Building a competitive Market for Micro-Scale Renewable Energy technologies

Source of picture:

Developing a competitive supply and distribution chain for deployment of off grid solutions such as solar Pico PV is always a challenge. This challenge is further aggravated with socio-economic, human induced problems as well as through market distortions, caused by sub-standard products. How can we overcome this challenge?

Indeed, several remedies can be applicable to these problems; however, a systemic cure can be achieved by creating a competitive business environment for deployment of micro-scale renewable energy solutions like solar lantern, which would be promoted by providing ex post financial incentive to manufacturing companies and entrepreneurs through result based finance fund (RBF).

It is expected that RBF can be linked to manufacturing companies and eventually to retailers and distributors. These retailers and distributors will have access to the financial incentive system of RBF fund, which could be received by them on completing pre-determined sales targets of stoves/solar lanterns. It is expected that these retailers and distributors will also facilitate post installation care and support the end-users (customers) for ensuring timely repair and maintenance of solar lanterns.

In this whole supply chain, one shall ensure a healthy competition amongst the companies, manufacturers, distributors and retailers which will eventually ensure long term sustainability of micro-scale renewable energy technologies such as lighting solutions.

There is an urgent need to breakdown the currently prevailing ‘subsidy driven, grant or aid linked inertia’ of project developers in the renewable energy sector and will eventually yield a truly commercial lighting sub-sector, which attracts private investment and debt or credit from financial institutions after the completion of this RBF funding.

For this blog posting, an indicative, generic design on RBF incentive and its effect on market is proposed. It is visualized that the RBF funds can be used to carry out key activities and to establish a business model that is: (a) profitable: at each level, the margins and incentives are clear and sufficient; (b) commercially viable: self-sustaining without requiring continuous external support or  subsidy; (c) environmentally sensitive: recycling of batteries will be developed and addressed in partnership with the solar PV central distributors, and; (d). scalable: the model can be expanded to new areas and the product range can grow as new products and product innovations and improvements become available.

The RBF design shall lead to the creation of commercial partnerships between manufacturers, local wholesalers, distributors, retailers and financial institutions. (a). private sector funding to manufacturers and central distributors is key, which can be disbursed as ex-post based on achieving pre-determined sales targets. Private sector actors invest their own funds upfront for manufacturing, market development and promotional activities; (b). an ex post premium to project promoters (e.g., PicoPV distributors and retailers) on completing pre-determined volume of sales of solar lanterns (maximum up to 20 % of the monetary value of the stoves and Solar Lanterns sold, which exceeds the pre-determined target. The sales target will be determined based on actual baseline and market study in the project areas.). This premium will be paid at two levels of the supply chain, viz., (i). at the central distributor level This fund will cover as ex-post payment to distributors, for establishing a working capital system for pre-financing the retailers with its own funds. and; (ii), at the last-mile entrepreneur retailers level ( which will enhance their demand and ability to buy higher volume of solar lanterns) upon meeting sales target and creating more demands. Most individual retailers cannot shoulder first move costs and risks associated with penetrating undeveloped lighting markets. The RBF progarmme will work to significantly reduce these risks and build industry confidence. , Lastly, (c). a ‘voucher’ finance mechanism, which will be provided to households upon fulfilling pre-agreed conditions like taking responsibility for maintenance of their solar lantern (battery recovery) as well as completing a successful operational lifetime of the appliance and to be used for either replacement of the existing lantern or for the purchase of an extra lantern. The monetary value of the redeemed vouchers would be transferred to the bank accounts of the retailers and distributors.

The theory of change of this proposed business model is built upon five key inputs: mobilize private sector funding with RBF as an incentive instrument; catalyze the RE sector and broker partnerships between private sector, development agencies, retailers, distributors and government; promote quality solar lanterns; develop an enabling business environment for private sector actors at national and sub-national level and create/share knowledge in the region and globally. By means of this approach, the RBF business model will promote market-based learning amongst micro-scale RETs manufactures, distributors, retailers and local NGOs in the supply chain as their participation in the program will require for (i) formalizing business to business relations amongst manufacturers, distributors and retailers (contracting, record based billing), (ii) initiating sales strategies based on higher turnover and attaining premium (iii), ensuring better use of solar and other micro-scale RETs at domestic level by users and redeeming the voucher, and (iv) profit management for investment amongst retailers and distributors. This way, RBF contributes to building up distribution lines for both products, reducing transaction costs and bringing structural change in the local market by paving the way for the private sector to further penetrate the household cooking and lighting market.

