpredictable rains, and larger and longer heat-‐waves, according to the most thorough assessment of the issue yet. A paper outlining the scale of impact that the social enterprise sector has had on ensuring sustainability and its continued potential will garner support for the space and ensure a re-‐ examination of the resources, support and structures that are in place to underpin its development. There are, for example, issues around taxation, finance and legal structures that must be addressed by governments and funding bodies alike. By creating the environment where people can access support and capital and draw on the expertise and experiences of others, we can create a new generation of social entrepreneurs, individuals who are looking for value driven careers and who recognise that economic growth must be environmentally sustainable and contribute to wide objectives of social well-‐being.

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

1 Introduction

Today more than ever developing countries need international assistance to support adaptation in the context of national planning for sustainable development, more capacity-‐building and transfer of technology and funds. This though being true, is there a significant role that social enterprises are playing or can play in poverty alleviation and environmental conservation and for that reason should be assisted and availed the various tools to anchor themselves in their respective industries, this is the question that this white paper tries to answer. This paper will demonstrate that the breakthrough ideas and practicable solutions offered by social enterprises are the means to ensuring not only environmental sustainability but are essential to developing able profound impact with regard to resilience to climate change. The basis of this paper will be to draw compassion on the efforts made by governments, non-‐profit national and international organisations and private companies with those of the social enterprise sector and determine whether its impact is capable of measuring up to those of conventional methods in a social and financial sense as well as environmentally. Supporting examples will be drawn from laudable enterprises and models that have been successfully implemented.

2 CHALLENGES FACED BY DEVELOPING COUNTRIES

2.1 Environmental Sustainability Rising fossil fuel burning and land use changes have emitted, and are continuing to emit, increasing quantities of greenhouse gases into the Earth’s atmosphere. These greenhouse gases include carbon dioxide (CO2), methane (CH4) and nitrogen dioxide (N2O), and a rise in these gases has caused a rise in the amount of heat from the sun withheld in the Earth’s atmosphere, heat that would normally be radiated back into space. This increase in heat has led to the greenhouse effect, resulting in climate change. Developing countries are the most vulnerable to climate change impacts because they have fewer resources to adapt: socially, technologically and financially. Climate change is anticipated to have far reaching effects on the sustainable development of developing countries. 1 This being the case though a growing number of studies are showing that developing nations are not fighting environmental degradation from external factors but also the environmental pollution that occurs within their borders especially in densely populated urban areas and their surrounding slums, contributes to the deaths and disabilities of millions of people annually. Generally, these pollution problems are ones for which the developed world has already found solutions. However, missing all too often in developing countries are not only the resources to come

UNFCC (2007) Climate Change: Impacts, Vulnerabilities and Adaptation in Developing Countries

Blacksmith Institute. The Hidden Tragedy: Pollution in the Developing 1 World 2

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

up with practical solutions, but also the necessary political and legal infrastructure to support these solutions, and the community involvement required to make them sustainable at a social level. 2 20% of the total burden of disease in the developing world is due to environmental pollution. 3 Municipal solid waste landfills are the third largest source of global methane emissions, and open garbage burning emits black carbon and other air toxics as well as greenhouse gases.4 According to a report compiled by the European Commission, Netherlands Environmental Assessment Agency (PBL), and the research group Ecofys, cumulative emissions from developing countries will rise from 48% of the total in 2010 to 51% by the end of the decade.5 This study found that developing economies as a whole, led by China and India have surpassed the emissions totals of the developed markets, with combined carbon emissions of about 19.2 billion metric tonnes last year compared with 13.4 billion in the industrialized world. Hardest hit by climate change, developing countries should more than anybody recognize the need for environmental consciousness. The citizens of emerging economies and developing countries are living in times of unprecedented economic growth, rising aspirations and rapidly changing lifestyles which are raising the expectations on public health and quality of life. 6 Remediation and recovery of misused resources is in turn expected but when not met will result in poor living standards as has become today’s case with solid waste management. ‘Waste Management’ of the modern society is a model of ‘end of the pipe treatment’ rather than an integral part of our developmental quintessential. Today’s development index relates to consumption patterns of energy, food, water and commodities ignoring the waste generation index and its consequent backlash. 7 With sufficient spending ability, the standard of living in an urban setup also has undergone fundamental and dramatic change in various spheres like transportation, infrastructure, communication and entertainment and also in consumption of goods for comfort. However, waste management in all these sectors has failed to be mainstreamed as an integral part of this very transformation. 8 Waste Management is closely related to climate change, now referred to as ‘ the defining challenge of 21st century’ because the environmental impact of Short Lived Climate Pollutants (SLCPs) like methane, hydrofluorocarbons (HFCs) and black carbon generated and released from waste contribute significantly to global warming. Their reduced emission will provide much needed early relief from the adverse impact of climate change. Compelling scientific evidence indicates the importance of fast global action to reduce emission of SLCPs can help slow global warming by up to 0.5 ̊C between 2010 and 2050, thus contributing to staying within the 2 ̊C target in the near term if complemented by deep and persistent

