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Logo of Phnom Penh Post newspaper Phnom Penh Post - New business mixes profit motive and sustainability

New business mixes profit motive and sustainability

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090511_04.jpg

The product of the Global Young Leaders Program, Eco Biz will sell sustainable palm sugar, charcoal and wood vinegar.

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HENG CHIVOAN

A man prepares logs to make into charcoal in Kandal province.  A new Hong Kong-based think tank will help French NGO GERES find new markets for its eco-products, such as environmentally friendly charcoal and wood vinegar, a charcoal by-product that can serve as a fertiliser.  

FINANCIAL GOALS

Eco Biz is seeking US$500,000 in investment and expects to break even by its second year and to make a net profit of $550,000 by its fifth year. The company will act as a middleman between the French NGO GERES, producers and potential buyers. 

HONG Kong-based Global Institute for Tomorrow (GIFT) is not your typical think tank, and its Global Young Leaders Program (YLP) is definitely not your average business course.

"We're trying to change the game," Chandran Nair, the CEO and founder of GIFT, told the Post on Thursday. "A lot of bilateral agencies are shaped by a postcolonial era, but the world has changed."

GIFT's YLP aims to bring together promising young people from diverse business backgrounds and gets them involved in a project that brings a market-based approach to issues traditionally left to nonprofit institutions.

On May 2, GIFT brought 24 YLP participants from 14 countries to Phnom Penh for one week to come up with a business plan for Eco Biz, a for-profit spinoff of the NGO Groupe Energies Renouvelables, Environnement et Solidarites (GERES).

"We tried to use the skills of the participants to look at the problem differently ... turning pressing problems into issues that can create prosperity in a meaningful and sustainable way," Nair told a crowd in Phnom Penh on Thursday at a business briefing event.

Eco Biz, 51 percent of which will be owned by GERES, will sell environmentally sustainable palm sugar, charcoal and wood vinegar - a charcoal byproduct that can be used as a fertiliser.

"Profits, people and the planet don't need to collide," Ruben Mahendran, who will run Eco Biz, said at the business event at the Imperial Garden Villa and Hotel.

In fact, Nair said, ignoring the profit motive can be dangerous.

People should not just be sitting in an ivory tower.... we want an outcome .

"There's a whole community here built around giving to people.... You can create dependency. You must create incentives so that the products that poor people produce have a greater market," he said.
New ground for GERES

Since 1994, GERES has been working with communities to conserve the environment and help Cambodians save money by developing and introducing energy-efficient stove technology.

At the moment, Geres receives most of its funding from donors like the Asian Development Bank, UN Development Program and the French embassy. In order to reduce its reliance on outside sources, Geres wanted to start a separate for-profit business to create a market for the sustainable goods produced from its stoves, according to GIFT briefing notes received by the YLP participants.

As an NGO, GERES has little experience in business and wanted help making sure its new business could be profitable, Mahendran said.

Mahendran contacted GIFT, and when the YLP participants came to Cambodia, they worked around the clock for a week to produce comprehensive marketing, operations and financial plans.

Without GIFT's help, Mahendran said, Eco Biz would have ended up with a "textbook-style" business strategy.

Nair said he believes a market-based approach responds to real-world demands that NGOs often ignore.

"Just occupying a moral high ground is not enough.... But if you get the incentives aligned, people will respond," he said, adding that many NGOs treat poor people like they are not smart enough to understand economic incentives.

"People should not just be sitting in an ivory tower and thinking, like some NGOs ... We want an outcome," Nair said.

But Eco Biz is not just about making money, as leaders will gauge its success by its ability to benefit Cambodia's forests and people in addition to shareholders.

This triple bottom line was a welcome change for some of the YLP participants. Matthieu Raffestin, the CFO for Sonepar Asia in China, said, "I'm used to finances in the strictest sense - pure profit and figures. But now, you have to take into account environmental impact."

Loh Wang Chin, a project development officer at GERES who also did the YLP program, said it went "beyond any MBA programs" because "it melted corporate people into NGO people".

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