Keshav C Das

August 24, 2015


Development Paradox: Economic Growth and Inequality


On completing one year in office, Modi government in India reported that India’s economy grew by 7.3 per cent during 2014-15.  The International Monetary Fund has projected that India will outpace China during the current fiscal year. This is very encouraging news. From the point of view of broader policy-making India is still a recovering economy.  The prime drivers of the growth were the significantly stronger performance of ‘manufacturing’, ‘electricity, gas, water supply and other utility services’ and the ‘financial, real estate and professional services’.

However, this is a development paradox. Indeed, this development paradox is applicable as a truth into most of the developing and least development countries economics; both in Asia and Africa. Taking the example of India, it is true that India has attracted global attention for rapid economic growth. India accounts for nearly 80% of the regional GDP of South Asia, and is the largest country in the region, is seen as an emerging economic powerhouse. Other countries in the region are also well advanced in the transition from low income to middle income status. But this progress doesn’t mask the fact that India in particular and South Asia in general is home to the largest concentration of people living in debilitating poverty and social deprivation on planet earth[1].

The geography of poverty has changed over the last two decades[2]. More than 70% of the world’s poor now live not in low income but in middle-income countries. Indeed, there are more poor people living in South Asia than in Sub-Saharan Africa. This pattern of concentration of the poor living in the middle income countries is likely to continue over the next decade[3]. This raises two big questions. Firstly, why could we not able to reduce poverty despite of the impressive income growth and secondly, does this income growth provide socio-economic development to society? The direct responses to these fundamental questions are not positive.

The number of poor people (defined as those living under $1.25 per capita per day) in Sub-Saharan Africa increased and Poverty headcount ratio for Africa is 46.8%[4]. In case of Asia, the poverty rate is nearly 50%[5]. Inequality has been raised and according to a recent report of Asian Development Bank, it has been increased in Asia two folds in last 10 years[6]. Inequality is an important dimension of development in its own right, but it also has consequences for governments’ fight against poverty and efforts to sustain growth. Both poverty reduction and the foundations for future growth can be strengthened by ensuring that the benefits of development are shared broadly and equitably.

The paradox of economic growth is that it has been instrumental in reducing poverty rates, but poverty rates have not fallen fast enough to reduce the total number of poor people. Poverty reduction in India, China (LDCs which aspires to be in the middle income status) are precisely in line with what economic growth would predict. Although inequality increased more rapidly and an inclusive development remains are dream to be fulfilled. Unfortunately, this is real world development paradox of the contemporary time. Policy makers need to address this paradox strategically, if we do not act on this urgently, it could impair growth and those with low incomes suffer poor health and low productivity as a result. It could threaten public confidence in growth-boosting policies like free trade, or it could sow the seeds of crisis!

Keshav C Das

Addis Ababa

June 1, 2015

[1] Is growth incomplete without social progress? Ejaz Ghani, 2011.

[2] Sumner, A (2010), “Global Poverty and the New Bottom Billion: Three-quarters of the World’s Poor Live in Middle-income Countries’”, IDS Working Paper 349, Brighton: IDS

[3] Chandy, L and G Getz (2011), “Poverty in Numbers: The Changing State of Global Poverty from 2005 to 2015”, Brookings.




Why does ‘not for profit’ pathetically fail in business development?

October.BlogThere is a paradigm shift in accepting ‘business development’ as one of the core activities in not for profit organisations in recent days. This ‘shift’ is mainly triggered due to the reasons that funders and donors are demanding more accountability, traditional forms of funding are becoming smaller and less reliable, donors are focusing for an increasing engagement with private sector instead of not for profit entities and hence, for-profit businesses are competing with non-profits (not for profits) to serve community needs and lastly needs of community are growing in size and diversity!

