For-profit business models are an effective path to sustainable development, meeting hears

24 November 2017

Four successful entrepreneurs from around the globe tell an UNCTAD commission that for-profit businesses can be key partners in solving economic, social and environmental problems

For-profit business models could be a powerful way to achieve the Sustainable Development Goals (SDGs), successful business owners told a UN commission on investment, enterprise and development convening this week in Geneva, Switzerland.

With the global community facing a US$2.5 trillion annual financing gap in key sustainable development sectors, there’s growing consensus that the private sector must play a stronger role in solving economic, social and environmental problems.

On Wednesday, four remarkable entrepreneurs from different parts of the world sh​ared their stories in Geneva, offering advice on how governments could make things easier for businesses that want to “do well by doing good”. Here are their stories:

Recycling plastic is good business, not just environmental goodwill - Dimitri Klironomos, Northwood Environmental, Zambia

"This is a passion-driven, but profit-bearing project," Dimitri says. "It's based on the premise that plastic recycling doesn't have to be altruistic." Northwood's business model, he says, is simple but effective.

"We sort, clean and shred plastic of different forms and then reuse the granules to make such things as black sheeting, refuge bags and other construction materials."

Founded in 2015, the company currently processes about 5 tons of plastic each day, Dimitri says, "which in the small town of Kitwe on the copper belt of Zambia is quite a major feat, since refuge collection has proved to be challenging for our local council".

“Although Zambia is a landlocked country, we’re no less guilty of allowing waste to enter the waterways and eventually make its way down to the ocean,” he says, noting that some 80% of the roughly12 million tons of plastic entering our oceans each year comes from land-based sources.

How can governments help entrepreneurs like Dimitri? He suggests that there should be specific tax incentives for companies making a "quantifiable impact on pollution," regardless of their size.

"We have a wonderful organization called the Zambia Development Agency, and they are really helpful in establishing tax benefits for up-and-coming businesses. The only problem is that they are directed at fairly large investments of over US$250,000, and we believe there needs to be a lower ceiling on that type of investment."

He says the tax benefits could be based on savings on foreign exchange.

"Zambia, like many other nations in Africa, has a problem with foreign exchange, and the import substitution of recycling is very important. We estimate that our small project has saved Zambia over US$2.2 million in the last couple of years."

Making motorcycle taxis safer with an Uber-like app - Peter Kariuki, SafeMotos, Rwanda 

Motorcycle taxis are a popular way to get around town in Africa. They easily weave through traffic jams and drive down dirt roads inaccessible to cars.

But they’re also very dangerous and one of the reasons why low and middle-income countries account for 90% of global traffic deaths, despite being home to only half the world’s registered vehicles.

Peter Safemotos 

In Rwanda, where SafeMotos is based, up to 80% of traffic accidents are caused by motorcycles.

In the Rwandan capital of Kigali, Peter says, "there are about 20,000 motorcycle taxi drivers doing around half a million trips every day. And we believe that safe drivers should be rewarded with more business. Customers should have an option to be connected to safe drivers through an app."

And that's exactly what his company does.SafeMotos equips motorcycle drivers with smartphones that track their driving – when they speed up, and how often they brake. The data is then fed into an algorithm developed by insurance companies to identify risky driving behavior.

"Our customers no longer have to gamble because through the app they are connected to drivers that have already been vetted [for their safe driving habits]."

Launched in 2015, the company has grown from just 5,000 trips to more than 165,000 trips in just two years.

"We're proudly for profit. But that doesn't mean we can't have a strong social impact," he says. "The UN is a strong proponent of the SDGs, and so are we." 

Peter, a Kenyan, says what attracted him and his Canadian business partner to Rwanda were the government's pro-entrepreneurship policies, especially for start-ups working in information and communications technologies (ICTs).

"We were able to register the business in under 15 minutes. We were granted an ICT-entrepreneur visa that allowed us to stay in the country. And we've enjoyed the support of many [business] enablers in Rwanda such as accelerators and incubators because the government has been pushing a lot for this." 

