Why would large companies (multi-nationals) invest resources into social businesses for the base of the pyramid?

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  • joeturner
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Re: Why would large companies (multi-nationals) invest resources into social businesses for the base of the pyramid?

For me, the big question is - what is 'safe' sanitation and who decides?

With respect to what happens to a corporation if they do not meet their stated obligations under the HRWS, the message seems to be that they're being increasingly monitored by their investors.

For example CDP said to me that they are supplying information about the water risk to investors www.cdp.net/en-US/Programmes/Pages/cdp-water-disclosure.aspx

What would happen if there was credible information put into the system about a problem with sanitation? If, in Christoph's example above, the sanitation was poor or didn't actually materialise? Do CPD have a way to include this detail of information into their reports?

I don't think they do at the moment, they were telling me that collecting data is a major problem. But.. maybe in the future..

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Re: Why would large companies (multi-nationals) invest resources into social businesses for the base of the pyramid?

Thank you Joe,
very interesting. I read the examples in the ceomandates report. Especially the third example I found very, very challeging because I thought this morning about that problem of sustainability in this kinf of project.
I will copy it here

Example 3 – Mining Company in Tanzania: Contamination and
Supporting Access to Water

The last example highlights some of the dilemmas large-scale water-using companies face when
dealing with water quality issues, and when they move toward supporting the HRWS.
A mining company had been providing local communities with “raw” river water from a nearby river, essentially relieving residents of the need to make the trip to the river to collect water themselves. However, the quality of water from the river was poor (this was unrelated to company operations). The company had excess water in its mine pits, which had to be discharged after being appropriately treated. The company built a water purification plant that would produce water for discharge of a much higher quality than the “raw” water it provided to the community from the river, but still of a lower quality than the water used by the company for its own staff.
This particular situation led to a number of questions for the company including:

  • What was the company’s responsibility to the community when discharging water that was cleaner than the “raw” river water it provided to the communities directly?
  • If the company provided the communities with treated water, should it be providing them with the same quality of water as that used by company employees? What about the serious cost implications?
  • What if the company provided the communities with treated water and health-related issues emerged, which were, or were seen to be, related to the quality of water provided?
  • What if the company provided treated water, but then left the area after 10 years and the water provision system fell into disrepair? Would the company be accused of infringing on the communities’ rights by failing to ensure that the quality of available water remained the same?

Actually there is more to ask.
  • What if the system fails and people get ill?
  • Who is responsible when they start to have wastewater?
  • Who is responsible when they put flush toilets, have no septic tank and the septic water spills all over?

Now we come to sanitation:
Who is responsible tor septic tank cleaning? And is it right to give people so much access to water that they can spill it? Who decides that - has the right to decide that? Is the water for free or is there a charge? Who does the billing? Who is responsible for maintenance? and so on.....

I come back to my point as always - without a utility services as this or others are impossible to be sustainable. They might be ok while there is a constant external flow of money and than? People change their habits and use and build economic situation around it.
Lots of questions without an end.

So the answer might be the mining company has to put the seed money to set up a water utility which decides: what quality, who is charged what, which sanitation etc. etc. and there has to be a fund for the first years and every measure has to be calculated to be grant free for the future. And the utility has to be "independent" from the donor??!! Difficult. I don´t have the answers.

Regards

Christoph

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Re: Why would large companies (multi-nationals) invest resources into social businesses for the base of the pyramid?

There is also this thing called CEO Water Mandate, which has some kind of link to the UN.

ceowatermandate.org

This is one of their reports on how corporations should respect the HRWS ceowatermandate.org/files/HumanRightsLens2012.pdf

Note that I'm not defending how these things work in practice - but I think I am correct in saying that Coca-cola has affirmed the HRWS especially with respect to their employees

www.coca-colacompany.com/our-position-th...water-and-sanitation
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Re: Why would large companies (multi-nationals) invest resources into social businesses for the base of the pyramid?

