Changemakers
By Yasmina Zaidman
A Polish woman in her fifties, a farmer, walks into the office of Symbio a distributor that purchases fruit from her farm. Though it's a busy weekday afternoon, she's not there on business. She has come to thank Tokya Dammond, the founder and chair of the company, for giving her the opportunity to return to farming after an increasingly competitive market forced her to retire early. She now grows organic raspberries for export, a lucrative and environmentally restorative enterprise for her and her family. Her gratitude stems from the fact that she has been able to regain her sense of pride and identity. But she has in fact become part of a powerful new trend in which innovative businesses are becoming the engine for social and environmental change. Such enterprises are starting to put economic growth in sync with environmental protection and the preservation of communities.
A New Environmental Trend
The growing movement of market-based solutions is broad, involving major multinational corporations, multilateral lending agencies, and small-scale enterprises. Business leaders and entrepreneurs the world over are realizing that business objectives can be met through enterprises that protect and even restore the environment.
Environmental Defense, a U.S.-based environmental advocacy group, recently reported that they have joined forces with some of the world's largest corporations to further combat climate change.
On October 17, 2000, BP, Shell International, DuPont, Suncor Energy Inc., Ontario Power Generation, the Canadian aluminum company Alcan, the French aluminum company Pechiney, and Environmental Defense announced the creation of the Partnership for Climate Action. The primary purpose of the Partnership is to champion market-based cost-effective and efficient mechanisms as a means of achieving early and credible action on reducing greenhouse gas emissions.
This partnership demonstrates how environmental leaders are seeking new opportunities to address environmental problems through enterprises that generate jobs, profits, and marketable products. However the challenge of wielding market-driven environmental solutions in such a way that environmental and social objectives are upheld remains a challenge. The phenomenon of "greenwashing" wherein companies capitalize on green reputations without fundamentally changing their business philosophy or significantly diminishing their impact on the environment is widespread.
While the major role of large corporations in environmental degradation makes them a key player in driving market-based environmental solutions, it is often the case that smaller and newer companies and industries are better positioned to launch the innovations required to successfully partner market forces with environmental restoration.
Many new enterprises are also ideally suited to testing new business models that make social and environmental restoration a central business goal. By looking at the example that Dammond's Symbio presents, we can see the underlying principles that are making enterprises like his a success in social, environmental and economic terms.
Since food security and hence food production pose one of the largest threats to biodiversity, solutions that address food security while enhancing biodiversity are badly needed. These solutions may lie in the launching of new restorative businesses. To test this very strategy, Dammond sought an environment where demographics, laws governing land use, and agricultural practices lent themselves to a successful venture in ecological food production. With its recent emergence into democracy, and its strong farming population, Poland seemed an ideal choice. He began working with local farmers to give them the tools to transition to organic and sustainable agriculture, and the economic incentives to do so. Seven years later, Symbio has successfully demonstrated that a business can provide social, environmental and economic returns. His approach reflects that of many other burgeoning entrepreneurs whose core purpose is a social outcome, but whose work is driven by a business enterprise. Symbio works with Polish farmers, providing inputs such as organic fertilizers, seeds and farming equipment, and then purchases their entire harvest for export to the growing western European market for organic produce. All the farmers are within a 100-kilometer radius of the office headquarters in Lublin. In addition to materials, Symbio provides training in organic farming practices and ecological restoration, which requires more stringent practices than the European organic produce standard requires. Since environmental restoration is his core objective, Dammond has upped the ante for farmers, awarding points to those whose practices actually increase local bio-diversity. This is achieved through the protection of wetlands, late harvesting of hay, and the protection of small waterways. He markets these achievements with his products through labels and brochures so that consumers are aware that their purchases are actually helping to restore the environment. And farmers who participate have advantages such as access to investment funds that are earmarked for environmental protection, and a partnership with Symbio that assures them sales and hence profits.
A Restorative Enterprise Tokya Dammond founded Symbio in 1993 with the motto, "Organizing production, purchasing and distribution of Polish organic fruits and vegetables for the health of the consumer, protection of the landscape and biodiversity enhancement." This dual objective of creating a successful business enterprise while generating social and environmental benefits is becoming more and more common.
The system developed here is holistic, taking into account a triple bottom line of social, environmental and economic returns. And despite the complexity of the business' design and implementation, a pattern of guiding principles behind Symbio's work, and that of other cutting edge social entrepreneurs, begins to emerge.
The Environmental Innovations Principles
Symbio has been a great success, growing steadily since its initiation, and generating profits sufficient to cover new investments in equipment and inputs, as well as the costs of its training programs and other services that it provides to farmers. What lies behind the success of Symbio as an environmental enterprise is a complex array of operations. These principles, which we will explore at greater length, are applicable not only for market-based environmental solutions, but also across environmental change strategies. Through the analysis performed by the Environmental Innovations Initiative, a project of Ashoka: Innovators for the Public, patterns have begun to emerge about the principles that guide truly successful environmental innovations. Social entrepreneurs use market-based environmental solutions in innovative ways by linking the four threads in the Environmental Innovations Principles. One of these principles is "Changing Economic Incentives," which addresses the use of market-based solutions and economic incentives to change environmental behaviors. Though the three stories in this issue of Changemakers.net Journal serve as examples of involving the application of market driven solutions, three other important principles are also incorporated into the activities of these environmental innovators. These are: "Getting the Negotiating Framework Right," "Empowering People with Information," and "Engaging People's Values and Culture."
