Bottom-up Solutions to the Climate Emergency: Three Innovative, Eco-Inclusive Enterprises Take a Local Approach
The year 2019 marked the end of the hottest decade on record, according to the World Meteorological Organization. Beyond the science, local communities – particularly in the Global South – live the effects of climate change every day, as weather patterns become more erratic. To take just one example, Cyclone Idai left 3 million people without housing, access to electricity or running water in Malawi, Mozambique and Zimbabwe. And many are facing increasingly frequent food crises, population displacement and water scarcity as a result of rising temperatures. To make matters worse, climate change also risks disrupting prior development efforts.
The threat of climate change exacerbates already existing inequalities, and increases the urgency of the need for resilient communities. But building this resilience presents a complex challenge: How can the world’s most marginalized communities effectively pursue growth, work toward the Sustainable Development Goals and overcome climate-related crises – while involving the rural households, women and youth who are most affected by climate change?
As local development needs differ, solutions to this challenge need to be equally diverse. That’s why the SEED Awards highlight the accomplishments of socially inclusive and environmentally sustainable (eco-inclusive) enterprises worldwide. The awards focus on innovative business and finance models that provide bottom-up solutions to our climate emergency, while also addressing the broader local development needs of low-income communities. Let’s take a look at the approaches developed by some recent award winners.
Electrifying Last-Mile Communities Through PAYG
As mentioned above, Malawi is particularly vulnerable to the growing impacts of climate change. At the same time, the country has one of the lowest electricity connectivity rates in the southern African region, with only 11% of the population having access to electricity. But with about 3,000 hours of sunshine per year, solar energy presents an opportunity for a flourishing renewable energy market in Malawi. And since conventional business models for supplying electricity often do not serve low-income communities, there’s a market for innovative new approaches – particularly ones that leverage renewable energy sources that don’t worsen the climate crisis. Green Impact Technologies is addressing these challenges and opportunities by bringing solar home systems to rural customers through an innovative pay-as-you-go (PAYG) model.
The PAYG business model allows last-mile customers to purchase a solar home system by paying local agents a modest installation fee, then paying off the full cost of the system periodically through mobile money. This gives customers the opportunity to pay flexibly over a three-month period, rather than having to save up money to purchase the system outright – a much more appealing proposition for low-income households. Moreover, the monthly fee is less expensive than what customers commonly spend on charging batteries and phones over the same period. As a result, customers start saving money – and benefiting from light and electricity access – from the get-go. To date, Green Impact Technologies has provided 5,000 solar home systems to base of the pyramid customers.
Enhancing Food Security Among Women Farmers in India
Climate change has a major impact on India’s agriculture sector: It causes water shortages, which lead to serious distress for farming communities, both in terms of access to food and income. Women farmers are particularly affected by climate change. Moreover, they often have minimal revenues due to a combination of high upfront costs, low landownership and an exclusion from the more profitable elements of the agriculture value chain: While women are overrepresented in fieldwork and harvesting, they are often excluded when it comes to processing, packaging or trading. In response to this challenge, Aikya Organics supports women farmers by helping them increase their resilience to climate-related shocks and grow their income, through sustainable farming and the formation of a network of women-led farmer-producer organizations (FPOs).
Aikya Organics provides training on Zero Budget Natural Farming – a holistic alternative to the present practice of high-cost chemical inputs-based agriculture – and offers climate change adaptation benefits. By training women farmers to plant their crops based on seasonality, local environment and market demand, it improves their self-reliance and opens entrepreneurship opportunities within the women-led FPOs. The network of women-led FPOs ensures that agriculture inputs are available at the community level across the value chain, significantly lowering input costs. In addition, Aikya Organics builds up growing, storage, processing and packaging units at the women-led FPOs. It helps them to create market linkages for the sale of organic products, which are then sold through business-to-business and business-to-customer channels – and under Aikya Organics’ own brand, “Dhaanika,” which is available at local organic stores. By increasing the number of women-led FPOs and their participation in the value chain, the company is able to send 60% of the retail price of Dhaanika products back to the FPO members.
Creating Urban Resilience Through Shared Home Financing
Located in the outskirts of Johannesburg, Soweto township is home to over 2 million people, with around 10,000 newcomers arriving from rural areas each year in search of better livelihood opportunities. Many migrant families cannot afford formal housing and are forced to live in informal backyard metal shacks. This already precarious housing situation is worsened by the increased frequency of floods and storms as a result of climate change. This results in damage to these backyard shacks, undermining the efforts of their inhabitants to start a better life in the city.
Hustlenomics addresses this need for more resilient housing by replacing unsafe shacks with affordable brick houses. It targets low-income homeowners who rent out informal shacks in their backyards, and cannot access traditional home improvement financing. It replaces these shacks with durable rental backyard homes equipped with electricity, running water and indoor bathrooms. These homes are constructed by interlocking brick technology, which allows the company to build a home in approximately one month, using eco-bricks from recycled construction waste. The initial construction costs are covered by Hustlenomics and are paid back through a shared financing model. Rural-to-urban migrant families in search of a home rent the houses from the homeowners, who pay back the company. Long-term contracts make it possible for the homeowners to rent out these improved homes at a price that’s comparable to what they charged for the informal shacks. Over an 18-month period, the homeowners use the rent from their new tenants to pay back the construction costs – and once this is done, they receive full ownership of the newly constructed homes. Meanwhile, the migrant families receive a long-term rental contract, and can stay after the pay-back period. Hustlenomics has already completed six backyard homes using the shared financing model, with the plan to build one home per month during 2020.
Supporting Eco-Inclusive Enterprises
Eco-inclusive enterprises such as Aikya Organics, Green Impact Technologies and Hustlenomics provide practical solutions that help marginalized people lessen the impact of climate change while addressing their broader development needs. But if eco-inclusive businesses are to make even bigger contributions to these interrelated challenges in the years ahead, existing enterprises will need to scale – and new companies and solutions will need to emerge. This will require support from public, private and financial actors, ranging from quality business development assistance, to targeted financial solutions and vetted business models. That’s where partnerships like SEED can play a key role, identifying effective solutions and helping them grow, while channeling support to the enterprises and innovations that need it most. If the world hopes to reach the goals established in global climate agreements, the time for new solutions is now.
If you are interested in developing innovative solutions and partnerships that promote social and environmental entrepreneurship in sustainable development, learn more about our work here.
Photo: A women farmer supported by Aikya Organics. Photos provided by authors.