Joe what you are writing I guess is going more toward water stewardship (see here) and there are many companies involved. The main aim is to guarantee a good water use for all without conflicts between the different users – it is mainly good watershed management. Somehow this might be useful for sustainable sanitation (as it should be part of). But there is a long and dusty road until you reach the non sewered areas. At least in dry areas the connection between no sewer and contamination of water sources (which is the main focus for water stewardship concerning sanitation) often is not directly there. In Lima for instance the settlements without sewer do not represent a problem for the watershed – therefore the activities might be not so easy but I will try to think of other situations. It is an idea which did not occur to me up to now to see how we might be able to use that.

Kris – yes it has been discussed before, but things change. At least my opinion has changed over the years and I see that the behavior of many companies has change as well (some as they learned from the situations where they have been thrown out – some as they changed management – some as they are trying to do the things right) and the political situation changes as well. For instance we have a political situation very much in favor of privatization in Peru right now – so it is important to think about “in which way privatization can be done well – what are the key points to be controlled to be worked on” – by regulation, by consultancy, by decision makers etc. No doubt it can be done right but it is not easy. So yes, personally I think about it a lot and I am interested to hear other (new) views – I think there is room for new ideas.

Regards

Christoph
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Re: Why would large companies (multi-nationals) invest resources into social businesses for the base of the pyramid?

Another little thing I heard in Zaragoza - if large multinationals have taken on the Right to Water and Sanitation (and an increasing number have), some of them are saying that this means that they have obligations to their employees.

Is it possible that this could bring change - in the sense of providing for, or possibly pressurising other to provide for - safe water and sanitation?

I am less cynical than the others. There has been a lot of talk and little action, but it seems to me that if poor water performance actually affects the value of the business of the multinationals, then it might lead to good things. Of course, the question then is how to ensure that poor performance in one country leads to a financial effect on a multinational based in another. But maybe in a more connected world, that is not so impossible to imagine.

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Re: Why would large companies (multi-nationals) invest resources into social businesses for the base of the pyramid?

As written in one of these two topics before privatisation of water supply companies is a controversial but 15 years old topic which about everything has been said on and no agreement could be reached ;)

What I find more interesting is the notion that large companies are starting to open up the market to the bottom billions by creating and mass producing products for them.
On the one hand this is great as it (in the short term) improves the living conditions of the target population.
It is also clear that only these multinationals have the mass production capacities to reach the economics of scale necessary to succeed with this (this is the main reason why most social business ideas started by NGOs with donor money are never going anywhere).
Last but not least the mass production efforts often produce low skill jobs within the targeted population both in production and as sales agents.

On the other hand however it seems to me that these efforts prevent a normal socioeconomic development, or more specifically the creation of a larger middle class. It is a sort of short cut, that is instead of rising the overall economic output (and thus wages etc.) and subsequently having a rich enough middle class that is both the producers and consumers of the products, you get a much lower economic equilibrium through the efficiencies of modern large scale mass production.
So what you end up with is a consolidation of poverty at a slightly less severe level plus large profits for small minority (the in country managers and the owners abroad).

In a sense this is better than the status quo in many of the countries we are talking about (where also a small minority is exploiting the country's resources, but is much less effective at it), but given that there is a similar development in reverse in the industrial countries (walmartization etc.) this is a worry some outlook for human society as a whole.

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Re: Why would large companies (multi-nationals) invest resources into social businesses for the base of the pyramid?

Hi guys, I am a bit confused

a) where to write - Kai points to Bens thread (this one) so I take it.
b) for me these topics a very mixed up -but maybe that depends on the view.
I have the impression that for Kai EVERY large company doing "greenwash" is not ok. But actually the video you posted Kai has nothing to do with social business or greenwahing, it is just business.

I would like to point out how I understand the situation:

For me there are 3 different lines of activity of companies or money from companies:

1. The money from persons who made their money with large cooperations and decided to do use their money for a defined purpose without the idea of generating revenue of that activity. (ex. Bill Gates, Warren Buffet, Bill Clinton) – I find this extremely positive and motivating.