In the face of this new reality, an increasing number of forward-looking non-profits are beginning to appreciate the increased revenue, focus and effectiveness that can come from adopting “for profit” business approaches. Increasingly, they are reinventing themselves as social entrepreneurs, combining “the passion of a social mission with an image of business-like discipline, innovation, and determination.”[1]

For many not for profit organisations, this new reality is still a surprise and struggling in a confusing state of operations to survive; taking up quick-fix based remedies like reducing size of human resources, cutting cost, merging with other organisations or merging it multi-country operations into a regional operations. Will this change bring brighter days to them? Answer is clearly NO!

To survive in the present competitive development market, not-for profit companies really need to look for a systemic change in its overall process of business model, orientation and strategies. Non-profit organisations now need to carry out a serious self–reflection and identify its key strengths and services (offerings), which are unique, competitive, affordable and having a ‘brand ’ of these offerings in market. To formulate its services, accurate understanding of community and development needs to be ensured so that organisation can offer higher quality of services by focusing on what it does best, which will eventually enhance credibility with clients and funders. Needless to say that such transformation will happen in organisation only through a continuous learning and improvement.

We have several myths on pursing business development activities; such a business development is a team work, funding can be mobilised with a smart and innovative business proposal or even for many non-profit workers; business development can also be done over an informal beer meeting. These beliefs are relative and its success is also isolated, but it can’t be considered as organisational business development strategy.

In the contemporary competitive environment, non-profit business development should be built upon five key principles:

  • Identifying a set of best mission-related earned income opportunities, where fund raising will be smooth and there is a better chance of winning (it could be water, health, energy or agriculture and any other opportunities). A continuous researching on feasibility of these opportunities is crucial, based on which organisation can select the most appropriate ones to develop realistic business plans
  • Identifying the major assets and capabilities that organisation has to invest in its business development. These asset could be a team of experienced ‘warrior’ for business development or internal fund to invest for business development
  • Recognising that organisation’s vision, mission and strategic goals represent the purpose and context for business development.
  • Gaining a better understanding of the motivations and support for doing business development, both within the organisation and in peers, and, at the last
  • Leadership in the organisation, to drive business development with proven knowledge and skills. We must remember business development is a specialised job.

Sad part is that most organisations do not consider these principles, instead take up business development activities without a clear strategy and plan of actions. Outcome of such initiatives is ‘A Bad Dream’.

Keshav C Das

Senior Advisor

SNV Netherlands Development Organisation

[1] “The Meaning of Social Entrepreneurship” by J. Gregory Dees.


1.1: Introduction-

Despite extensive economic growth and increases in the quality of life over the last century, concern remains that the era of industrialization has had substantial negative effects on the natural environment and that these effects diminish the vitality and sustainability of our economic systems[i]. In addition to the localized problems pollution, recent scientific discoveries have revealed global scale effects such as ozone depletion and climate change[ii]. The long-term economic impacts of these effects may be quite substantial as a large portion of the world’s economic output is dependent upon the viability of natural systems.

Environmental sustainability and fight against climate change is a long-term strategic issue for the modern world within the broader context of sustainable development. It is an established fact now that climate change has the potential to alter the ability of the earth’s physical and biological systems. It impacts different regions and sectors differently based on their sensitivity and adaptive capacity, and therefore, vulnerability.

The role of businesses in resolving such environmental challenges is emerging as a subject of high importance. Businesses are considered as a central force of economic development, as it generates growth and serves as a vehicle for innovation and change. For businesses, this is more important to consider as there is high level of socio-economical and political accountability under the widely accepted domain of green assets management. Businesses have huge social and environmental responsibilities. These responsibilities should be fulfilled while venturing for profits in the business. This philosophy of environmental accountability helps companies in two ways, viz., establishing businesses as ethical brand and secondly developing a market niche in the present competitive market. Companies understand these concerns and therefore, to a great extent many businesses have been adopting ‘green marketing policies’ and ‘Energy Efficient Technologies’. Remarkably, this trend has affected both the forward and backward linkages of product life cycle.

