Towards Triple Impact – Toolbox for Analysing Sustainable Ventures

1. Towards Triple Impact –Toolbox for Analysing Sustainable Ventures Capacity Building Seminar Working Material

2. Agenda When? What? Who? 9.00 – 9.30 9.30 – 10.30 10.30 – 12.00 12.00 – 13.30 13.00 – 15.30 15.30 – 16.00 16.00 – 18.00 18.00 – 18.30 9.00 – 9.30 9.30 – 11.30 11.30 – 12.00 12.00 - 13.00 13.00 – 15.00 15.30 – 16.30 16.30 – 17.00 17.00 – 17.30 Organizer Facilitator Trainer Trainer Trainer Facilitator Facilitator Trainer Facilitator Trainer Facilitator Organizer Day 1 Day 2 Welcome Getting to know each other Introducing the toolbox Lunch Tool 1: Identifying opportunities Coffee Break Tool 2: Understanding the determinants of success Wrap up day 1 Plan for the day Tool 3: Assessing costs and benefits Reflections on the toolbox Lunch Taking it to the higher level: program design Coffee break Action planning Wrap up and feedback

3. Workshop Material Introducing the toolbox Tool 1: Identifying opportunities Tool 2: Understanding the determinants of success Tool 3: Assessing costs and benefits Wrap Up

4. Publication ‘Towards Triple Impact’ Published in 2009 Available for download at: http://www.unep.fr/scp/publications/

5. Topics Sustainable Ventures The Toolbox

6. What are Sustainable Ventures? Venture Sustainability • Initiatives on the micro-level (not meso or macro) • Financially self-sustainable (typically a business) • Led by for profit, non profit, public or community organizations • improve human well-being and the environment on a profitable basis (people, planet, profit) • contribute to decoupling economic growth and improvements in well-being from natural resource use.

7. 3 Examples of Sustainable Ventures Impact Manila Water Company Tikapapa, Peru USISS, Mali Economic • Improves water sales in low-income communi-ties • Reduces water leakage • Provides water to low-income population in metro manila • Sells indigenous potato varieties to supermar-kets and Frito Lay • Conserves biodiversity • Creates income for indigenous people • Sells dried mango to local vendors • Uses renewable energy • Creates employment Environ-mental Social

8. Background: SCP History Approach Goal • The Brundtland report 1987 emphasized the need for sustainable development • The Johannesburg Declaration 2002 stated that consumption and production had to be tackled as a system • The Marrakesh Process supports the development of a 10 Year Framework of Programmes to improve SCP • SCP refers to the production and use of goods and services that respond to basic needs and bring a better quality of life, while minimising the use of natural resources, toxic materials and emissions of waste and pollutants over the life cycle, so as not to jeopardise the ability to meet the needs of future generations. • Norwegian Ministry of Environment, Oslo Symposium, 1994 Maximize human well-being while ensuring a sustainable use of natural resources

9. The Poverty-Environment Nexus • Poor people ... • For example: • ... depend strongly on natural resources • 70% of people living with less than 2$/day generate some income from agriculture1 • Many get their water from natural sources, collect firewood, use natural building materials etc. • ... cannot protect themselves well from natural disasters and extreme weather events • Many live in sub-standard housing that doesn’t withstand heavy floods or wind • Few have insurance or savings to manage losses • ... are affected disproportionately by global environmental degradation • desertification puts the health and well-being of 1.2 billion people in more than 100 countries at risk1 • ... are often forced to deplete the natural resources around them for lack of alternatives • well over 50% of all tropical deforestation is due to slash-and-burn agriculture by displaced landless peasants2 • Source: (1) http://www.un.org/events/ desertification/2007/sgmessage.shtml, (2) http://home.alltel.net/bsundquist1/df4.html

10. The Challenge: De-Coupling Growth closely linked to resource use Global Income Pyramid (Source: Milanovic 2002) Income and CO2 Emissions per Capity and by Country (in 2004) (Source: Gapminder) Large poor population growing fast Global Population Growth (Source: UNFPA)

11. Better Tools Needed to Develop Sustainable Ventures To be developed Footprinting GRI High SROI ... Triple Bottom Line Accounting Low SWOT Analysis ROI Low High Ease of use (Standardization, Data Requirements)

12. Topics Sustainable Ventures The Toolbox

13. The Toolbox Adresses 3 Analytical Steps Where are opportunities to create value by meeting needs better and more efficiently? What factors determine the success of the venture? What are the costs and benefits of the venture for the business, society and the environment?

