Amy Reeve 7 Mar 2019 05:54pm

How the private sector can solve society's struggles

It has taken a bashing, but the private sector continues to develop innovative solutions to some of society’s biggest challenges. Amy Reeve finds three organisations helping to create lasting positive change

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Caption: Governments, companies, and communities can rally together effectively in the face of redundancies

When the Duke and Duchess of Cambridge joined a meeting with the Dundee Michelin Action Group in January, which was hastily formed at the end of 2018 when the French tyre firm announced it will cease manufacturing at its Dundee plant by mid-2020, the collaborative effort to “find a constructive way forward” for the 845 employees affected was praised

Only through partnership and togetherness could a sense of optimism be maintained, it was suggested. Just days later the city was dealt another economic blow as construction firm McGill entered administration with the immediate loss of 374 jobs.

Despite politicians and other businesses rallying round, the community is shattered by the psychological and financial effect of this latest round of redundancies. McGill was part of a long supply chain and according to local paper The Courier, one of the region’s largest employers of workers learning on the job. Labour MSP Jenny Marra said, “There is no doubt now that the city is in economic crisis.”

The societal effect of workers losing jobs in declining industries is well documented: lesser skilled workers in particular are at risk of underemployment, long-term unemployment, or leaving the workforce entirely. Research from the University of Manchester found that large-scale job losses can have a hugely detrimental impact, denting an individual’s trust in others, with trust being linked to significant benefits including health, happiness and social cohesion. In Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist, Kate Raworth of the University of Oxford’s Environmental Change Institute suggested an alternative to the dogged pursuit of economic profit whatever the stakes.

Economic activity should meet the needs of all, within the means of the planet. “If we don’t all win, we all lose” is the motto of the Ashoka Foundation, which was founded in 1981 by Bill Drayton when he realised that a collective effort between business, government, academia and other influential institutions would be a far more powerful and effective way to help people make systemic change in their communities.

Ashoka now has more than 90 global social entrepreneurs trying to tackle the root causes of the world’s most pressing issues and ensuring economies work for everyone. The World Bank’s Carbon Initiative for Development uses an integrated approach to help create meaningful and sustainable change that can be replicated. A $125m fund, its goal is to help improve living standards through results-based finance, illustrating how reducing greenhouse gas emissions can generate tangible development benefits for local communities like cleaner air, improved safety and financial savings as well as generating profits for businesses so they can grow.

Matt King, the fund manager for Ci-Dev, says: “We’re trying to identify business models that the rest of the world can learn from, copy, and build to a much larger scale. We want to see the private sector pick it up and run with it. One of the things we’re really proud of is that in some of the poorest countries in the world we have still managed a 4:1 ratio of private money to public money.

For our trust fund that’s important because we shouldn’t be doing these things over and over again, we should be enabling the private sector to do that.” If there are only so many billions of public dollars to help solve the world’s climate issues when it needs trillions, he adds, then a vibrant sector where private companies can operate, scale and make a profit as well as provide solutions for communities must be the aim. “There are enough solutions that deliver profit and climate change results at the same time,” he adds. “What we’re seeing throughout our portfolio is that there isn’t necessarily a trade off.”

Eric Reynolds

Inyenyeri, Rwanda

Over three billion people use “dirty” fuels such as wood and charcoal to cook with, says Eric Reynolds, who moved to Rwanda from the US in 2010 because he wanted to do something about the “Gordian knot of health, environmental and economic poverty” he saw when he visited homes during a trip to the country with an NGO in 2007.

Probably best known for his adventure clothing and equipment company Marmot, and more recently eco-friendly apparel company Nau – which had at its heart “a specific injunction to do no harm” – Reynolds found himself with time to focus full-time on research to develop a solution to tackle “the biggest cause of persistent poverty and suffering” in Rwanda.

He admits to being “terribly naïve” in the early days. But rather than succumb to the fate of the other 2,000 or so cook stove projects that had failed, he realised he was coming at the problem the wrong way. Most people were too poor to buy a quality stove that would reduce CO2 emissions by the amount needed to protect people from respiratory disease. So he flipped the business model: Inyenyeri would give the stoves away and generate revenue by selling efficient fuel instead. “We’re a utility company,” explains Reynolds.

“We manufacture pellets using fuel from small farms and certified woodlot owners, the customer buys from us the amount of pellets they need for cooking – which is virtually as clean as natural gas and cheaper than charcoal – and they get a free-to-use biomass Mimi Moto cook stove. We now have 5,500 households and we’ve proven the business model in several neighbourhoods in the city, in rural villages and a refugee camp, so we have essentially tested the model in representative demographic areas.”

Growth capital has come from a variety of sources including loans and grants from the IKEA Foundation, Althelia Ecosphere, Oikocredit, KfW, the World Bank and the EU. The business is currently “arranging for financing mechanisms” with the government of Rwanda as well as equity investors, says Reynolds, with the hope that it will eventually be owned locally and operated as a franchise.

