#Social Entrepreneurship# Lessons learned

– characteristics of a social entrepreneur: the participation of Diego was a great input.

– characteristics of a social business: I personally like the definition of M. Yunus, that affirms that a social business is the one that, after paying back the investment, reinvest the profit on social development issues. But it’s been interesting to realize that most of the called social businesses don’t comply with this definition.

– the power of social media to boost social businesses

– the individual assignment regarding a real social business has been very useful and I really enjoyed researching about GreenWorks, an institution doing an amazing job in UK.


CSR in SMEs

It’s clear that there is a great challenge for the private sector in general to reframe the business model in order to make it more compatible to the global constraints and the requirements of society. For SMEs, which often cannot afford to invest as much as big companies, being creative and seeing CSR as a long term issue which assures your existence is critical to drive changes, through the incorporation of practices stemming from this concept to the core business.


Brief Analysis of the EU Proposal for Rules and Action Plans on GHG emissions and removals from LULUCF

Under the context of reducing the greenhouse gases (GHG) emissions, one of the most discussed measures are those related to land use, land use change and forestry. The Kyoto Protocol, the main current international agreement for GHG emissions, covers a very narrow scope of this topic, focusing on the afforestation and reforestation activities contributing for the emissions’ reduction targets, even though the  Decision -/CMP.7 taken in Durban during the 17th Conference of the Parties of UNFCCC resulted in some progress. The main barrier for including other activities in international agreements is still the methodology used to account the emissions or removals promoted by them. In this sense, last March 12th, European Commission released a “Proposal for a Decision of The European Parliament and of The Council on accounting rules and action plans on greenhouse gas emissions and removals resulting from activities related to land use, land use change and forestry”. The document assigns a very important role to LULUCF on tackling climate change, aligned with other policies already in force in the region, such as the 20% reduction of GHG emissions by 2020. Although European Union’s emissions basically stem from energy production rather than land activities, “appropriate land uses and management practices in forestry and agriculture can limit emissions of carbon and enhance removals from the atmosphere”. (pg 3)

The proposal was created through the creation of an expert group, supported by a public consultation and an impact assessment, which considered three alternatives for including  LULUCF in the Union’s commitments: LULUCF as part of the ESD, as a separate framework or by delaying inclusion altogether. The key issues investigated by the impact assessment were:

The results of this assessment indicated that there are good reasons to include LULUCF in the GHG emission-reduction commitments. The more appropriate scheme seems to be a separate legal framework, setting rules for a mandatory accounting of emissions and removals from both forestry and agricultural activities, and giving equal weight to mitigation action irrespective of whether it was taken in the forestry, agriculture, related industries or energy sectors. Therefore, the proposal represents the first approach to robust and comprehensive accounting rules for LULUCF, which should support future policy development towards the inclusion of LULUCF in the Union’s commitments.

Since it’s a trans-boundary issue, the Subsidiarity and the Proportional Principles underlie the proposal. The GHG involved in the accountability are CO₂, CH₄ and N₂0 resulting from the following activities: afforestation, reforestation, deforestation, forest management, cropland management and grazing land management.

To conclude, it’s clear that LULUCF must be included in the international GHG emission-reduction commitments. But the main constraints are still the methodology used to account the emissions or removals and the monitoring process. Although the European Commission’s proposal sets ground rules and guidelines to support related policies, it doesn’t address properly those challenges.

Reference:

European Commission 2012/0042 (COD) of 12 March 2012. Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on accounting rules and action plans on greenhouse gas emissions and removals resulting from activities related to land use, land use change and forestry.

 


#Climate Change#: Reforestation CDM Project in Brazil

Although Brazil has got a lot of projects registered under the CDM scheme, only 2 of them are related to reforestation. The idea here is to analyze one of them, developed in the Tietê riverside, one important watercourse that crosses the city of São Paulo, within the state with the same name.