14. Taking a Systemic Perspective • ... is important for sustainable ventures • – to ensure that negative impacts are reduced and not simply shifted around in the system • + to optimize positive impacts • – Are impacts shifted from one stakeholder group to another? • + Can more stakeholders benefit from the venture? • – Are impacts in one areas traded off for another? • + Can the ‘triple bottom line’ be improved? • – Are impacts moved around in the life cycle? • + How can the venture improve impacts along the life cycle?

15. Impact Areas Social Progress and Human Well-Being (MDGs) Environmental Sustainability Economic Development • Poverty • Eradicate extreme poverty and hunger • Education and Gender • Achieve universal primary education • Promote gender equality and empower women • Health • Reduce child mortality • Improve maternal health • Combat AIDS, malaria and major diseases • Environment • Ensure environmental sustainability • Partnership for Development • Develop a global partnership for development • Improve resource efficiency • Reduce use of toxic and hazardous material • Maintain and improve ecosystem services and biodiversity • Improve profits • Increase income • Improve economic infrastructure • Generate taxes

16. Life Cycle A life cycle perspective is needed because: • Consumption and production processes are deeply intertwined • Value chains are globalized • Impacts can be shifted from one step in the life cycle to another • Taking the whole life cycle into account allows to identify and improve impacts overall

17. Stakeholders A stakeholder perspective is needed because: • Stakeholders can affect or are affected by the success of a venture • Knowing the impacts of a venture on its stakeholders helps to manage and improve them • This will also increase support and reduce risks

18. Exercise: Getting to know the project Approach Objective • Get to know exam-ples of sustainable ventures • Learn to take a systemic perspective 20 min40 min 30 min • Read the case descriptions and fill in the tables individually: identify the life cycle stages and stakeholders of the project • Now collect and compare youranswers in the group: • Which life cycle stages or stakeholders were named often, which only a few times? • Can you think of any additional life cycle stages or stakeholders that you forgot? • Did the systematic analysis help to you see life cycle stages or stakeholders you would not have otherwise seen • Report your findings back to the group in no more than 5 min.

19. Template Systemic Perspective Life Cycle Stages Stakeholders

20. Workshop Material Introducing the toolbox Tool 1: Identifying opportunities Tool 2: Understanding the determinants of success Tool 3: Assessing costs and benefits Wrap Up

21. Tool 1: Identifying Opportunities • Are there opportunities to leap-frog to more efficient ways of consumption and production? • What are new technologies and approaches (regarding products processes or business models) that could improve efficiency? • What resources exist to respond to needs and improve well-being? • Are there resources that are renewable, in greater supply or even unused resources that could replace or complement the ones currently used? • Where do opportunities exist to improve well-being? • Where do needs remain unmet? • What basic opportunities are people missing? • Where are resources wasted in the life cycle? • Where could efficiency be improved to do more with less?

22. Exercise Identifying Opportunities Approach Objective • Test the tool using a concrete project • Clarify questions • Learn how to look for opportunities 20 min 40 min 30 min • Analyze the situation in the case example following the four elements of the ‘Opportunity Crosshairs’ individually • Bring together your findings on the “opportunity” sheet, and discuss: • Can the issues mentioned for the different fields be linked by a new business opportunity? • Are there conflicts between the issues?    • What are the overall action points you derive from the collection? Start with actions that address issues from the different fields. • Report your findings back to the group in no more than 5 minutes 

23. Template Identifying Opportunities Resources Leveraging Innovation Eliminating Inefficiencies Needs

24. Example Tikapapa • Innovative partnerships, with research institutes and retailers to improve quality of process • Native potatos in Peru exist in a wide variety of colors, sizes, flavors and cooking qualities • High-end consumers want high-quality, rare products • Inefficient far, to market processes • No effective marketing communication

25. Workshop Material Introducing the toolbox Tool 1: Identifying opportunities Tool 2: Understanding the determinants of success Tool 3: Assessing costs and benefits Wrap Up

26. Tool 2: Understanding the Determinants of Success • Who are the stakeholders that oppose the venture or hamper its progress? • What are the EES resources and capabilities that are missing and limit the development of the venture? • What are the weak links in the life cycle? • Who are the stakeholders that support the venture? • What are the EES resources and capabilities that enable the venture? • What are the strengths within the life cycle? • Who are the stakeholders that might negatively impact the venture in the future? • Could there be changes in the availability of EES resources and capabilities that might harm the venture? • Might there be changes within the life cycle that could damage the venture? • Who are the stakeholders that might positively impact the venture in the future? • Could there be changes in the availability of EES resources and capabilities that might benefit the venture? • Might there be changes within the life cycle that could contribute to the success of the venture?

