Why would a multinational cement company take the bizarre step of becoming a cashew nut farmer in Tanzania? Perhaps it’s because the company can save money and improve its environmental performance while creating hundreds of jobs, addressing local poverty, and boosting relations with local and national government. By Cameron Rennie
As the WBCSD’s
Sustainable Livelihoods project enters its second year, a number of member companies are proving that poverty reduction can be part of the core business strategy, as a cement company from the Holcim Group demonstrates.
Sustainable Livelihoods is the WBCSD’s attempt to persuade business that creative thinking around new business models can realize a return while raising the standard of living in developing countries where multinational companies operate. Harnessing innovation in absent or fledgling markets could become a key plank of economic development and one which business is expert to deliver.
Thinking It Through
Holcim, one of the world’s leading suppliers of cement, is thinking on these lines by combining industrial ecology with social welfare in Tanzania.
Globally, the Holcim group is seeking to substitute fossil fuels by alternative, waste derived fuels for its cement kilns. This substitution represents an important business opportunity for Holcim because it reduces fuel costs and offsets CO2 emissions. And by dealing safely with wastes that are often difficult to dispose of in any other way, the company is able to provide an important waste disposal service to society.
In Tanzania, Holcim subsidiary the Tanga Cement Company turned to agricultural waste and found that cashew nut shells in particular offered a cheaper and environmentally preferable fuel source. While heavy fuel oil costs approximately USD 6 per gigajoule (GJ) and coal costs USD 4, left over cashew nut shells can be purchased for USD 2.5 per GJ.
Not surprisingly, Tanga had been considering ways of burning more leftover shells of cashew nuts but the supply of shells keeps fluctuating according to the export-led fortunes of Tanzania’s cashew industry.
Supplying the Ideas
When Tanga asked its local cashew shell supplier, Biomass Energy Tanzania Ltd (BETL), what could be done, the two companies hit upon the novel idea of creating their own supply of shells in the form of a 3000-acre cashew farm next to Tanga’s cement plant.
It may seem a radical answer but economically and environmentally it makes perfect sense. A steady supply of cashew shells will provide a local and much cheaper renewable energy source for the kiln, and by using biomass fuels, the company neutralizes a portion of greenhouse gas emissions.
It was at this point that Tanga and BETL began to see the full implications of their thinking. While the idea had been driven by economic and environmental concerns, management also saw the opportunity to satisfy the company’s aim of delivering a positive social contribution aligned with business objectives.
Toward Sustainable Livelihoods
Tanga realized that the new cashew farm could be used to empower the local community by dividing up the site into five-acre plots for 300 local farmers to cultivate. Moreover, the farmers would be offered credit to buy the land and repay Tanga once crops provided a sustainable income stream. The project will also hire 1000 people in a processing plant to deliver a premium cashew nut.
The project will also work with growers in the Tanga region to provide a market for both their raw cashews and their biomass waste products. Supported by finance, technology transfer and capacity building, the presence of the farm and processing plant will stimulate local commercial activity and contribute to the development of infrastructure and services in the area.
A Return on Addressing Needs
Holcim’s strategy underlines how the Sustainable Livelihoods project can encourage companies to develop new business models that address a local need and make a financial return.
“The project will change Tanga’s engagement strategy from sponsoring local sports teams to fusing environmental and corporate citizenship principles with the potential to lift the bottom line,” says Tanga’s managing director Leon Hooper.
It will take three years to roll out the project before the first cashew crops can be harvested. In the meantime, Holcim plans to try and replicate the thinking across other group companies.
“It’s a fine example of bottom-up thinking inside the Holcim group,” says Hooper. “Our challenge now is how Tanga will work with stakeholders to ensure the project is delivered in a way that is suitable and sustainable in this region of Tanzania.”
Early in 2004, the WBCSD will publish a How to guide that will include other case studies and explain how organizations can adapt their business models to address sustainable livelihoods issues.
Another company to commit itself to the Sustainable Livelihoods program is ABB, a leader in power and automation technologies. ABB recently launched its Access to Electricity program, which will bring electricity to a poor rural community in Tanzania.
According to Christian Kornevall, head of ABB’s sustainability affairs, the project is driven by both innovation and the belief that ABB must engage in sustainable development. “We are aware that we can contribute to sustainability. There are too many have-nots in the world but innovation and solutions will only come from directly addressing their needs.”
ABB decided to partner with the WWF in Tanzania to establish a mini electricity grid for a rural community living on the perimeter of a game park.
At present, the community earns a meager living through unsustainable logging of forests in and around the game park.
“The community is paid a pittance for the timber,” says Kornevall. “We’re hoping that the introduction of electricity will improve the quality of life and enable the people to produce timber as cut planks that can be sold for more money.”
The thinking goes that the community will be able to pay for the electricity out of the proceeds of the wood sales. With sufficient income, the community will be able to cut down trees at sustainable levels and prevent deforestation.
“The new business models represent bottom-up thinking through the empowerment of communities based on local resources and generic growth. Top down, or traditional thinking, does not necessarily have the potential to bring power to the rural poor. That’s why we’re working with other stakeholders such as the UNDP, World Bank, WWF, bilateral donors and other companies to ensure that the project can be scaled up and replicated elsewhere.”
ABB is also watching closely to see whether these types of projects can in future be part of its core operations in least developed countries. Delivering electricity to poor communities and making a return could have a knock-on effect for the company’s research and development division in developing new products and technologies.
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This article has been reprinted courtesy of the World Business Council for Sustainable Development. It was first published in December 2003.
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