2 3

Blacksmith Institute. The Hidden Tragedy: Pollution in the Developing World Blacksmith Institute. The Hidden Tragedy: Pollution in the Developing World

CCAC (November 2012). Fact Sheet: Solid Municipal Waste Management Elzen M. et al. (November 2010) ‘The Emissions Gap Report Are the Copenhagen Accord Pledges Sufficient to Limit Global Warming to 2° C or 1.5° C? A Preliminary Assessment’ UNEP. 6 Annepu R. (January, 2012). ‘Sustainable Solid Waste Management in India’: Waste-‐to-‐Energy Research and Technology Council (WTERT). 7 Shende et al. ( September 2014) ‘ Municipal Solid Waste : Challenges in Transforming Waste into Potential Resource for the Sustainable Society ‘ A Policy Paper. 8 Shende et al. ( September 2014) ‘ Municipal Solid Waste : Challenges in Transforming Waste into Potential Resource for the Sustainable Society ‘ A Policy Paper. 4 5

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

carbon dioxide emission reduction measures. 9

2.2 Resilience to Climate Change

The Intergovernmental Panel on Climate Change (IPCC) Working Group’s Fifth Report; Climate Change 2001: impacts, adaptation, and vulnerability, predicts an average global temperature increase of 1-‐ 3.5oC over the next 100 years. Taken by itself this small aggregate temperature change has little meaning, however there is general concern over how climate change will affect the frequency of extreme weather events and how particular regions will be drastically affected by even small temperature increases. 10 It is known that both temperature increases and precipitation changes will vary from region to region, affecting higher and lower latitudes differently. Due to these differential effects, developing countries are likely to suffer more from the economic impacts of climate change, as well as being the least able to adapt to new climatic conditions.11 Changes will be brought about with regard to the incidence of natural disasters such as droughts and floods, agricultural production, fisheries and marine life, water resource availability, industry and human health. These are all expected to increase the disparity in wealth between the developed and developing world and redistributive impacts are one of the major reasons for concern about the climate change phenomena as expressed by the IPCC in its 2001 report. 12 One of the most severe manners in which climate change has affected the livelihood of the most vulnerable populations within developing countries is its impact on food security. Climate change may affect agriculture through: •

Changes in temperature and precipitation,

•

Changes in soil moisture and soil fertility,

•

Changes in the length of growing season and

•

An increased probability of extreme climatic conditions (as dealt with above) Global Climate Models (GCMs) predict that aggregate changes in world food production are likely to be small. 13 However there is general agreement that climate change may lead to significant reductions in agricultural productivity in developing countries.

Water availability is a key component of food security, given the reliability of water supplies is perhaps the single most important factor in food production. In general climate change is expected to lead to more precipitation but much of this increased wetness may not end up where it is most needed. Arid and semi-‐arid regions are likely to suffer even more reduced rainfall and increased evaporation. In this respect, climate change is an added risk to these regions which have already been

Akimoto. H., et al. (2011) Integrated Assessment of Black Carbon and Tropospheric Ozone. UNEP/WMO. McGuigan et al. (May 2002) Poverty and Climate Change: Assessing Impacts in Developing Countries and the Initiatives of the International Community. London School of Economics Consultancy Project for The Overseas Development Institute. 11 McGuigan et al. (May 2002) Poverty and Climate Change: Assessing Impacts in Developing Countries and the Initiatives of the International Community. London School of Economics Consultancy Project for The Overseas Development Institute. 12 McGuigan et al. (May 2002) Poverty and Climate Change: Assessing Impacts in Developing Countries and the Initiatives of the International Community. London School of Economics Consultancy Project for The Overseas Development Institute. 13 IPCC (2001) Working Group II, Climate Change 2001: Impacts, Adaptation and Vulnerability, contribution of Working Group II to the 3rd Assessment Report of the IPCC, Cambridge University Press, New York. 9

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

undergoing a process of increased desertification and land degradation, caused both by over-‐ exploitation and inappropriate land-‐use as well as general climatic variations.14 The agricultural population in Africa stands at 530 million people, and is expected to exceed 580 million by 2020. The population relying on agriculture accounts for 48% of the total African population (almost 70% in East Africa). 15 Between 1980 and 2011, Africa’s agricultural population grew by 63 %.16 Already a continent under pressure from climate stresses, Africa is highly vulnerable to the impacts of climate change. Many factors contribute and compound the impacts of current climate variability in Africa and will have negative effects on the continent’s ability to cope with climate change. These include poverty, illiteracy and lack of skills, weak institutions, limited infrastructure, lack of technology and information, low levels of primary education and health care, poor access to resources, low management capabilities and armed conflicts. The overexploitation of land resources including forests, increases in population, desertification and land degradation pose additional threats .17