2. The money which comes from companies as Unilever where it is really not clear to me to what extend is this opening a new market for the (secret) product for the toilet or opening the base of the pyramid for other Unilever products (really giving the secret product for a production price) – that reminds me a bit of Nestle with the dry milk powder for children. I am worried about the activities, as they seem not to be transparent and that would be very important to build trust. Personally I am not very fond of that line as it is not clear although they seem to do interesting things in Ghana.

3. Straight privatized water business has nothing to do with social and typically the money is just loans or grants for the infrastructure – this has lots of different forms and ways. As the public provider have often severe efficiency problems due to a range of reasons. The following might be criticized - please feel free to do so, it is just my view. It would be easy in developing countries to set up an efficient water provider which could a) provide a better service b)make money just being more efficient and c) be equal in price. And as Florian wrote – there are good examples for private operators – BUT and that is also true – if you have a public operator, which has the chance to develop itself over years and you are lucky and do not have politics or worse corruption involved, than you can have an at least equally efficient public operator. The problem is always politics and corruption – present all over the sector and destroying a lot of efforts of all kinds. This in the public as well as in the private area. A mayor who is very bright in organizing a public bidding and has a good advisor could set up a scheme for a private which at least gives some protection from corruption for years if you do a longer contract – that has been my view over years in South America. I am not sure anymore. If the next mayor wants to destroy the setting it can be done and than the damage is much higher, as large fines have to be paid to the private. I would not generalize but from what I see, it seems to be better when companies from the country do play an important role in the privatization, in this case the chance for a positive experience is higher (just my impression) as agreements are done in the way of the country.

Summarizing: I agree with Florian – sometimes good experiences sometimes not, there are good examples and good companies and bad examples and bad companies both in private and public operators.

Regards
Christoph

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Re: Ben Cambodia experience - WASHplus Weekly: Focus on Sanitation as a Business

Ben - I too find multinationals' actions suspect. I touched on my valid distrust in another recent SUSANA forum thread:

Justice and Toilets

Here's an excerpt:

I wrote, "...unless the multinational is a "B" type corporation then, no, I don't think they [multinational corporations] have a role to play. Caring only about profit, in my mind (and in practice) destroys any real and lasting effectiveness on the ground. Plus, I'm a staunch opponent of corporate greenwashing so I don't want their money either."
Kai Mikkel Førlie

Founding Member of Water-Wise Vermont (formerly Vermonters Against Toxic Sludge)

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Re: Ben Cambodia experience - WASHplus Weekly: Focus on Sanitation as a Business

[Start of Page 2 of the discussion]

Dear all,

I know I might be one of the few interested in big firms pactices, and at the risk to be off topic, I wanted to share with you an article very interesting :
"Today 19th december, some of the world’s biggest consumer products companies, including Unilever, Reckitt Benckiser, Procter & Gamble and Gillette, have been fined a combined €951m (£748m) by the French competition watchdog for price fixing in supermarkets."
Full article
It means that only after 3 years they've been fine 361 Million € for the same practices, they kept doing business as usual without a problem.

Can we really take money from these people to do development work ?

Best,

Ben
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Re: Ben Cambodia experience - WASHplus Weekly: Focus on Sanitation as a Business

Dear Dennis,

Thanks for joining in.
If I may ask, could you please tell us a bit more about your background, your organisation, your experience, etc ...

I'll let others orientate you better on "Are there specific Aid & Development Sector "Programme Design and Project management" skills workshops (preferably good quality online ones) out there to improve the Programme quality and effectiveness?". (moderator's edit: this has now been posted here: forum.susana.org/forum/categories/54-wg-...ter-project-outcomes)
That's what this forum and the great work from people running it is all about.

For the Cambodian projects, here are a few links on the biggest san-mark programs there :
IDE hits 100 000 latrine sales
Watershed website

Best,

Ben


[End of Page 1 of the discussion]

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  • denniskl
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Re: Ben Cambodia experience - WASHplus Weekly: Focus on Sanitation as a Business

And ben, can you post links or send me information about the Cambodian sanitation projects?