According to the Project Design Document, “The Tietê —São Paulo state’s largest river— runs 1,100 Km from its eastern source in the São Paulo Metropolitan Region to the western border of the state where it joins the Paraná river, which then runs southward, toward the Rio de la Plata estuary between Argentina and Uruguay. This river has had a tremendous influence on São Paulo City land pattern occupation and today’s industrial development set up within Metropolitan Area. Because it is located at the source of these gateways, the São Paulo Metropolitan Area has to import more than 50% of the water from other basins” (PDD, pg 10). In the last century, when São Paulo grew exponentially to be one the biggest cities in the world, the levels of pollution within the river increased a lot and the riverside was completely occupied in urban areas. The result was the damage in important ecosystems and consequently significant losses of biodiversity within the Atlantic Forest biome. The following picture shows the losses in vegetative coverage in the state.

Source: PDD (pg 51)

The project consists on the reforestation of up to 13.939 hectares of riparian areas currently occupied by unmanaged grassland along the banks of ten hydropower reservoirs in the State of São Paulo with native forest species. About 100 native different species are expected to be used, and the project will be carried out by AES Tietê, an electric sector’s company which owns the concession of 10 hydropower plants in the region with a total capacity of 2,6 GW.

The methodology applied to the project is “Afforestation and reforestation project activities implemented on unmanaged grassland in reserve/protected areas – AR-AM0010/version 04 (EB 50 on October 16 2009)”. In that sense, it’s important to highlight that the areas that will be recovered are protected areas according to the Brazilian environmental legislation regarding riverside, but there is no responsibility for the company to promote de reforestation of the area. Without the activity, the baseline is that the grassland remains unmanaged.

To proves additionality, the methodology used was “Tool for the demonstration and assessment of additionality for afforestation and reforestation CDM project activities” (version 02), approved by the CDM Executive Board (EB 35), to demonstrate additionality through investment, barrier and common practice analyses, as applicable. (PDD, pg. 22) Summarizing:

Once the additionality was proved, the main point becomes the estimation of GHG removals by sink. It remains as one of the most controversial aspects of afforestation and reforestation methodologies. “Estimation of ex ante actual net GHG removal by sinks was performed by the application of TARAM (Tool for Aforestation and Reforestation Approved Methodologies) made available by the World Bank BioCarbon Fund, by applying the stock-change method.” (PDD, pg. 31) So, the result of net sink is calculated deducting the amount estimated to be removed without the project from that one promoted by the project activity. No relevant leakages were identified. The monitoring process is very complex in this case, since there must be a detailed ex post laboratory analysis to prove that the expected removals really occurred.

To conclude, we see that this kind of project has no incentives from other origins to be undertaken. In this case, the CDM can really represent an incentive to the removal of GHG from the atmosphere, even though companies may do that also to improve their reputation, for publicity or for improving the relation with communities. The social and economic effects of this project are few, but from the environmental point of view reforesting the riverside can be positive for the biodiversity, for protecting the water stream from pollution, prevent floods, among other factors. The only point of concern is this case is the effective reduction of the mix of trees planted, what reinforces the demand for a clear and efficient monitoring plan.

 


#Rural Development#: A food insecurity outlook

According to the Food and Agriculture Organization of the United Nations (FAO), by the end of 2008 there were about 850 million undernourished people. Other sources, such as Oxfam International, affirm that it reached 1 billion people by 2009, due to the prolongation of the 2008 food crisis effects. Despite this awful situation, if we take into account the Millennium Development Goals (MDG) set by United Nations, we are on the track to reduce the proportion of hunger people in the world, hence reaching the target, as we can see in the table below.

Although it seems to be contradictory, it’s not rare to see important representatives of countries and international organizations claiming that the current economic system promoted this improvement. Sometimes it seems that they forget they are treating with people, with human life, not with percentages. If nowadays we have almost the same number of hunger people in the world, it means we have not improved the situation at all. Taking a further look at the distribution of famine in the world, we can see a huge increase in the number of undernourished people in the least developed countries (>20%), indicating that the gap between rich and poor has been widened. Obviously, the conclusion is that the current situation is worse than we had in the 90’s. Population growth makes up the statistics and the problems remain hidden behind “proportions”. Rich countries sometimes benefit from the situation whereas poor countries cannot afford to solve the problem by themselves.