Changing Economic Incentives
Symbio was launched in order to achieve environmental restoration and provide the incentives that are needed for people and institutions to change. Incentives like increased market share, new jobs, and new economic opportunities are often needed to change the behavior of companies and individuals.
A company, whether large or small, which can differentiate itself and see a greater financial return because of its environmental practices, is likely to move in the direction of sustainability and restoration much more quickly than a company that will suffer economically. In addition, consumers are more likely to adopt an environmentally sound product or practice if it does not have an associated economic cost, or is, in fact, more affordable than the environmentally degrading alternative.
By creating an economically viable model for truly sustainable agriculture, Dammond has begun to attract the interest of international finance mechanisms like the International Finance Corporation (IFC) - an arm of the World Bank and the Global Environmental Facility (GEF). The availability of capital early in the launch of such enterprises is critical for the emergence of more such environmental businesses.
In this issue of Changemakers.net Journal, Fabio Rosa, an agronomist who is implementing sustainable development projects in Brazil, will discuss the importance of the Clean Development Mechanism, developed in partnership with the World Bank, for financing viable rural electrification plans. However, even with the possibility of outside financing, Dammond's goal and the goal of other successful environmental entrepreneurs is to make the enterprise self-sustaining, profitable, and capable of growth.
Getting the Negotiating Framework Right
While economic viability is a guiding principle, successful restorative enterprises are driven by the other Environmental Innovations Principles as well. With Symbio, we can see the importance of not only the economic incentive structure, but also the critical role of a legal framework that creates a disincentive for enterprises that are not ecologically sound. "Getting the Negotiating Framework Right" means creating the legal parameters that create incentives to innovate. In the realm of ecological agriculture, the standards defined by the European Union for organic produce assure that those who invest in differentiating their products by making them organic will be able to access this niche market. Eco-tourism currently lacks such widely accepted standards. As a result, it has been difficult for truly sustainable or restorative eco-tourism enterprises that invest more in their operations, to gain a sufficient market advantage. Many environmental innovators are finding that as they cultivate their enterprises, they must also work to develop and implement legally binding or voluntary standards that can help bolster the uniqueness and value of their products and services. An article on social entrepreneur Paul Rice, who created TransFair U.S.A. to certify and market fair trade coffee, will explore the importance of certification and reliable criteria for sustainable and equitable products. These criteria, which create a negotiating framework for producers, vendors and consumers in areas such as food production, agriculture, forestry, and eco-tourism, are an important mechanism for assuring the success of restorative enterprises.
Empowering People with Information
One of the most important facets of Dammond's program is its emphasis on training and technological innovation. By working closely with farmers and partnering with them in a cooperative way, he has given them the tools to farm more successfully. This enhances his own businesses success, and assures that all the farmers that he works with have a common standard of high quality and ecological produce. Without this kind of organization and training, it would take much longer for these farmers to get to the point where they could reliably provide the high quality output that Symbio needs in order to satisfy its customers. Training and technical support are important elements in the work of social entrepreneurs to create new business models. While each takes a distinct approach to sharing knowledge, changing practices, and incorporating business know-how, each example in this issue demonstrates the importance of empowering others with the practical tools they need to be a part of a new enterprise. The story on Arturo Garcia of Mexico who is working with coffee farmers, explains how he focuses his attention on coffee cooperatives, providing them with knowledge in ecological farming practices. On the other hand, Rice emphasizes education of the consumer, helping coffee drinkers understand the impact of their buying choices and steering them toward products they can enjoy, without exacerbating social inequity and environmental degradation. With Symbio, Dammond finds himself approaching both ends of this spectrum, training farmers in Poland through consultation with agronomists, and educating consumers in western Europe by labeling his products with information about organic produce and Poland's environment.