3 Role Played by Conventional Industries Social enterprises (SEs) play a vitally important role within society when it comes to mapping a path towards a more environmentally sustainable society and economy. However it is a role that, if not entirely overlooked, is frequently under-‐appreciated. This may reflect the presence of the word “social” in their title, or the long tradition of work-‐integration enterprises across making a very specifically social contribution. 18 SEs have emerged from a convergence between the non-‐profit and the for-‐profit sphere. Within the last few decades Non-‐governmental Organisations (NGOs) have proliferated, competition among NGOs has become fierce, and a “rising tide of commercialization” has begun. At the same time, companies are increasingly held responsible and accountable for their actions by governments, activists, and the media and, therefore, adopt comprehensive corporate social responsibility (CSR) strategies. It has been argued that unless the CSR strategy is incorporated into the core strategy of the firm it does not lead to increased value, neither for the firm nor for the local community. It has also been argued that companies could learn much from NGOs. 19 An SE combines the social orientation and objectives of NGOs with the market-‐driven practices of businesses. It does not do social good as an image improving part of its business or regard it as a means to increase sales. Rather it pursues social objectives and uses business approaches to do so. It thus intertwines social and economic mission in its DNA and is thereby “way beyond CSR”. In 2012 in the midst of the National Entrepreneurship Month in the United States of America and as countries around the world celebrated Global Entrepreneurship Week, the U.S. Agency for International Development (USAID) and the Government of Sweden rolled out a new $15 million competition to support entrepreneurs who are strengthening global food security and alleviating

McGuigan et al. (May 2002) Poverty and Climate Change: Assessing Impacts in Developing Countries and the Initiatives of the International Community. London School of Economics Consultancy Project for The Overseas Development Institute. 15 Blein et al. (November 2013) Agriculture in Africa : Transformation and Outlook . NEPAD . 16 Worldwatch Institute. (February 2014) Asia and Africa Home 95% Global Agricultural Population 17 UNDP (2006). ‘Beyond Scarcity: Power, poverty and the global water crisis, United Nations Development Programme’. Human Development Report. 18 Peattie K. (2012-‐2013 ) Social Enterprise And The Environment: Can Social Enterprise Save The World? Experiences From A Decade Of Research. A Paper for Social Enterprise and Environmental Sustainability: Challenges and Opportunities ESCR-‐TSRC Seminar 2. 19 Panum K. and Hansen M. (May 2014) Successful Social Enterprises in Africa: Case Studies of Six Social Enterprises in Kenya. CBDS Working Paper Series 14

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

poverty through market-‐based solutions that reduce water scarcity in the food supply chain. 20 The US President Obama has been quoted as believing that ‘social enterprise has a critical role to play as part of a holistic approach to accelerate economic recovery and boost job creation in the United States. In addition, social enterprise can leverage new capital, skills, and pathways to scale in support of the Administration’s global development commitments, including Power Africa, Feed the Future, and the Global Health Initiative.’ The US administration has already taken a number of steps to realize the full potential of impact investing and social enterprise, including creating the Small Business Investment Company Impact Investment Fund, clarifying the rules that allow foundations to invest in social enterprises, and increasing impact investments made by the Overseas Private Investment Corporation, which committed $333 million to impact investing in 2012 in sectors including healthcare, education, renewable resources, and water. 21

4 Role Played by Social Enterprises

4.1 In Ensuring Environmental Sustainability and Resilience to Climate Change The reason why social enterprises matter when considering environmental sustainability ( and resilience to Climate Change) challenges, is that many of them operate at a community level where sustainability issues can be both clearly perceived and effectively tackled. The individual citizen acting alone can find it very difficult to move to sustainable energy, reduce their waste or change how they travel. Social enterprises operating at a community level can create more sustainable systems of consumption and production whilst simultaneously providing more sustainable livelihoods. The ability of social enterprise to build viable businesses at a community level can also be important for protecting the environmental resources and eco-‐system services on which we all ultimately depend.22 As an area for research, policy and practice social enterprise and environmental sustainability is set to become increasingly important in future. This is particularly true in sectors and countries where environmental limits linked to the availability of cheap energy, land or water are beginning to impact on conventional businesses and business models.23 In practice social enterprises have been prominent as catalysts and innovators in a range of important environmentally-‐orientated sectors. In waste management and reduction, social enterprises have often driven the introduction of curb side recycling within communities or have established businesses to reclaim and return to the value stream resources represented by end-‐of-‐use products ranging from computers to furniture. In house building, social enterprises have provided some of the more innovative schemes for low carbon homes, and in terms of energy supply, community energy social enterprises have been instrumental in driving forward renewable energy investments. Similarly whether it comes to reducing food Greenblatt J. and Steffen R. (November 2013) Helping Social Entrepreneurs Tackle Global Development Challenges US White House Office of Science and Technology Policy. 21 Greenblatt J. and Steffen R. (November 2013) Helping Social Entrepreneurs Tackle Global Development Challenges US White House Office of Science and Technology Policy. 22 Peattie K. (2012-‐2013 ) Social Enterprise And The Environment: Can Social Enterprise Save The World? Experiences From A Decade Of Research. A Paper for Social Enterprise and Environmental Sustainability: Challenges and Opportunities ESCR-‐TSRC Seminar 2. 23 Peattie K. (2012-‐2013 ) Social Enterprise And The Environment: Can Social Enterprise Save The World? Experiences From A Decade Of Research. A Paper for Social Enterprise and Environmental Sustainability: Challenges and Opportunities ESCR-‐TSRC Seminar 2. 20