Many of the main challenges faced by poor countries can be clustered into two topics: global markets and food resilience. The first topic means that from an external point of view, poor countries have been deprived from food security especially by the prices volatility, since most of poor countries are net importers. According to a document of the UN Conference on Trade and Development (UNCTAD),  food prices rose by 83% between 2005 and 20086, with maize prices nearly tripling, wheat prices increasing by 127%, and rice prices by 170% between January 2005 and June 2008. “At present, there is a lively debate as to whether these developments were the result of factors adversely affecting food supply, or whether they were caused by excessive speculation in food commodities derivatives” (De Schutter, 2010). There are also arguments supporting the increasing demand as a driver for prices spike, pushed by China and India, but this is not coherent with the available data.

This huge dependence on external markets stems basically from the internal vulnerability of those countries, what means low food resilience. According to FAO, the population is expected to grow about 34% until 2050 and almost all of this increase will occur in developing countries. The same study affirms that food production should increase by 70% to meet our future needs.

So, how should we tackle the existing food insecurity and go beyond to assure that we can support the increasing population? According to FAO, “Investment in agriculture will improve the competitiveness of domestic production, increase farmers’ profits and make food more affordable for the poor. Private investment will form the bulk of this investment, but public investment has a catalytic role to play in supplying public goods that the private sector will not provide.” However, the current situation reveals that poor countries are often not attractive to private investors and governments are not financially able to promote public investments in the necessary scale.

In this sense, there are important measures to be undertaken. From the public sector, a higher share of the national budgets should be invested in this long term achievements, as well as the money coming from international aid. A legal framework for encouraging private investments is an alternative to be adopted in some countries, at the same time it assures that when the money flows into the system, it really contributes for the local social development, for preserving the environment and reinforcing local culture.

A good example of this situation in the future can be the expansion of biofuels’ production in Africa. An article published recently by “Nature” indicates that Africa food production in Africa can be boosted by biofuels’ production, improving the food security in the continent. The reasons are many, such as the availability of untapped land, the investments and researches that the sector could promote in agriculture, etc. According to it, “bioenergy projects in Africa be expected to demonstrably improve food security at a local level”(…)” To achieve this goal will require planning and monitoring. Emerging frameworks and standards for evaluating bioenergy” (…)”Private–public partnerships are in principle attractive ways to harness the economic engine of private enterprise in order to realize social benefits” (…)”The first step towards reaching ‘win–win’ outcomes with respect to bioenergy, food security and poverty reduction is to recognize that such outcomes are possible.”

 

References:

De Schutter, O. (2010), Food Commodities Speculation and Food Price Crises: Regulation to reduce the risks of price volatility. United Nations Special Rapporteur On The Right To Food.

Food and Agriculture Organization of the United Nations – (FAO 2011), The State of Food Insecurity in the World: How does international price volatility affect domestic economies and food security?, Rome.

Oxfam International (2011), Growing a Better Future Food justice in a resource-constrained world.

Lynd, L. & Woods, J. (2011), “Perspective: A new hope for Africa” in Nature: International Weekly Journal of Science, ed. 474, S20–S21.

United Nations Conference on Trade and Development – UNCTAD (2009), Trade and Development Report.

 


#Innovation# Open Innovation / Lead User Innovation

For a long time we have being bombarded with the idea that globalization promotes the integration and connection of people around the world. But there is another result of this process that has been observed in the recent past and has an enormous impact on companies’ ability to compete, which is the gain of importance of the final consumer on setting up the characteristics of companies’ supply chain and products. Regardless the main causes for this, which could range from the quick diffusion of consumer’s level of satisfaction among other potential ones (fear) to the perception that it’s possible to capture people needs easier and faster (proactive), this trend has been observed in many markets.

In innovation it’s not different. Companies realized that their costumers can be part of the innovation process, having an input as important as or even more important than those inputs emerged inside the institutions by professionals. It led some companies to apply the ideas of open innovation and lead user innovation. As stated by Baldwin, Hienerth and von Hippel (2006), most of the relevant innovation in many sectors emerged from consumers’ interaction with producers.