(where located, what the projects are called, who is running them (and contact details), what - if any - Government departments (at national, provincial, district, commune and / or village levels) are involved, any M & E reports etc?

I will be in Cambodia soon for some other activities and I want to understand if we can include already proven sanitation approaches in-country

Otherwise, maybe email me? This email address is being protected from spambots. You need JavaScript enabled to view it.
Creator of the RealChange Global Impact Fund and MCM GREENMAN GROUP

Solving housing quality , power reliability, water supply and sanitation management in developing countries with private sector impact investors money

Philosophy

* See a problem.
* Make sure it's the real problem (by talking to the people with the problem).
* Find people who are solving this problem somewhere in the world and collaborate - and learn from them to solve the problem
OR
* Create a new solution where none exists
* Find passionate people who care about the problem to help implement solutions

Our solution approach - what's yours?

Dennis McMahon
From Australia; based in Malaysia
www.mcmgreenmangroup.com (R & D and project implementation)

www.RealChangeImpact.com

Funding from the private sector, giving market level returns

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Re: WASHplus Weekly: Focus on Sanitation as a Business

Hi Ben and Elizabeth (and everybody else in the thread)

I just wanted to add that I can see both points.

Big = Scale; Small = Innovation

The multi nationals have the experience of scale (for good and bad!:) and the funding and lobbying power to change national and intra-country policies. This applies to sanitation issues as well as any other product or service topic you can think of

Small NGO's (the good ones) tend to have innovative ideas, and often field trial concepts and products successfully, but with little experience, knowledge or resources to "build-for-replication" or to tinker for scalability, their innovative approaches tend to stay "in the field" and never make a larger stage.

So the ideas are on one side and the money and power is on the other - the challenge, of course, is to bring them together in ways that (hopefully) do more than "Do no harm" and in fact "Do the good" they are meant to.

The real reasons for "collateral damage" programme results

In many cases I believe the issue is not that corporations (or the people who run them) set out to make problems or cause the "collateral damage" to the people or the environment etc; I think it is often the failure by Programme developers and promoters (such as NGO's, Foundations, philanthropists, etc) to properly design programmes that take all the relevant factors into account (environmental, cultural, stage of development, education levels, health issues, etc)

And this failure happens on both sides.

Large companies have managers who know how to design for commercially oriented, large scale project deployments (that usually merely comply with required national standards) and small orgs lack the project design, scope and management skills to properly account for the issues that projects face on the ground.

Is Better Programme Design the Answer?

I think properly researched, well-designed, all sector programmes (that take a serious look at what are the real problems, and what are the best combination of solutions to suit) will get an appreciative audience (and funding and resource support) from the multi nationals.

Yes, they will always have their own political and commercial agendas but these can be massaged to give all parties a reasonable outcome - and most importantly for the recipient groups, the results that are promised:)

Programme design and project management skills training for the Aid and Development Sector

And if better programme design (and better project management skills) is one of the answers, how is this capacity building among the smaller NGO's to be done?

Are there specific Aid & Development Sector "Programme Design and Project management" skills workshops (preferably good quality online ones) out there to improve the Programme quality and effectiveness?

Thoughts?

Happy to engage with the group on how these types of improvements to programme design and project management can be developed, systemised and deployed among the Aid and Development sector workers
Creator of the RealChange Global Impact Fund and MCM GREENMAN GROUP

Solving housing quality , power reliability, water supply and sanitation management in developing countries with private sector impact investors money

Philosophy

* See a problem.
* Make sure it's the real problem (by talking to the people with the problem).
* Find people who are solving this problem somewhere in the world and collaborate - and learn from them to solve the problem
OR
* Create a new solution where none exists
* Find passionate people who care about the problem to help implement solutions

Our solution approach - what's yours?

Dennis McMahon
From Australia; based in Malaysia
www.mcmgreenmangroup.com (R & D and project implementation)

www.RealChangeImpact.com

Funding from the private sector, giving market level returns

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