Of late, businesses have been attempting to interlink with other companies with similar vision and mandate to create a true international business domain, which is environmentally responsive. This is possible through transfer of efficient technologies from technologically sound entities to businesses, which implies that there should also be an appropriate symbiosis between Research & development entities and businesses with basic motive to propagate efficient –affordable and commercial profitable innovations. In another word, businesses do not need merely businessmen, rather need ecological entrepreneurs, who will have charisma and power to modulate negative environmental changes and capabilities to create new opportunities.


1.2: Motives of environmental responsibility-

Historically, much of big business has pursued investment, production and marketing strategies that have resulted directly in extensive waste and degradation of natural resources or encouraged consumption patterns that do the same. Logging and mining enterprises, pulp and paper mills, agribusiness, oil, chemical, cement, iron and steel companies, as well as many other enterprises, have degraded  natural resources as well as global climate.

Now, there are signs that businesses are on the verge of recasting their relationship to both the environment and their stakeholders. Many companies are adopting a discourse and policies that suggest that businesses can simultaneously make profits and be good citizens. There appears to be a growing recognition that the increasing freedom enjoyed by business during the era of the so-called Washington Consensus[1]needs to be complemented by increased responsibility[iii].

There could be two basic motives, for which businesses implement and practice environmentally responsive behaviors, Viz., (i). Existing environmental law and regulations compel businesses to execute certain mandatory practices and therefore, companies adopt environmental measures as per statutory norms and guidelines and (ii). Businesses indentify a profit motive in the negative externalities of environment degradation and attempt to capitalize on the market failures, conceded from the exploitation of environment.

Indeed, pressures from stakeholders have also acted as catalyst for this transition.  Companies respond to the numerous pressures[2] that exist in their external and internal environments today, from a wide range of stakeholders that are pushing for greater environmental and social responsibility[iv]. A third source of pressures can be termed institutional and includes a proliferation of “best of” rankings, the steady emergence of global principles and standards that raise public expectations about  these responsibilities, and new reporting initiatives emphasizing the triple bottom lines of economic, social, and environmental performance. 

This necessitates a new relationship for businesses with the environment and society. It is as much an approach to promote economic growth and competitive advantage as it is to encourage environmental responsibility.


1.3: Environmental Sustainability in Businesses-

However as debriefed above, true environmentally responsible businesses should have action plan for creating environmental sustainability which could perform beyond mandatory and standard legislation related to environmental and social protection. The environmental sustainability of businesses should not be a ‘Greenwash[3][v]’ but it should actually reduce negative environmental impact and develop an ecologically resilient society, which should meet the needs and requirements of the present without compromising the ability of future generations to meet their own needs. The planet Earth needs to be capable of supporting ongoing and future business practices if they are to be considered genuinely sustainable from both an ecological and an economic perspective. There is no simple solution to this situation, but different perspectives may contribute to create conditions and models of sustainable business practices, which are ethical demands of environmental sustainability. It is visualized that businesses can fulfill the ethical demands of environmental sustainability through two major approaches, Viz., Internally-oriented Environmental Responsibility Practices and externally-oriented Green Management Practices.   A few specific measures under these two approaches have been explained below.

1.3.1: Internally-oriented Environmental Responsibility Practices-


It is felt that businesses should focus on the internal management of materials, products, and processes that have potentially negative environmental impacts and that add costs to and reduce efficiency in their operations. Businesses must recognize that proactive environmental management can also be good business, leading to more efficient, cost-effective and profitable results. Therefore, internally-oriented practices that contribute to sustainable development include: 1) enhanced regulatory compliance to reduce the Business’s negative environmental impacts of hazardous emissions in communities in which they are located; 2) adoption of pollution prevention and clean manufacturing practices that eliminate pollution before it occurs; 3) redesign of products and processes to achieve more beneficial environmental impacts for customers and communities; 4) materials reduction, recycling and reuse; and resource conservation.

  1. 1.      Enhanced Regulatory Compliance-

Businesses should adopt voluntary proactive environmental management systems that go well beyond what local or national regulations require. Notably, businesses like Kodak, SmithKlein have created their own corporate environmental and safety standards that meet international guidelines[4]. These corporate standards are often more stringent than the requirements adopted by governments and are usually applied by all of their facilities worldwide[vi],[vii],[viii].