There are many well succeed cases of this theory. One good example of co-creation involving costumers and company is the rodeo kayak industry, also presented by Baldwin, Hienerth and von Hippel (2006). The industry started its commercial activities basically during the 70’s when some users responded to potential purchasers’ demand designing and producing boats similar to those that they made for themselves. The whole industry was then created by users and afterwards it evolved to a very collaborative market.

An example among the big players in the world is the program Connect+Develop of Procter & Gamble. The program calls costumers and institutions to innovate, applying a wide range of alternatives which involves co-creation¹ and crowdsourcing². Examples of these approaches are, respectively, partnerships with universities or other institutions and direct channels to be used by the final individual costumer.

3M, a company recognized for its ability to innovate is also promoting open innovation processes. They work with external scientists and institutions, interacting with final costumers through communication tools, such as blogs.

There are a countless number of initiatives like this being undertaken by companies and this theory is gaining support worldwide. According to Gassmann, Enkel and Chesbrough (2010), “taking stock of these different trends, it seems clear to us that open innovation has quite a long life left ahead of it, as there is a long and growing list of phenomena that it can help us understand and interpret. However, we should note that it is unlikely that ‘the last word’ will ever be spoken on a topic as dynamic as innovation. Open innovation should instead perhaps be viewed as ‘the next word.’” To conclude, it’s clear that innovating in the innovation process is a key factor to assure competitiveness to companies and opening it for external participants seems to be critical for the success of companies.

¹ Co-creation is the act of involving consumers directly, and in some cases repeatedly, in the product creation or innovation process. Companies engage with consumers on initial product concepts and ideas, and they use consumers as a resource throughout the product development life cycle

² Crowdsourcing is “the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call

References:

Baldwin, C. Y., Hienerth, C., & von Hippel, E. (2006). How user innovations become commercial products: A theoretical investigation and case study. Research Policy, 35(9), 1291-131

Gassmann, O., Enkel, E. & Chesbrough, H. (2010), The future of open innovation. R&D Management, 40: 213–221.

http://www.businessweek.com/magazine/content/06_17/b3981401.htm

http://www.pgconnectdevelop.com/

 


#Climate Change#2: South Africa’s vulnerability to climate change

Regarding the vulnerability and possibility of adaptation to the effects of climate change, South Africa mentions in its report to UNFCCC¹ that changes are likely to become more apparent in the coming years, affecting in a large scale the availability of water, the agriculture productivity, the biodiversity and the coastal and marine environment. Although the country has got specific sector plans to increase the resilience of its environment, the level of vulnerability is relevant as well as the possible impacts, and the adaptation measures are constrained by the uncertain effects of climate change.

Taking a look at the two main vulnerability and adaptation indexes available, the situation is confirmed. DARA², in its report called “Climate Vulnerability Monitor 2010”, foresee a worsening in the country’s vulnerability between 2010 and 2030, particularly in the dimension defined as “habitat loss” and in a smaller scale for “economic stress”. The situation about habitat loss is common to most of Sub-Saharan region, which means that one of the most valuable areas in the world in terms of biodiversity is extremely threatened. In its turn, the GAIN Index, whose approach add to the vulnerability the capacity of a country to absorb the impacts and increase its resilience, put South Africa in a negative trend as well. Concerns with food capacity, health workers and infrastructure are highlighted among the vulnerabilities, whereas tertiary education levels is a concern when it comes to the capacity to face the challenges posted by climate issues.

The conclusion is that, besides its carbon intensive economy as showed in my first blog regarding this topic, South Africa is likely to be extensively affected by the global climate change. National government is already undertaking actions to face this challenge, but the velocity and anticipation of the responses will be crucial if the predictions about climate are confirmed.