His advice to governments? Align education programmes with the technical skills that up-and-coming businesses require.

“Human resource has been our biggest bottleneck. We've not been able to hire experienced talent,” Peter says. 

Turning bees into pollution-monitoring drones - Michael van Cutsem, BeeOdiversity, Belgium

Today, 92% of the world's population lives in polluted areas, and pesticides contaminate 45% of the food we eat, Michael says. 

Seeing these stats, he says, "we thought we were facing a wall and going directly into the wall. But then we noticed that there were all these SDGs, and that it was actually a wall of opportunities. So we created BeeOdiversity to help create value with nature instead of destroying nature to create value." 

The company has found a way to use bees to measure levels of pesticides, pollution and biodiversity in the environment.

Michael BeeoDiversity 

"In one beehive you have 50,000 bees that act as drones. And they're going to take pollen. And the pollen is on the plants and absorbs the pollution. So it gives you a great indication on the health of the environment." 

The data is processed and then handed over to local authorities, farmers, companies and others, who pay a lump sum for the “beemonitoring” as well as consultancy fees.

Currently active in parts of Belgium, France and the United Kingdom, the company has 70 ongoing projects “employing” more than 12 million bees to monitor an area greater than 70,000 soccer fields.

So far, the data has shown that pesticides contaminate 85% of the surface monitored. And seven of the 50 pesticides identified last year are forbidden in the European Union.

Asked about the challenges he has faced, Michael says that inadequate policies have created major hurdles.

"When we see politicians they tell us, 'Either you save the world or make money. But you cannot do both'. So on one side you have NGOs that receive grants and on the other side you have commercial companies. But we're in the middle. We don't have access to the grants and we don't have access to the financing provided to commercial activities."

A solution, he says, could be social impact bonds, a “pay for success” model for financing companies solving social and environmental problems.

The other major hurdle the company faces, Michael says, is a lack of talent in the job market. "The young generation wants to act and make a difference, but they don't always have the technical skills needed."

Charles Taka 

Reducing our carbon footprint, one building at a time - Charles Blaschke, Taka Solutions, United Arab Emirates

“We think we’ve found the best solution to reduce carbon emissions, and it starts in the homes and buildings we live work and play in,” Charles says. 

Technology has transformed almost every aspect of our daily lives, he says, except for our buildings, which account for 40% of global carbon emissions.

“But the beautiful thing is that our buildings are very inefficient, so there’s great potential to save a lot of energy. And when you save energy, you save money." 

The company’s business model, Charles says, is based on the pay-as-you-save premise, meaning Taka Solutions only gets paid when building owners save money on their energy bills.

“We go into a building and say, ‘Look, you're spending a million dollars on energy and we think we can slash your utility bills, let’s say, to US$600,000. But in order to do that you need to spend US$1 million.’ And the building owner will say, ‘Well, I don't have a million dollars and if I did I wouldn't spend it on my building.’ We say, ‘That's fine. We'll spend that million for you. You spend nothing. We will invest in your building and all you have to do is split those savings with us.”

He says that, on average, Taka reduces energy consumption between 20-40%. Contract periods are between three to seven years.

But why has Charles, an American, decided to start this venture in the United Arab Emirates?

“It's a good example of a government doing very good things to attract and keep entrepreneurs like myself.”

“There are 50 million buildings all over the world. We could’ve gone anywhere. Ultimately, we decided to start this relatively risky business in the UAE because of the vision of its leaders," he says referring to the country's goal to improve energy efficiency by 40% by 2050.

Asked how governments could motivate more “impact entrepreneurs”, Charles suggests offering free licenses for businesses whose core function directly addresses the SDGs. And tax breakswouldn’t hurt.

“Consider the company's impact as a form of a tax. If they're saving carbon emissions then that's their tax.”​