  1. 2.      Pollution Prevention and Clean Manufacturing Practices-

Businesses should adopt clean manufacturing practices that prevent pollution before it occurs not only in their own operations but also among their suppliers, vendors and contractors. There should be a company mandate for making substantial investments in cleaner manufacturing technology[5] to improve supply chain performance which will ensure to introduce pollution-prevention measures in production and distribution system[ix].

At the same length, it is found that clean manufacturing system is possible through technology u innovation, upgradation and retrofit.

  1. a.      Technology Innovation, upgradation and retrofit-

Continuous efforts for technology innovation and scaling up those technologies commercially should also considered by businesses.[6] Similarly, businesses should remove obsolete and inefficient technologies and adopt efficient technologies which could produce more outputs with less energy consumption. For example, companies, which has needs of steam and power, could installed high pressure boilers to fulfill the steam requirement as well as produce power through installing efficient turbines. In a similar fashion companies should also try to adopt waste heat recovery, which could have otherwise vented to the atmosphere and could pollute the environment[7].  


  1. 3.      Improving Process and Product Efficiency-

In continuation of the previous two measures, businesses should also have internal policies for improving processes, involved in the backward and forward linkages of any production process. This measure should aim to produce efficient products, which are environment friendly, recyclable, non-toxic and sustainable[8]. Therefore, process optimization is the thumb role for this measure, which also includes use of renewable source of energy for production processes[x],[xi].


  1. a.      Paradigm shift in Energy Source-

Businesses should use feedstock of renewable origin to meet the energy demand in their production and distribution or marketing mechanisms. Those feedstocks should less carbon intensive, having ZERO probability to emit Green House Gases [GHGs] and which could fulfill all the process requirement of the business operations[9].

  1. 4.         Waste Treatment and Management-

Companies should also take due care to produce least possible ‘‘effluents and hazardous byproducts, and that least volume should also be treated and managed to convert to energy [Waste to Energy] so that it could be reused in the production processes[10]. Existing waste-management practices can provide effective mitigation of GHG emissions[xii]. A wide range of mature, environmentally-effective technologies are available to mitigate emissions and provide public health, environmental protection, and sustainable development co-benefits. Collectively, these technologies can directly reduce GHG emissions or avoid significant GHG generation[11]

1.3.2: Externally-oriented Green Management Practices-

It is a widely accepted fact that businesses should develop a symbiosis with stakeholders, environmental interest groups, and communities to address important environmental problems and it could be practiced in three ways:

1) Incentives for companies’ employees and managers to collaborate with external stakeholders on environmental improvement projects[12];

2) Philanthropic activities that support community, national, and international efforts to improve environmental conditions[13]; and

 3) Strategic alliances between businesses and environmental and public interest groups to solve crucial environmental problems[14].

In addition to the aforesaid two broad categories, it is felt that business should also adopt green marketing practices, along with capacity development of its human resources and other timely measures. A brief description of a few strategies is given below.

  1. A.     Green Labeling:

It is felt that going green for the sake of being different is not enough. Aside from differentiating oneself, going green has to be relevant to his target customers. It has to mean something to them[15]. Passing this message to consumer is also very important. Based on the recent trends, it could be recommended that blogs or social networking sites are extremely effective to promote green products.

  1. B.     Human Resource Development:

Developing skills of human recourse of businesses is also an important strategy for environmental sustainability.  Both the frontline workers and middle and senior level managers should be trained on ‘green technology’. The human resources of businesses should be change agents for transforming the businesses and its operations. Companies could arrange periodic training and capacity development programs and can ensure appropriate adoption of efficient and timely green initiatives in the companies.

  1. Mandatory Carbon Disclosure:

As a precautionary and proactive approach businesses should practice a detail accounting of their carbon footprint in a defined time frame. This accounting should illustrate the strategy, targets, performance, and benchmarking of how the companies are working to reduce its impact on and adapt to changing environment and climate[16]. This will benefit businesses in two ways; viz., in managing the emissions, if there is any and enhancing efficiencies of the different process with appropriate adoption of new technologies.