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

miles through local food ventures, or reducing carbon emissions linked to transport through alternative vehicle ownership or use schemes, social enterprises have been the ones creating new business models and driving innovation. 24 One of the clearest ways that these organisations support pro-‐environmental behaviour change is by providing waste management services that would not be otherwise available. Termed “providing alternative infrastructure” in the recent Third Sector Research Centre literature review, third sector organisations have long been at the forefront of developing sustainable waste management practices. 25 4.1.1 Case Study: Sampurn(e)arth Environment Solutions , Mumbai. 4.1.1.1 Indian Solid Waste Scenario With tremendous growth witnessed in the past few decades, waste management has become one of the key dimensions of sustainability. Every day, urban India generates 188,500 tonnes of MSW

(Municipal Solid Waste)-‐ 68.8 million tonnes per year -‐ and waste generation increases by 50% every decade. Some of this waste will be recovered by an army of informal recyclers -‐ 20% in large cities according to the Chintan Environmental Research and Action Group and less in smaller cities. However, more than 80% reaches open dumpsites where it causes damaging public health, deteriorating the environment, and causes climate change. 26 The waste is collected by the municipal corporation as well as through private contractors in a Public-‐ Private Partnership (PPP) model. There have been a few attempts for a biogas plant however for different reasons it has been a failure or have been limited to a small scale. This is an informal sector collecting plastic, paper and metal waste from the local waste collection bins as well as the dumpsites. The dumping ground is managed by private contractors. The informal waste sector is made up of a chain of waste pickers, waste buyers and wholesalers and then recyclers. Most of the waste pickers have immigrated into the city from rural areas in the state. These informal workers form an important part of Solid Waste Management (SWM) by segregating recyclables from the waste which is not done by municipal workers. On the other hand, they are exploited by the middlemen and get paid much less because of the long supply chains.

4.1.1.2 Solutions Offered by Sampurn(e)arth Sampurn(e)arth provides context based decentralized SWM solutions which are environmental friendly, actively engage waste pickers and is profitable. They target contexts like Corporates, educational campuses, residential units and provide solutions to manage both biodegradable waste

Peattie K. (2012-‐2013 ) Social Enterprise And The Environment: Can Social Enterprise Save The World? Experiences From A Decade Of Research. A Paper for Social Enterprise and Environmental Sustainability: Challenges and Opportunities ESCR-‐TSRC Seminar 2. 25 Hallett E. (2012-‐2013) ‘Social Enterprise and Waste’. A Paper for Social Enterprise and Environmental Sustainability: Challenges and Opportunities ESCR-‐TSRC Seminar 2. 26 Annepu R. (January, 2012). ‘Sustainable Solid Waste Management in India’: Waste-‐to-‐Energy Research and Technology Council (WTERT) 24

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

(handled through compost units or biogas plants) and non-‐biodegradable waste (channelized to recyclers). Waste pickers are trained and employed to manage these systems. They also provide value added services like waste audit, awareness, recycled paper stationery and manure utility. Initiated in 2010, Sampurn(e)arth was registered in 2012. Based out of Mumbai, today, they are a team of 17, have reached 40 clients, managed about 800 MT of waste and engaged 7 waste pickers. In next few years, they are looking to reach a handling capacity of about 400-‐500 Metric Tonnes (MT)/day and engage about 1000 waste pickers. Their services include: • • • • •

Waste audit Proposing context based solution Implementing waste management system Operation and maintenance of the system (where we engage waste pickers and attempt to provide them alternative livelihood) and Consultancy related to above services

They provide solutions for both biodegradable (food waste, horticulture waste) and non-‐ biodegradable waste. For biodegradable waste they use Biogas Plants or Composting while the non-‐ bio-‐degradable waste is channelized to recycling units leaving a very small percentage of waste going to the dumping grounds and creating zero-‐waste situations. To attain their mission of ensuring a world where waste is transformed into utilizable resources without exploitation of people or the planet, Sampurn(e)arth employs a zero-‐waste model as shown below;

Zero Waste Model Educa&onal*/* Corporate*Campus*

Housing*Socie&es/* Locali&es*

Segregate Waste at source

*Malls/Hotels/* Townships*

Recyclable*Waste*

Organic*Waste* Compos&ng/*Biomethana&on*

Figure 1: Sampurn(e)arth Zero Waste Model

Realization of this zero-‐waste vision involves five processes – 1. Waste Audit

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

2. 3. 4. 5.