He admits that success will come at a cost, it’s a capital-intensive model, but “who would not want to be associated with something that is so obviously well intended and well structured and legally established? By being idealistic, and matching that with a sober, thoughtful plan, we will raise the funds and, I hope, be a very large and successful utility company across Africa.”

Bremley Lyngdoh

Worldview Impact Foundation, UK

When Bremley Lyngdoh [pictured, below right] met Dr Arne Fjørtoft at a UN conference in Thailand in the 1980s he was already a passionate sustainability advocate working on projects to protect the ecosystem and heritage of indigenous people (Lyngdoh is from a farming community in Meghalaya, north-east India).

So he didn’t need much convincing when Fjørtoft, a Norwegian politician-turned sustainability champion, asked whether he’d like to see the work he was doing to help smallholders rise out of poverty through restoring a neglected farm in Sri Lanka. Employing Tamil and Singhalese women, Paradise Farm was transformed into a multipurpose organic operation to produce profitmaking products such as organic green tea, organic virgin coconut oil, fruits and spices, while jobs were created for the community.

Lyngdoh became an ambassador in the UK and helped set up the Green Goodness project to train students at Richmond Park Academy to become effective social entrepreneurs and sell the farm’s tea. Worldview Impact Foundation, his own social enterprise, is based on mitigating climate change by creating sustainable livelihoods for the poor and has projects in Morocco, Turkey and Kenya.

Lyngdoh strongly believes that every business should now have a social enterprise element to it, which can be scaled, replicated and applied to different communities. “The young generation are more enlightened, more proactive. They have technology at their fingertips – you can verify where that teabag came from or whether that t-shirt was the result of child labour. You can trace everything to source and you have the power to buy, or not. Young people can bring down companies that don’t do good for people or the planet. Companies that invest in the long term will survive, they will be forced to change because if they don’t, they will disappear.”

Lyngdoh created Spring Valley Farm in India to connect organic farmers in rural areas with social entrepreneurs in urban areas and create a space for learning and sharing best practice. He hopes that by inspiring and involving the next generation to think globally and act locally, they will change the economic model he believes has proved so damaging to the environment: “The neo-classical rip-off economies, where man is superior to everything else, that’s dead in the water.”

Investors are wise to this, he adds.“Impact investors have a major role to play by investing in things that bring harmony, new life, stability and peace. That money multiplies. It may take a little longer but you feel more rewarded – it’s karma.”

Brandon Dennison

Coalfield Development, US

Born and raised in West Virginia, which is dominated by the Appalachian mountain range, Brandon Dennison says most West Virginians feel a strong connection to the place, the landscape, the culture and people.

“There’s a real sense, almost on a spiritual level, of not wanting to give up on a place,” he says. “And I just know we have the potential to do so much more than just one thing.” He’s referring to coal and how the boom and bust nature of the industry, and its rapid decline, resulted in generational poverty, a less resilient workforce and a market structure that was well-intentioned but failing to help the community.

He took action by switching the narrow focus of placing one person at a time in whatever jobs might remain to using the social enterprise model to help create new markets in the region and foster a more diverse, entrepreneurial, and well-educated workforce. Unemployed and underemployed people work the 33-6-3 model each week: 33 hours of paid labour, six hours of higher education class time, and three hours of life-skills mentorship.

Coalfield Development has created more than 40 on-the-job training positions and more than 200 professional certification opportunities, redeveloped more than 150,000 square feet of dilapidated property, and successfully launched five new businesses in real estate development, construction, woodworking, agriculture and artisan trades.

It’s been an emotional experience: “I had a pretty solid middle-class upbringing so when I started working with people the poverty was so much more deep and complicated than I realised. It’s not just dollars and cents. You run into health problems, financial debt from years before that you can’t change, emotional and psychological issues. Trying to work with someone to break out of poverty is even more complicated than I ever imagined,” he says.

But when he looks at what can be achieved when the compassion of the not-for-profit sector combines with the efficiency of the for-profit sector (he’s an Ashoka Foundation fellow), he’s proud: “We have seen people go from being very vulnerable, on public assistance, sometimes even homeless, to getting work experience, becoming the first person in their family to get a college degree, even becoming home owners and launching successful careers. It takes a long time, it’s expensive, but it does empower people.”

He says the economic and cultural similarities between the coal community in West Virginia and, say, Wales or Poland are “striking” and he hopes that he can share everything he has learned with community leaders elsewhere. In this case, although scale is important, he adds, the entire wellbeing of society is at stake if lessons aren’t learned.

“It’s unhealthy when a place gets written off, or feels written off. It gets these deep fissures in society, which I think we saw in our 2016 and even 2018 elections. A rural-urban divide is a problem for the planet.”