  1. GHGs mechanisms of environmental markets:

Indeed, companies could also take help of the current market mechanisms of environmental domain, such as Clean Development Mechanism [CDM], Joint Implementation [JI] and emission trading. These measures are in place under Kyoto Protocol could also ensure efficient technology transfer and enable businesses under the recently concluded COP-15’s mandate on ‘Technology Innovation’.

1.4: Conclusion-

Therefore, to conclude, it could be reiterated that businesses should emerge with proactive company policies, highlighting a mandate to fulfill socio-economic and environmental ethics as well as percolating the co-benefits of those measures to the masses. Businesses must represent a desire to integrate the economic, environmental and societal aspects of its business to achieve sustained financial success, safeguard the environment and develop the company’s reputation as a respected corporate citizen. In order to make alliances and partnerships between businesses and external stakeholders work, the World Business Council for Sustainable Development points out those businesses must develop an integrated approach to environmental management, have committed top management leadership, see employees as partners, and continuously pursue positive actions[xiii]. However, for this approach, businesses must develop a management culture that explicitly recognizes the importance of social and environmental responsibility. Openness and accountability are essential to earn the trust. 


It is believed that if businesses realistically and carefully make attempts for sustainable development, it can reduce the adverse environmental impacts of business operations on local communities, develop clean manufacturing and pollution prevention processes and technologies, explore environmentally neutral or beneficial products and services, and help conserve natural resources and improve environmental conditions around the world. And, indeed, businesses will need to integrate this sustainable development policy, and associated programs and standards fully in all activities and all functions as an essential element of management.


[1] The term refers to the common approach towards the debt crisis adopted by Washington-based institutions such as the World Bank, the IMF and the US government in the late 1980s. An approach that emphasized the need for structural reforms in developing countries associated with more open economies, privatization of state-owned enterprises, deregulation and the down-sizing of the state.  

[2] This pressure for greater responsibility comes from primary stakeholders, such as owners, employees and customers, who can be viewed as being on the ‘inside’ of the businesses.  Secondary stakeholders including non-governmental organizations (NGOs), activists, and governments are also seeking greater environmental responsibility. 

[3] Greenwash: .Disinformation disseminated by an organization so as to present an environmentally responsible public image. (The Concise Oxford English Dictionary, 1999), or the attempt by corporations to hide the unpleasant environmental facts of their activities by adopting an environmental discourse or specific policies and practices that appear to be environment-friendly but do little, if anything, to change the relationship of business to the environment.


[4] Kodak uses a “Business Unit Evaluation Guide” to measure how well business unit managers integrate environmental responsibility into business plans and track progress in environmental performance semi-annually. The Sony Corporation plans to have all of its production and non-manufacturing facilities in Japan certified with ISO 14001 standards.


[5] The 3M Corporation carries out pollution prevention programs within its own plants and designs products that prevent pollution for its customers. General Motors is adapting its materials accounting systems, its material safety data sheet management systems, and its materials inventory control systems to generate environmental regulatory reports and to support pollution prevention initiatives.


Through a process known as “Design Manufacturing Waste Out” (DMWO), Proctor & Gamble is finding ways of reducing or eliminating manufacturing wastes. Bristol-Myers Squibb conducts product life cycle (PLC) reviews to identify and reduce potentially negative environmental impacts at all stages of a product’s life from raw material acquisition, design, marketing, manufacturing and packaging, to distribution, customer use, and ultimate disposal.


[6] It could be recommended that each business should have a division for monitoring the efficacy of the currently practiced technologies in the company and a mandate should be in place to enhance the productivity of these current technologies with a focus on sustainable development. A classical example in this front could be the development of amorphous based solar technology, which has higher efficiency and applicability in different geographical areas.

[7] Businesses should also focus on developing green assets, whether that is building or other infrastructure. Buildings, which account for approximately half of all annual energy and greenhouse gas emissions, are an important target area for any strategy addressing climate change and environmental sustainability. Whilst new commercial buildings increasingly address sustainability considerations, incorporating green technology in the refurbishment process of older buildings presents many technical, financial and social challenges. Therefore, companies should also practice and take care of this aspect by adopting current green building policies.