Design of a Waste Management System tailored to suit the client’s waste needs Installation Commissioning of Operations Regular Monitoring and Supervision

Waste Audit Depending on the context (small buildings/large buildings/residential complex/township/office complex/industrial premises) a waste audit is done for a duration of 2 to 7 days. The pattern of waste generation and the existing waste management system is understood. A report is submitted with recommended solutions for both wet waste and dry waste. An awareness session is done as per the requirement, to effectively induct housekeeping staff and residents into the system. Design of a Waste Management System A waste management system is designed as per the results of the waste audit. For biodegradable/wet waste quantities up to 200 kg per day composting units are suggested. If the daily waste generation is over 200 kg per day then installing a biogas plant is what is preferable. The system is designed keeping in mind the site-‐specific conditions such as space, garden area, scope for usage of biogas, etc. For the recyclable dry waste, depending upon the quantity generated daily, it is propose that the waste be stored for a certain period of time, following which the company sends a vehicle to pick up the waste that it then sent to recyclers. Installation Once the system has been decided upon and approved, the process proceeds to installation. This involves installation of buckets/ready-‐made composters (for daily generation of up to 30 kg) or construction of brick and mortar pits (for daily generation of 30 to 200 kg) or the biogas plant(for quantities upwards of 200 kg per day) Commissioning of Operations Once the system is in place and segregation is being done, operations are begun. Composting and Vermicomposting Composting involves mixing yard and household organic waste in a pile or bin and providing conditions that encourage decomposition. The decomposition process is fueled by millions of microscopic organisms (bacteria, fungi) that take up residence inside the compost pile, continuously devouring and recycling it to produce a rich organic fertilizer and valuable soil amendment. Vermicomposting uses worms for the conversion of waste into rich fertilizer. The compost produced will be purely organic and can be used for internal horticulture. In case there is no garden space or any manure is left over, it can be channelized to interested individuals/institutions outside the premises. Biogas Plant Sampurn(e)arth sets up Biogas Plants from which methane gas and organic manure are produced . The biogas can be used for cooking, heating water, generation of electricity. The organic manure can be used for internal horticulture. In case there is no garden space or any manure is left over, it can be channelized to interested individuals/institutions outside the premises.

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

Dry Waste The company has a network of various recyclers to whom we send the recyclable waste collected. Sampurn(e)arth supplies clients with part of the worth of the waste in terms of recycled paper stationery. For housing societies, they absorb the worth of the waste collected as part of the salary of the waste picker employed for operation and maintenance. E-‐Waste E-‐Waste is collected and sent for recycling. In order to do so, the company has tied up with companies who are certified by the Maharashtra Pollution Control Board to handle E-‐Waste and process it responsibly according to the proposed guidelines. Clients are supplied with part of the worth of the waste in terms of recycled paper stationery or pay in cash. Monitoring and Supervision The operations are regularly monitored by Sampurn(e)arth with the frequency high during the initial stage and lower once the system is running smoothly. They also provide detailed monthly reports regarding the waste processed and the environmental impact assessment of the waste management system. The company’s overall zero-‐waste model forms the basis for the seven internal business models that run simultaneously incorporating the above mentioned processes in different capacities and or contexts. These models can be divided into two segments , dry waste and operations and maintenance Dry Waste Segment: 1. Dry Waste Trading to the Recycling Market: In this segment the company buys waste from the informal segment and mainly from waste-‐pickers. However the numbers projected also includes dry waste collected from Zero-‐waste Projects. Here city based Municipal Corporation Sheds have been specially provided for collecting waste from the particular ward including collections by waste-‐ pickers in that ward. 2. Tetra Pak Trading: This segment the company only deals with the Tetra Pak carton collection and trading, in association with Tetra Pak company. This is shown differently as the arrangements are different and there is an addition incentive in from of subsidies from the Tetra Pak company. The managers and the storage and sorting area used will be commonly used with the above mentioned project 3. Dry Waste Client Segment: This segment is purely meant for only dry waste collection from clients who are mainly corporate houses or any other large commercial establishments. This is more to be seen as a impact segment and create more visibility for the organization. Operations and Maintenance Segment: 4. Zero Waste Model: Here the company provides biogas and composting solutions to clients. Operation and Maintenance includes collection, segregation and processing. 5. Complete Installation Model: Here the company carries out the complete design, drawings and installation of the plant. 6.Consultancy Model: Here the company carries out the complete design, drawing and supervision

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

of the installation of the plant acting as a third party and a facilitator in the project . 7.Composting Pit Model: Here the company installs composting facilities for smaller waste generators. These projects will be a outcome of the business development activities carried out in the Zero Waste Model.

Impact Brief: Theory of Change § § § § § § §

If waste is handled properly then emission of greenhouse gases at dumping grounds will decrease. If decentralized approach is adopted it will reduce the transportation cost of waste and CO2 emissions due to it. If materials are reused and recycled then the emissions due to the processing of virgin resources will reduce. If bio fuels are used, it will supplement the demand for domestic fuel and reduce the strain on fossil fuels. If organic manure is used it will supplement the demand in fertilizer industry and improve the soil condition as well as the quality of crops. Involving waste pickers in the system will result their improved economic and health conditions. Handling the waste properly will also result in realization of its commercial value.