Engaging People's Values and Culture
Business enterprises and the market in general have been held accountable for many instances of not only environmental degradation, but also cultural degradation. Exploitative labor practices, migration related to industry, and displacement of people in the name of economic development are very real and ongoing phenomenon, making it difficult to imagine how business enterprises or activities driven by profit could, in fact, enhance communities. However, the most successful enterprises are often a force that create or unify communities. Employment, economic security, and industries that tap into the strengths and abilities of a community can provide enormous social cohesion. When coupled with environmental restoration, this social or cultural cohesion can make a business enterprise a powerful force for positive social change. Without consideration for local cultures and a respect for the rights of workers, consumers and local communities, any enterprise will meet major obstacles. This could include public relations problems, loss of customer support, and problems with worker retention. Engaging people's values and helping to strengthen communities through a business enterprise supports both the restorative and profit motivations of a company. For Dammond, respect for the traditions of the Polish farmers has been a fundamental platform for the sustainable agricultural practices he has introduced. He has also found that by bringing farmers together to learn, exchange ideas and strategies, and share resources like equipment and seeds, his work has actually helped unify farmers that had become divided by an increasingly competitive market. Garcia, working with coffee growers in Mexico, is also relying on the traditional ties within the coffee farming communities to build strong cooperatives around the production of sustainable and high quality, shade-grown coffee. His work has served to reinforce these communities by giving them greater economic security, and a strong motivation to continue to work together. Rice has been so successful in marketing his products in the U.S. through major outlets like Starbucks Coffee, that he is actually helping to shift the U.S. consumer culture toward a greater interest in socially responsible and environmentally sustainable products. In market-based solutions as well as other forms of environmental change work, we have seen the importance of an underlying commitment to respecting people's cultures and engaging their values. Since culture and values often drive human decision-making even more profoundly than economic, legal, or knowledge-based factors, this principle is one that should not be underestimated.
A Broader Pattern Emerges
As the Environmental Innovations Initiative has worked with and observed environmental social entrepreneurs working around the world, we have seen the emergence of a very powerful and hopeful trend.
Rather than pitting environmental change against market forces, which have traditionally been responsible for unsustainable use of resources, these environmental innovators are tapping into these same market forces to make sustainable activities effective for both human communities in need of economic development and the environment.
In addition, environmental entrepreneurs have been able to successfully leverage the participation of government and civil society in the construction of market-based tools. For example, some have developed laws, regulations, and systems of certification that can provide incentives and guidelines for market oriented solutions like sustainable forestry, ecological tourism, and organic agriculture. In addition they are using environmental goods and services as a device for educating the public about environmental issues and individual responsibility.
Through the stories on Rice and Garcia and the essay by Rosa, this issue of Changemakers.net Journal explores some of the cutting edge efforts of environmental innovators around the world who are demonstrating how business enterprises can in fact accelerate the pace of environmental change using the principles we have observed.
In Brazil, we will see how Rosa provides rural electrification through solar energy using capital from a fund called the Clean Development Mechanism. This fund, launched in connection with the Kyoto Protocol on climate change and funded by the World Bank and private investors to support sustainable development initiatives within poorer countries, is designed to lower the overall cost of reducing greenhouse gas emissions released to the atmosphere. According to the World Resources Institute, these twin objectives reflect the need to coordinate action between countries in different phases of economic development that nevertheless share a common aim of reducing the buildup of greenhouse gasses.
We'll also see how Garcia is working with small coffee producers to make their work more lucrative and environmentally sustainable through cooperatives that provide access to larger markets, and training in more ecologically sound growing, harvesting, and production processes. Rice works with fair trade and organic coffee producers to certify and market their products, effectively closing the gap between the sustainably harvested product, and the enormous market for coffee in the U.S. and Europe.
These social entrepreneurs share Dammond's conviction that business can in fact be a tool for environmental change. They also share the key principles described in common, which, if applied more broadly, could help others to successfully wield market forces for environmental change.
Conclusion
With these principles and a wide array of specific implementation strategies, we are seeing more and more social entrepreneurs applying market-based approaches to resolving environmental and social challenges. The results so far in areas like sustainable forestry, ecological agriculture, and fair trade products, indicate an enormous opportunity in this arena. This opportunity will grow as more financial institutions and lending agencies recognize the enormous financial and social returns that can come from investing in these restorative ventures. However, the need to wield market forces cautiously and deliberately remains strong, as businesses continue to define for themselves what qualifies as appropriate behavior in a competitive globalized economy. Careful evaluation is needed of the true impacts of market-based tools and business enterprises on the economic as well as social and environmental fronts. It is our hope that the Environmental Innovations Principles can serve as guideposts for ventures that truly undertake environmental and social objectives utilizing the dynamic forces of the market as an engine for change. As Dammond watches his business grow, and begins to work with other international groups like the International Finance Corporation to extend his model to other countries, the line between a business entrepreneur and a social entrepreneur, begins to blur. It suddenly starts to seem appropriate that the two roles should blend together so well. To the farmers he works with, Symbio is a source of needed revenue, to the consumers a provider of healthy, high quality produce. But in the larger scheme of things, Dammond is a pioneer in a new synthesis of two powerful forces for change: economic opportunity and environmental restoration. To comment on this overview or any of the following articles, please write to webmaster@changemakers.net Yasmina Zaidman is the Acting Director of the Environmental Innovations (EI) Initiative at Ashoka, a program that distills from the work of the world's leading environmental innovators the crosscutting principles and effective strategies than can accelerate the pace of change in the environmental field. Zaidman has worked in the environmental field since she graduated from Vassar College in 1995 with a degree in Hispanic Studies. She worked with the Global Futures Foundation and Ecotech to bridge the gap between business and environmental objectives through interactive conferences, and then consulted to businesses in the US and Mexico on environmental management and implementation of ISO 14000.
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