[8] Monsanto is developing biotechnology-improved higher-yielding seeds for agriculture that reduce the need for externally applied insecticides, and that reduces the raw materials, fuel and associated manufacturing and transportation inputs associated with insecticides. Monsanto seeks to develop a line of agricultural products that lead to higher productivity, soil conservation, less insecticide and energy use, and better habitat protection.

Intel seeks to reduce the power consumption of personal computers and is designing computer subsystems that use advanced power management techniques during operation and when in standby mode. Dell Corporation is producing personal computer chassis that are recyclable and upgradeable, extending their life cycle and reducing disposal problems.


[9] Indeed, a typical example in this front in the contemporary time is the innovation and adopting the ‘Green Coal’ technology, which is in the process of replacing of ‘fossils based coal’ in near future. At the same length, adopting green technologies for energy sources, like wind, solar, biomass based fuel as well as biofuel could be another few avenues, which could be ventured by businesses.

[10] Waste reduction, recycling, or reuse not only relieves pressures on natural resources and virgin materials, but also helps solve waste disposal and treatment problems for customers and communities. Ford Motor Company’s worldwide stamping, casting and forging operations use more than 2 million tons of recycled metals a year. Proctor & Gamble eliminated 30 million pounds of waste materials in 2008 alone by reducing packaging for its laundry, cleaning and household products. In addition it used 979 million pounds of post consumer recycled materials in its packages.


[11] PepsiCo, for example, initiated energy conservation programs that have saved more than 4.6 million kilowatts of electricity since the programs’ inception, preventing the emission of 1.5 pounds of carbon dioxide, 5.8 grams of sulfur dioxide and 2.5 grams of nitrogen oxide for every kilowatt hour saved.

Weyerhaeuser invested $240 million to improve productivity and environmental performance at its paper mill in Saskatchewan, Canada, that reduced natural gas use by 80 percent, increase energy self-sufficiency and reduce air emissions by as much as 90 percent. It reduced wastewater discharges by 90 percent and water usage by recycling 35 million gallons of effluent and storm water runoff into its Arkansas paper mill’s process water.

[12] Alcoa offers awards and incentives to its employees in plants around the world to work with community groups on innovative ways of preserving the natural environment and cleaning up environmental problems.

[13] Businesses also provide financial support or use their corporate resources to develop educational programs for environmental protection and sustainable development. Compaq Computer Corporation donates equipment for use in wildlife refuges, parks, and research facilities that benefit the environment and provide environmental training programs. It sponsors middle school teachers to attend environmental training programs that help them develop the knowledge and skills to strengthen environmental courses in their schools.

[14] Chevron, for example, sees its alliance with the World Wildlife Fund, the national government, local communities, and joint venture partners in Papua New Guinea to protect Lake Katubu from accidental releases and contamination and to promote nature based tourism as an important contribution to sustainable development.


[15] The majority of consumers today are not yet prepared to pay a premium or to sacrifice product performance to buy green products. Environmentally-conscious consumers are not a homogeneous group. According to J. Ottoman, author of the Green Marketing Book, traditional demographics are not enough to determine the intent to purchase green products. What really entice green purchases are consumers’ feelings of being able to act on these issues, or empowerment. In other words, if consumers believe that they can make a difference, they will be more inclined to buy green products.

[16] The Carbon Disclosure Project launched in 2000 to collect and distribute high quality information that motivates investors, corporations and governments to take action to prevent dangerous climate change. 2,500 organizations in some 60 countries around the world now measure and disclose their greenhouse gas emissions and climate change strategies through CDP, in order that they can set reduction targets and make performance improvement


[i] World Resources Institute, 2004. World Resources 2002–2004. World Resources Institute, Washington, D.C.

[ii] United Nations, 1999. UNEP Global Environmental Outlook 2000 and United Nations, 2004. UNEP 2004 Annual Report.

[iii] UNRISD, States of Disarray: The Social Effects of Globalization, UNRISD, Geneva, distributed by Earthscan, London, 1995.

[iv] The classic reference is R. Edward Freeman’s Strategic Management:  A Stakeholder  Approach.  Boston:  Pitman, 1984. 

[v] Greer, J. and K. Bruno  Greenwash: The Reality Behind Corporate Environmentalism, Third World Network, Penang, 1996.