Figure 2: Sampurn(e)arth Outcome and Impact of Services

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

Impact in Numbers § Nearly 300 MT of Dry waste is channelized to recycling §

Nearly 500 MT of Wet waste is processed (in Compost/Vermicompost pits and Biogas plants)

§

7 former waste pickers are involved

§

Nearly 1000 MT of CO2 emissions are saved

4.1.2 Case Study: Kilimo Salama, Kenya. 4.1.2.1 Agricultural Scenario in Kenya Kenya has a land area of 582 646 km2, most (80%) of which is arid and semi-‐arid land (ASAL) with very low potential. It has a population of roughly 40 million people with 3% annual growth. The country has a varied climate ranging from warm and humid in the coastal area to cool temperatures in the highlands. Productivity potential can be divided into three categories: high potential, with annual rainfall of more than 858 mm; medium potential, with annual rainfall of between 735 and 858 mm; and low potential, with annual rainfall of less than 612 mm. Recently, rainfall has been erratic in most parts of the country, with frequent prolonged dry periods and occasional flooding.27 Agriculture contributes 24 % of Kenya’s Gross Domestic Product (GDP) and accounts for 60% of the total employment. 28 Over 75% of Kenya’s population lives in rural areas and is dependent on agriculture29. Although growth in the agricultural sector has picked up, almost 50% of Kenyans fall below the food poverty line; 10% of children under five are underweight, with higher incidences of this being in rural areas where livelihoods are dependent on agriculture, as indicated earlier. Such food insecurity and nutrition issues are some of the poverty indicators that can be addressed by further developments in the agricultural sector. 30 In addition, as the majority of Kenya’s poor depend on agriculture for their livelihood, helping them gain access to inputs and markets can drive poverty reduction in the short term. Enhancing the productivity of smallholder farms. Since the majority of Kenya’s poor depend on smallholder agriculture for their livelihood, increasing their productivity through the use of fertilizer, improved seeds and access to markets, will lead to significant poverty reduction in the short to medium (v) term. Weather risks define the lives of smallholder farmers.

Muriuki H. (2011) Dairy Development in Kenya . FAO Dairy Reports. Rome, Italy. Kenya National Bureau of Statistics (2012) ‘Kenya: Facts and Figures’. 29 Government of Kenya. (2010) Agricultural Sector Development Strategy 2010–2020. Government of Kenya, Nairobi, Kenya. 30 Ministry of Agriculture (2011) Report for the Agriculture And Rural Development Sector. Government of Kenya, Nairobi, Kenya 27 28

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

Featuring Kenya’s SEs the Challenges the address are as follows; 31

Figure 3: Agricultural Challenges Addressed by SEs Based in Kenya

In 2012 flash floods washed away the rice harvest of some 2,000 farmers in western Kenya the hundred of farmers in Murang'a County who lost than 20,000 acres of maize plantation. 32 Drought related losses between 2000 and 2009 amounted to 240 billion Kenyan shillings (Ksh) loss 33 and tea production declined by 2.2% in 2012, due to adverse weather conditions characterized by frost attack in some tea growing areas.34

Griffin E. et al. (March, 2014) ‘A Case Study of Health and Agriculture Social Enterprises in Kenya’. ODI Report. A case study of heal IRIN Kenya: Rice Farmers Lose Harvest to Floods 33 The African Business Journal (April 11th, 2014) Droughts in Kenya Detrimental to Agriculture and Economy 34 World Bank (June 2013) ‘ Time to Shift Gears: Accelerating Growth and Poverty Reduction in the New Kenya’ Kenya Economic Update. Edition 8. 31 32

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

Agricultural micro insurance can effectively reduce the impact of severe weather as well as support increased investment in farm productivity. Insured farmers find themselves able to buy certified seeds and invest in fertilizer instead of planting relief seed and forgoing investing in soil nutrients. In the years following droughts, insured farmers are able to continue farming as before the drought, while their uninsured neighbours continue to feel the impact of drought until several seasons after the drought. Agricultural micro insurance can have a real impact on food security. For this reason, developing affordable and relevant agricultural micro insurance is critical. Farmers in Kenya generally do not have access to insurance for their farms since traditional agricultural insurance relies on on-‐farm monitoring of losses, evaluated through farm inspections. And since the transaction costs to insure one acre are similar to insuring a 200 acre farm, the premiums from the one acre farm would never cover the related transaction costs. Weather index based insurance offers a method to insure farms as small as one acre by replacing costly farm visits with measurements from weather stations as the indicator of drought conditions. The weather stations measure the rainfall and these measurements are compared to an agronomic model specifying crops rainfall needs. If the needs are not met, all farmers insured under that station receive a payout. If the needs are met, none of the farmers receive a payout. Since the concept of weather index insurance for farmers was developed, several pilots have been launched around the world (Mexico, Morocco, India, Malawi, Rwanda, Tanzania, etc.) However, in order to create an impact similar to that of microfinance, the foremost challenge is to reach sustainable scale. Only in India has a commercial insurer, ICICILombard, reached some scale, selling some 40-‐50,000 policies per season. But even they consider that after five years they are still very much in the early stages of product development. Index insurance, in a way, needs to make the leap from the laboratory to become a product for the mass market. To reach scale, there are many barriers, three of which are addressed through Kilimo Salama: •

Firstly, insurance products need to be affordable for farmers, without reverting to subsidies.

•

Secondly, distribution channels relevant to smallholder farmers need to be identified and developed.

•

Thirdly, investment in renovating automated weather stations that can monitor the local weather patterns and the related insurance contracts is needed.