References:

¹ South Africa’s Second National Communication under the United Nations Framework Convention on Climate Change (available at http://unfccc.int/resource/docs/natc/snc_south_africa_.pdf)

² http://daraint.org/about-us/


#EIA/SEA#: The Belo Monte Project in the Amazon region (State: Pará. Country: Brasil)

UHE Belo Monte is a hydroelectric power plant to be built in the Amazon area, in the state of Pará (Brazil). The total capacity of the plant is 11,2 GW, which makes it the third biggest hydro power plant in the world. The assessment to evaluate the potential of the Xingu Basin was conducted during the 70’s and the 80’s, and the original project of Belo Monte, at that moment called Kararaô, was presented in 1989. Due to environmentalists and civil society pressure, particularly the reluctance of local indigenous people to accept the project, the project was left aside for a long time. In 2001, Brazilian’s government brought up a plan to increase the energy generation in the country, following the demand expectation and the necessity to have security in the supply. Since then, there has been a constant fight between investors/government against civil society players, and in 2009 the consortium responsible for the project presented the Environment Impact Assessment in order to move on with the project. As a result of the adaptations of the project, the mitigation and compensation plans presented, IBAMA (Brazilian’s National Environmental Agency), issued the Installation License in 2011, meaning that the construction was permitted and could start from that moment.

The project is quite controversy in Brazil and created a conflict with several international institutions, especially with the OECD. Personalities are advocating against the power plant in inside the country and abroad (James Cameron, Arnold Schwarzenegger, among others). The project is criticized from many points of view, but the central discussion remains over the environmental impacts, social impacts, technical feasibility and costs.

From the environmental and social point of view, although the technology to be used is the best available, which means that a smaller area has to be flooded, the reservoir will cover 440 Km² and will cause the displacement of almost 1.000 families. The river flow will be reduced, affecting the local fauna and flora, besides undermining some economic activities, such as fishery. The social and environmental programs or projects to comply with the IBAMA’s requirements account for about USD 3 billion, or 20% of the total cost.

Furthermore, to prevent major impacts and compensate some of them that are not avoidable, the project was adapted. First of all, changes in the reservoir, in the channel structure to compose the reservoir, among others, made that the power plant only can operate near its total capacity during a certain period of the year. So, even though the total capacity is above 11 GW, the energy guaranteed in the purchase agreements is closer to 4 GW, which is the amount that can be generated constantly throughout the year. Taking into account the total cost incurred (more than USD 15 billion), the feasibility and real necessity of the project has been put on trial for many technical experts and representatives of the civil society. The high cost of environmental and social programs, along with the changes in the technical project, proves the importance of the EIA in this case, even though the concerns raised from this process haven’t been enough to convince the involved parts not to undertake it.

Finally, the discussion comes to a point which is even more controversial. What is the kind of development we should encourage in the Amazon area? Nowadays, despite its decrease, the deforestation levels are still high. The project is already attracting many people to the region and the cities tend to expand, which is particularly dangerous in an area that land properties and environmental legislation are not fully respected. Maybe a Strategic Environment Analysis would be very useful in this case.

References: www.ibama.com.br

 


#Climate Change#: GHG Emissions in South Africa

According to the UNFCCC (United Nations Framework Convention on Climate Change), the latest data available for South African emissions of GHG (Greenhouse Gases) refers to the year 2000. The total emissions were estimated to be 461 million tones CO₂e. Following the IPCC (International Panel on Climate Change) 2006 methodology for GHG inventories, the most significant sector contributing to South African emissions is the energetic one, which accounts for 83% of the total. This value excludes emissions and accumulation of GHG due to land use, land use change and forestry. The net impact of these emissions is a reduction of about 18 million tones CO₂e, meaning that more GHG were sunk by forests and crop lands than emitted by those activities. In the graphs above we can see the summary of the information provided.

Figure 1: Total greenhouse gas emissions by sector in South Africa, without land use, land use change, and forestry

 

Figure 2: Total greenhouse gas emissions by sector in South Africa, including land use, land use change, and forestry

Source: South Africa’s Second National Communication under the UNFCCC – november/2011

The relevant contribution of the energy sector to the total emissions stems from the intensive carbon energy matrix, particularly coal, which is easily founded within the country. This mineral provides more than 70% of primary energy and more than 85% of the electricity in South Africa. Among many measures that local government is trying to promote, the use of renewable sources of energy is the one that stands out regarding potential to reduce GHG emissions.

