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Integrating Social-Responsibility into
For-Profit Economic Development
Charles V. Fishel, CEO
Abundant Biofuels Corporation
Bhopal, IndiaDecember 3, 1984
• 40 tons of vaporous methyl isocyanate hydrogen cyanide monomethyl amine, carbon monoxide and possibly 20 other chemicals were released from Union Carbide pesticide plant after explosion.
3000
peo
ple k
illed
500,
000
inju
red
Bhophal – 20 Years Later• In 2004, complaints from area residents led
the Supreme Court to order the state to supply clean drinking water to the people living around the factory, like this young girl, filling buckets fed from a government-provided tank
• By then, nearly 20 years had gone by, with residents of the nearby slum drinking contaminated water, with often disastrous results on their health.
http://www.nytimes.com/slideshow/2008/07/07/world/20080707BHOPAL_index.html
http://www.nytimes.com/slideshow/2008/07/07/world/20080707BHOPAL_index.html
http://www.nytimes.com/slideshow/2008/07/07/world/20080707BHOPAL_index.html
Hundreds of tons of waste still languish on grounds of Union Carbide pesticide factory in Bhopal, India, nearly a quarter-century after a poison gas leak killed thousands and turned this ancient city into notorious symbol of industrial disaster
Just beyond factory wall is blue-black open pit repository of chemical sludge from pesticide plant is now a pond where slum children and dogs swim on hot afternoons.
Bhophal – 20 Years Later
http://www.nytimes.com/slideshow/2008/07/07/world/20080707BHOPAL_index.html
http://www.nytimes.com/slideshow/2008/07/07/world/20080707BHOPAL_index.html
• More than 500,000 people were declared to be affected by gas and awarded compensation about $550
• Some victims say they have yet to receive any money
• Interpol’s efforts to extradite Warren M. Anderson, CEO continue,
• though apparently with little energy.
Bhophal – 20 Years Later
ChevronTexaco (Texaco merged with Chevron in 2001)
While drilling in the Ecuadorian Amazon from 1964 to 1990, Texaco
dumped more than 18 billion gallons of toxic wastewater,
spilled roughly 17 million gallons of crude oil, and
left hazardous waste in hundreds of open pits dug out of the forest floor.
ChevronTexaco
To save money, Texaco chose to use environmental practices that were obsolete, did not meet industry standards, and were illegal in Ecuador and the United
States.
ChevronTexaco
Contamination of soil, groundwater, and surface streams caused local indigenous and campesino people to suffer mouth, stomach and uterine cancer, birth defects, and spontaneous miscarriages.
ChevronTexaco
Today, 30,000 Ecuadorians are demanding justice in a landmark class action lawsuit
An independent court-appointed expert recently deemed Chevron responsible for up to $27 billion in damage.
For-Profit Social-Responsibility
Biofuels
Case Study:
D1 OilsOld Strategy: Traditional Oil Company Model
Go to poor country
Buy seeds at lowest possible profit
Export back to England for refining and
Sale to European customers
No benefit to indigenous peoples
U. S. Biodiesel Refineries
150+ Biodiesel Refineries
47 are idle
100 are operating below capacity.
U. S. Biodiesel Refineries
Even when operating at capacity,
Refinery profitability depends upon U.S. government tax credits / subsidiaries.
Food vs. Fuel
Diversion of agricultural land
Deforestation
Water contamination
Increasing fuel costs stimulate poverty.
Impact on Food Production
Some Biofuels Are Destroying agricultural Production
Causing food shortages.
Increasing Fuel Costs Stimulate Poverty
Some farmers benefit from higher prices
But many poor countries are net grain importers
Poorest of poor spend >70% on food
About 1/3rd of sub-Saharan Africa is undernourished – living on less than $1/day
Proportion has barely changed since 1990s. http://www.washingtonpost.com/wp-dyn/content/article/2007/12/11/AR2007121101834.html
International Food Policy Research Institute
Deforestation
Demand for biofuels encourages deforestation in developing countries
U-Tube graphically illustrated clearing of Indonesian forests to increase palm oil production for biofuel.
http://www.washingtonpost.com/wp-dyn/content/article/2007/12/11/AR2007121101834.html
Indonesia ….
If 10,000 sq meters of rainforest is cleared to make way for growing soy beans used to make biodiesel
Over 700,000 kilograms of carbon dioxide is released
Saving generated by resulting biodiesel will cancel out in about 300 years.
Indonesia ….
If peat land rainforest in Indonesia is cleared to grow palm oil,
carbon debt will take over 400 years to repay.
Indonesia ….
When carbon released is taken into account,
corn ethanol produces nearly twice as much carbon as petroleum.
http://www.guardian.co.uk/environment/gallery/2008/may/21/endangeredhabitats.forests?picture=334279833)
2.2 million hectares of Colombian Amazon forest has been cleared to
grow coca over past 20 years
It will take between 100 and 600 years for just 1 hectare to recover.
Sustainable Energy
Helping to “decarbonize the world
Abundant Biofuels will not
Divert land from agricultural production
Engage in any deforestation
Will not use any water for irrigation.
Social Impacts
Abundant Biofuels will
Increase average daily wage to meet UN Anti-Poverty goals 8 years ahead of schedule
provide full health coverage to all employees and their families
Share profits with indigenous peoples.
Sustainability
Abundant is committed to sustainable development
Company has chosen a crop that will grow for 40 – 50 years after planting and can be harvested almost continuously after 8 months
Abundant Biofuels commits itself to establishing and maintaining highest standards
In 21st Century, that is simply good business!
Declaration on Rights of Indigenous Peoples
Although UN Declaration was rejected by United States (among others),
Abundant Biofuels Corporation endorses UN Declaration and intends to fully comply with its principles.
Case Study Conclusion
Import-Based Strategy Little benefit to
indigenous peoples Supply problems Transportation costs Limited profit Food vs Fuel
Sell in host country Premium selling price Benefit to indigenous
peopleFull employmentHealth careProfit sharing
Import substitution High profits
Socially Responsible Investing
In Philippines, Abundant works directly with Lumad federation (land is held communally)
Easy structure:
Profit-sharing joint venture
Employ indigenous people at living wage with health care.
Socially Responsible Investing
Other countries:
Impoverished natives aren’t organized
Land is owned by individuals small plots
Workforce often concentrated in urban ghettos.
Work with Microlenders
Our focus is developing 10,000 hectare plantations that need about 4,000 workers
Working with small farmers / landowners is very inefficient.
Work with Microlenders
Abundant Biofuels is working with small and medium sized farmers in Peru and Colombia
to produce biodiesel from Jatropha
These farms are located in poor, rural where land is under used, and often degraded to due deforestation.
Farmers often turn to growing cocaine as the only viable cash crop
It is hard to establish trust with these farmers….
Working with NGOs and micro-lenders will help us gain their friendship / trust
Working with NGOs / Microfinance
We prefer to work with NGOs who can organize cooperatives / communities to reach critical mass --- provide bridge of trust
In Peru, Abundant received approval from InterAmerican Development Bank (IADB) to develop 10,000 hectares in Region of San Martin (near City of Tarapoto)Abundant Biofuels will be working with
SNV, a Dutch NGO, based in Tarapoto.
Working with NGOs / Microfinance
Microfinance banks can provide financing to individuals / cooperatives / communities
Abundant can provide guarantees where needed
Better than creating an Abundant Biofuel “Company Town”
Together
We can bring sustainable economic development
with dignity to indigenous and impoverished peoples
of the World