Kilimo Salama is an insurance designed for maize and wheat farmers so they may insure their farm inputs against drought and excess rain. The product will be available to farmers in five regions across Kenya: Bungoma-‐Busia, Oyugis-‐Homa Bay, Nanyuki-‐Timau, Embu and Eldoret.

4.1.2.2 Role Played by Kilimo Salama35

Kilimo Salama is a product launched under the Agricultural Index Insurance Initiative, a partnership between UAP Insurance and the Syngenta Foundation for Sustainable Agriculture (SFSA) Kilimo Salama’s design is based on the lessons learned from a pilot in Laikipia district, where several hundred maize farmers insured their farm inputs against drought in the long rains season of 2009. Following the drought that season, both weather stations showed that there was a payout and all

Source: Kilimo Salama-‐Background Document

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

farmers were compensated depending on the extent of the drought as measured at their weather station (a 30% and 80% payout, respectively.) The pilot was the first of its kind in Kenya. Reflecting Kenyan farmers’ cash flow, where farmers invest in their farm as they plant, farmers can insure as little as 1 kg of maize seed or fertilizer. This ‘pay as you plant’ type of insurance allows farmers to ‘try out’ insurance, a product they have never bought before and which has a negative reputation in Kenya. Experience shows that as farmers learn to trust insurance, they expand their coverage and are comfortable investing more in their farm, raising their productivity and increasing their food security. Kilimo Salama is distributed in a new way that is relevant to farmers, through local agro-‐ vets, of which there are an estimated 8,400 in Kenya. This year, there are close to 40 stockists distributing Kilimo Salama in five regions in Kenya. This distribution channel is a first for agricultural micro insurance. Local agro-‐vets register Kilimo Salama using a scanner with tailor-‐made software that allows for paperless registration and immediate confirmation to the farmer of the policy. The technology used allows transaction costs to be as little more than the cost of an SMS (5 Ksh). Agro-‐vets collect premiums and transfer these in bundles through M-‐Pesa to the insurance company. This method is also a first for agricultural micro insurance. Kilimo Salama is made affordable through partnerships with agri-‐businesses who sponsor half of the premium’s price, leaving the farmers to pay 5%on top of the cost of the inputs, a first for agricultural micro insurance.

Figure 4: Kilimo Salama Purchase Process .

Source : Syngenta Foundation

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

Impact Brief Launched in Kenya in 2008, it is now the largest agricultural insurance program in Africa. Kilimo Salama has successfully provided protection against rainfall while remaining affordable and accessible to farmers in remote regions. The product has succeeded in meeting its goal of protecting farmers against unpredictable weather. 36 The product has also been successfully implemented through the use of an extensive stockist network and mobile phone payment system. In 2009, the initial product pilot covering 200 farmers and two weather stations happened to come before one of the worst droughts in recent history. As previously mentioned , all of the farmers received a payout totaling either 30% or 80% of the insured maize seeds; the portion was different for each of the two weather stations. In the following season, 12,000 farmers were covered through 25 additional weather stations. In this season, only 10% of farmers (1,200 farmers from 10 weather stations) received payouts ranging from 10 percent to 50% of their insured inputs. 37 By the end of 2013, Kilimo Salama insured 187,000 farmers in three countries. Previously, few of them could afford such cover because of the high costs. Traditional crop insurance relies on expensive farm visits to verify claims. Kilimo Salama does not visit the farms. Most of the program is designed specifically for smallholders. It uses automated weather stations and mobile payments. These dramatically reduce administrative costs, finally enabling a premium price that millions of farmers can afford.38 Two thirds of these new farmers come from recruiting through microfinance institutions (MFIs) where enrollment in Kilimo Salama is mandatory. Kilimo Salama offers the MFIs indirect coverage by protecting their debtor, the farmer. This practice encourages farmers to take up insurance if they want to receive a loan. Several farmers in a focus group in Moiben mentioned that they were purchasing insurance because they wanted to take a loan to expand their farm‘s acreage.39

International Finance Corporation . ‘Kilimo Salama – Index-‐Based Agriculture Insurance. A Product Design Case Study’. International Finance Corporation . ‘Kilimo Salama – Index-‐Based Agriculture Insurance. A Product Design Case Study’. 38 Syngenta : 'Kilimo Salama' becomes ACRE 39 International Finance Corporation . ‘Kilimo Salama – Index-‐Based Agriculture Insurance. A Product Design Case Study’. 36 37

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

5 Systemic Challenges faced by Social Enterprises Defining social enterprises as “trading organisations with social and community objectives with the majority of profits used to fulfill social purpose”, and looking at their impact in areas such as local food projects, recycling initiatives and sustainable tourism, the report finds that: 40 •

Social enterprises operate in ways which generate sustainable solutions to issues affecting people’s lives;

•

Many social enterprise solutions have the potential to be scaled up to increase their impact;

•

There is scope for social enterprises and Government to do more to work collaboratively on influencing sustainable living.