[vi] Eastman Kodak Corporation, Health, Safety and Environment 1996 Report, Rochester,

NY: Eastman Kodak Corporation, 1998.

[vii] Sony, Environmental Report 1997, Tokyo, Japan: Sony Corporation, 1998.

[viii] BP Amoco, Environmental and Social Report 1998, London: BPAmoco, 1999.

[ix] Proctor & Gamble, 1998 Environmental Progress Update, Cincinnati, OH: Proctor & Gamble, 1999.

[x] Monsanto Company, Sustainable Development, St. Louis, MO: Monsanto, 2005.

[xi] Cooper Industries, 1996 Environmental Report, Houston, TX: Cooper Industries, 2002.

[xii] Weyerhaeuser Corporation, 2000 Annual Environmental Performance Report, Tacoma, WA: Weyerhaeuser, 2000.

[xiii] World Business Council for Sustainable Development, “Meeting Changing Expectations:

Corporate Social Responsibility,” Geneva, Switzerland: WBCSD, 2008.


Keshav C Das

Advisor, Climate Change, Sustainability 

Why environmental issues are important for business?

Jan2013Business can’t sustain without a sustainable production and consumption value chain development. Environmental sustainability is now conceived and implemented in regular business operations of companies not merely as a ‘green washing’ approach, rather, for most companies these days; sustainability is the core of corporate strategy. The rationale for this paradigm shift in the corporate strategy [from the old school of thoughts-produce more with less cost] is mainly powered with energy efficiency, process management, introduction of cleantech, green growth etc.

In one of the recent global survey of McKinsey[1], it is stated- companies know that consumers and employees care about the environment, and their interest often presents real business opportunities and risks. According to the survey, an emerging key environmental concern is biodiversity, or the diversity of species, variety of ecosystems, and variability of genes. The survey found that a majority of executives (59 percent), see biodiversity as more of an opportunity than a risk for their companies. They identify a variety of potential opportunities, such as bolstering corporate reputations with environmentally conscious stakeholders by acting to preserve biodiversity and developing new products or ideas from renewable natural resources. The positive outlook on biodiversity is in stark contrast to executives’ views on climate change in late 2007, when only 29 percent saw the issue as more of an opportunity than a threat[2]. Perhaps, addressing climate change over the past few years has changed some executives’ views on the potential upside of environmental issues.

Based on the ongoing discussion in the World Economic Forum (Davos) and the deliberations of Lord Stern, author of the government-commissioned review on climate change that became the reference work for politicians and green campaigners as well as the stern warning of Jim Yong Kim, the new president of the World Bank, are two significant statements in the beginning of 2013, which reaffirms the severity of the climate change problem and necessities to take up this issue as a market determinant, and perhaps, also as a business’s core activities. While Mr. Kim pledged to make tackling climate change as a priority of his 5 year term, he stated that “there will be water and food fights everywhere”. Lord Stern regretted that he underestimated the risks of climate change in his much referred Stern Review Report of 2006 and he now believed that he could have been more ‘blunt’. He said: “Looking back, I underestimated the risks. The planet and the atmosphere seem to be absorbing less carbon than we expected, and emissions are rising pretty strongly. Some of the effects are coming through more quickly than we thought then.”

With these concerns of two world leaders, the critical question for companies and businesses is: should they capitalize on this increasing threat of climate change and aligned their corporate environmental sustainability strategy? The answer is certainly YES. The corporate strategy should be to engage in these environmental value chains through market-based solutions that can quickly and effectively deploy capital to appropriate projects. The companies should use the market more effectively, and look for options with new climate finance mechanism and tools (like nationally appropriate mitigation actions-NAMAs), which will not only bring new investment opportunities to fund private sector sustainability and carbon reduction projects but also create new windows for profits. With corporate strategy ever more sensitive to climate risks and environmental sustainability, the business can adopt for greening of supply chains as a bright spot of opportunity for corporate investment in offsetting – and in some cases “insetting” – particularly in the realm of agriculture[3].

Keshav C Das, Senior Advisor, Climate Finance, REDD, and Renewable Energy

SNV Netherlands Development Organisation