Finally, it’s important to highlight that as most of developing countries, particularly the so called BRICs, South Africa increased relevantly its emissions from 1990 to 2000. The total increase was of about 33%, impacted especially by emissions from the energy sector, which rose 46% during this period. Waste and agriculture sector reduced their emissions in 38% and 4%, respectively.

 


Project Management: Itaipu Dam

Itaipu is a hydroeletric power plant located in the border Brazil-Paraguay. Its feasibility studies were carried out from 1970 to 1973, and the construction itself started at the beginning of 1975. The first generation unit started to run in 1984.

The capacity of the plant is 14GW, which made it the biggest hydroelectric power plant until the construction of the Three Gorges Dam, in China, completed in 2008. During 2011, Itaipu generated 92,24 TWh, providing 17% of the total energy consumed in Brazil and 73% of the Paraguayan consumption.

Background

The region where Itaipu is settled was a reason of land dispute between Brazil and Paraguay since the colonial period. In the 60’s the great hydroelectric potential of the Paraná River to produce electricity was proved and the dispute intensified. The military dictatorships governments of the countries at that moment came up with a solution that would solve the land dispute and provide energy for the increasing consumption in both countries, represented by the construction of the power plant, through the Itaipu Treaty. Afterwards, Brazil and Paraguay also signed an agreement with Argentina, since the Paraná River is one of the rivers that form the Río de La Plata, meaning that a bad water management in the dam flow could result in floods in Argentina.

Nowadays, the energy produced is shared by Brazil and Paraguay, but because of the differences regarding demand, Paraguay sells a big part of its energy rights to Brazil. The treaty between both countries expires in 2023 and since 2008 Paraguay has been claiming for a renegotiation in the conditions of Brazilian energy purchases, creating a little tension between the governments.

Challenges

100.000 workers participated in the construction of the facilities. In the peak times, about 40.000 workers were leaving in 9.000 houses at the margin of Paraná River. At that moment, the closest city was Foz do Iguaçu, which had a population of 20.000 people. A huge infrastructure had to be built in order to support the intense migration toward the region.

At the construction site, the first task is to alter the course of the Paraná River by removing 55 million cubic meters of soil and rock in order to excavate a 2 km detour. Later on, in 1978, 58 tons of dynamite exploded the two cofferdams that protected the construction of the new course. The 2 km detour created was 150 meters wide and 90 meters deep.

Almost all the work was hired from Brazilians suppliers. Many companies became huge and more representative in the Brazilian economy because of this project, and the project got over the economic crisis during the 70’s. In 1978, the site received 7,207 cubic meters of concrete, which is a record in South America.  The transportation in the site demanded more than 20.000 trucks and 6.648 railways cars. Between 1978 and 1981, about 5 thousand people were hired monthly, due to the peak of the construction and the high employees’ turn over.

The dam was constructed about 1982. Before fulfilling the reservoir created with the river’s water, a huge replacement of local populations had to be done, in parallel with programs to protect local animals and plants. The first unit started to run in 1984.

The estimated cost for the plant was about US$ 10 billion and the real final cost was of about US$ 14 billion, due to all the challenges faced and the impact of the economic crisis on the project. For having an idea of the project’s magnitude, the total amount of steel and iron used are enough to build 380 Eiffel Towers. As negative effects, we can mention the displacement of 10.000 families and the death of 149 workers during the construction, besides many other accidents and diseases.

Conclusion

From a very controversial project, Itaipu became a very important source of energy to support Brazilian economic growth. However, at the time it was built, there were fewer concerns about social and environmental impact, so the construction was not conducted in a very good way obviously taking into account the less developed technology and standards available by the same time.

The cost was huge, but in the long run it would cost much more to generate energy from non renewable sources. Comparing with other renewable sources, the cost is lower than the alternatives available for Brazil. The conclusion is that the power plant keeps playing a very important role on Brazilians development, but there are many lessons to be learned from its construction. Furthermore, the success of the plant does not mean that the country has to adopt the same technology in other regions, since the technology and knowledge about our limits on impacting the environment and the society evolved.

 

References: http://www.itaipu.gov.py/en

 



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