“This report confirms that social enterprises make a real difference through the work they do to inspire people to adopt more sustainable lifestyles. Their innovative and creative approaches together with their positive impact make them vibrant partners across DEFRA(Department for Environment, Food and Rural Affairs) ’s key priorities”. 41 Defra’s Social Enterprise Strategic Partnership (SESP) has published ‘Getting the Message Across’. The report found that social enterprises are particularly motivated to come up with innovative solutions to the challenges of sustainability. They live their values and demonstrate them to the communities in which they operate, making sustainable living appear both normal and achievable: for example, a community shop will use the eco-‐ products that it sells or sign up for solar energy.42

5.1 Finance 43 The difficulties of accessing finance is given highest prominence with regards to challenges faced by social enterprises. Enterprises were dependent primarily on internal resources and grants. Limited access to commercial finance is perhaps inevitable for enterprises which have modified their business orientation to meet social objectives particularly those who have chosen to register as NGOs The Kenya case study reports that impact investors and lenders are present but enterprises claimed that it was difficult for start-‐ups and smaller enterprises to access capital as impact investors focused particularly on established and commercially viable enterprises.

5.2 Market44 Social enterprises tend to focus on niche markets, particularly those at the ‘bottom of the pyramid’. It may not always, however, be easy or possible to the exploit the fortune concealed there. A classic case

Russel G. (2012-‐2013 ) Social Enterprise And The Environment: Can Social Enterprise Save The World? Experiences From A Decade Of Research. A Paper for Social Enterprise and Environmental Sustainability: Challenges and Opportunities ESCR-‐TSRC Seminar 2. 41 Russel G. (2012-‐2013 ) Social Enterprise And The Environment: Can Social Enterprise Save The World? Experiences From A Decade Of Research. A Paper for Social Enterprise and Environmental Sustainability: Challenges and Opportunities ESCR-‐TSRC Seminar 2. 42 Russel G. (2012-‐2013 ) Social Enterprise And The Environment: Can Social Enterprise Save The World? Experiences From A Decade Of Research. A Paper for Social Enterprise and Environmental Sustainability: Challenges and Opportunities ESCR-‐TSRC Seminar 2. 43 Smith W. and Darko E. ( March 2014) ‘Social Enterprise : Constraints and Opportunities –Evidence from Vietnam and Kenya’ ODR Report. 44 Smith W. and Darko E. ( March 2014) ‘Social Enterprise : Constraints and Opportunities –Evidence from Vietnam and Kenya’ ODR Report. 40

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

of there being a gap in the market, but no market in the gap. Some enterprises are trying to open up new markets where customers have not been used to paying for services before. This is clearly the case for HIV counseling services in Vietnam. Some markets are difficult to penetrate because the technological requirements for uptake by poor communities are quite high. In Kenya, enterprises mentioned the impact of widespread illiteracy in limiting the uptake of market information services and extension efforts.

5.3 Legal Status 45

Social Enterprises complained of harassment by local tax officials confused by the charitable status of the organisation when paying customers formed the mainstay of the operation. Others felt that the development of a new legal category for social enterprise would lead to greater government recognition and the possibility of preferential policies targeted at social enterprise. Finally, social enterprises in India often face policy and regulatory challenges. For example, there are no specific legal frameworks for social enterprise, so businesses either designate themselves as Small and Medium Enterprises (SMEs) or non-‐profits, though their income structures don’t fall neatly into either of these categories. Moreover, India, like many other developing countries, faces problems of public authority, regulation and oversight. The most flagrant of these issues is, of course, corruption.

Smith W. and Darko E. ( March 2014) ‘Social Enterprise : Constraints and Opportunities –Evidence from Vietnam and Kenya’ ODR Report.

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries

6 Recommendations

6.1 To Government and Regulators46 I.

II.

III.

Although there is a need to create a level playing field for social enterprises registered under existing legal frameworks there should be no rush in to establish a new legal category or legal status for social enterprises unless a clear and objective definition can be agreed at a national level. There should be controlled use of government subsidy. Particularly in response to political pressures, governments (and donors) often provide price subsidies for goods sold or provided to key population groups which are already efficiently provided by the private sector therefore eliminating the potential for a niche market that alternatively would have been taught to be self-‐sufficient. Financial and non-‐financial support mechanisms should be reevaluated since governments can play an important role in both facilitating and promoting the activities of social enterprise.

6.2 To Support Organisations47 I.

Donors, technical assistance providers, incubators, social investors should make a distinction between private sector development activities and support for hybrid social enterprises because for hybrid social enterprises, operating in more difficult markets with lower margins, lower (or non-‐existent) profit, support may need to be more intensive and longer term.

II.

Donors and social investors should deliver their support within an analysis that is grounded in the specifics of the sector and the local context -‐ rather than blanket support for the concept of social enterprise per se. Organisations should understand the specific challenges faced by social enterprises and support the development of intermediary organisations which have strong local roots and understand the spaces in which social enterprises can operate in the local context.

III.

46 47

Smith W. and Darko E. ( March 2014) ‘Social Enterprise : Constraints and Opportunities –Evidence from Vietnam and Kenya’ ODR Report. Smith W. and Darko E. ( March 2014) ‘Social Enterprise : Constraints and Opportunities –Evidence from Vietnam and Kenya’ ODR Report.

The Capacity for Social Enterprise in Realising Environmental Sustainability and Resilience to Climate Change in Developing Countries