27. Exercise: Understand the Determinants of Success Approach Objective • Test the tool on a concrete project • Clarify questions • Learn how to develop strategic perspectives for a project 20 min 40 min 30 min • Collect the factors that impact on the success of the sustainable venture • Come together as a group, and develop strategic options for the enterprise • Based on the enablers and constrains, which strategies do you recommend for the enterprise to move forward? • Based on the opportunities and risks, with which strategies can the enterprise prepare for future developments? • Report back to the whole group in no more than 5 minutes

28. Template Understanding the Determinants of Success Enablers Opportunities Constraints Risks

29. Example USISS • Mangoes in abundance • High quality drying equipment • Reduce costs of drying equipment by using cheaper and local materials • Boost demand through marketing • Limited local demand • Poor packaging technology reduces shelf life and appearance • Seasonality of mango harvest and consumption • Limited production facilities don’t allow for scale • No regulation to allow for export • Limited management capacity • National competitors • Hiring extra staff and with uncertain returns

30. Workshop Material Introducing the toolbox Tool 1: Identifying opportunities Tool 2: Understanding the determinants of success Tool 3: Assessing costs and benefits Wrap Up

31. Tool 3: Assessing Costs and Benefits

32. Mapping Table

33. Measuring Impacts What to measure? Prioritization How to measure? Indicators How to keep track? Dashboards and Scorecards • Measurement should focus on the impacts that will inform decision making, e.g. due to their: • magnitude • significance as enabler, constraint, risk or opportunity • Relevance for strategic priorities • Public interest (e.g. reporting requirements by government) • Measurement must be based on a set of well-defined indicators. The choice of indicators should consider: • the cost of assessment • the usability of the data for other stakeholders (e.g. use established indicator sets) • the effect of the indicators on decision making processes • Monitoring of indicators requires dedicated tracking systems • Dashboards and scorecards are reporting systems with clearly established baselines, targets, responsibilities and reporting schedules

34. Comparing Different kinds of impacts Impacts on different stakeholders Different Timings Uncertain Impacts • Attach weights to certain impacts • Integrate data to intermediate indicators or a single measure if required • Assign priorities to certain stakeholder groups (e.g. the mar-ginalized or traditio-nally disadvantaged groups) • Weight impacts accordingly • Discount rate expresses the importance attached to future impacts • Scenario analysis responds to the question ‘what if..?’ (e.g. regulatory changes, availability of input factors) • Sensitivity analysis identifies the critical assumptions for a forecast by changing different parameters

35. Exercise: Assess Costs and Benefits Approach Objective • Test the tool on a concrete project • Clarify questions • Learn how to consider costs and benefits of a project holistically and manage them 20 min 40 min 30 min • Individually, collect the costs and benefits mentioned in the case exercise in the template. • Choose a suitable indicator for each type of impact. • Get together, share your results and discuss: How would changes to the venture’s model affect the different costs and benefits. Take two examples that try to improve the system in one place, and see how these would play out in other categories. • Share your insights with the whole group in no more than 5 minutes

36. Template Analyzing Costs and Benefits Comparing options Impacts Indicators

37. Example: Manila Water Company

38. Workshop Material Introducing the toolbox Tool 1: Identifying opportunities Tool 2: Understanding the determinants of success Tool 3: Assessing costs and benefits Wrap Up

39. Reflecting on the toolbox Approach Objective • Identify areas for application • Gather ideas for improvement • Discuss: • Can we use this approach in our daily work? • What was difficult? • Where do the tools need further refinement?

40. Applying the Toolbox - Examples Award Schemes Public and private investors Donors and develop-ment organizations Professional education training programs • Structure application forms based on toolbox • Coach winning ventures based on the frameworks • Request business plans developed with the toolbox • Identify and support sustainable ventures • Use ‘identify opportunities’ to guide a structured dialogue with stakeholders in a certain sector or region about possibilities for engagement • Train professionals in the analysis of sustainable ventures

41. Taking it one level higher: program design Approach Objective • Understand how toolbox can be used for own program 30 min 45 min 30 min • Participants identify relevant program (grant program, competitions, donor program, PSD services etc.) • Breakout groups with similar program: how could we use the toolbox within our program • Report back

42. Action Planning Approach Objective • Design a follow up process • Discuss: • What should be our next steps as a group/sub-group? • Who is responsible for what? • What do we want to achieve by the end of this year? • Find a date for (informal) follow up meeting (app 2 weeks after the training)