Fulfilling economic, social, and environmental goals at the same time
Eco-Biz is a social enterprise seeking to simultaneously promote sustainable forestry
practices and sustainable rural livelihoods in Cambodia. It will market and distribute
products created through socially-uplifting and environmentally-friendly practices and
technologies developed by GERES Cambodia and other organizations. Altogether,
Eco-Biz’s initiatives will be designed to fulfill a triple bottom line: economic, social, and
Poverty is driving unsustainable pressure on the environment
Cambodia has a population of 14 million, of which 36.1% live below the national poverty
line of US$0.45 per day. It is one of the poorest countries in the world with a per capita
GDP of US$350 in 2006. Yet it is growing rapidly—with an average annual GDP growth
rate of 9.3% during 1997-2007. This has led to severe deforestation, with an annual
loss of 140,000 hectares of forest, a 1% annual deforestation rate. Deforestation has
been chiefly driven by illegal logging for domestic use, land clearing for agriculture, and
weak enforcement of forestry laws. This creates a pressing need for sustainable
forestry management, which would involve alleviating rural poverty and raising rural
incomes, creating incentives for sustainable forestry practices, and providing access to
renewable energy sources.
Leveraging energy-efficient technologies and entrepreneurship
Operating in Cambodia since 1994, the Groupe Energies Renouvelables,
Environnement et Solidarités (GERES) is a France-based, international NGO with the
fundamental goals of “preserving the environment and improving the living conditions of
the Cambodian people”. It has developed various energy-efficient technologies (kilns
and stoves) which have improved rural incomes while reducing pressures on the
environment. In May 2009, GERES launched Eco-Biz, a private limited company to
market and distribute products created with GERES-developed energy-efficient
Eco-Biz Co. Ltd.
technologies. Initial human resource requirements are 5 full-time employees (CEO,
three sales managers, and one administrative assistant) and contract staff as
Saving Cambodia’s people and forests
Cambodians will be empowered through an improvement in the quality and
sustainability of their livelihoods through higher incomes, renewable energy sources,
and entrepreneurship. At the same time, their adoption of certified community forestry
practices and environmentally-friendly technologies will reduce deforestation and
Using Economic Incentives to Drive Adoption of Sustainable Practices
Eco-Biz will offer three core products: palm sugar, wood vinegar, and charcoal. All
products will be produced in a sustainable manner, using energy-efficient technologies,
driving sustainable forestry practices, and contributing to villagers’ livelihoods.
Global sugar consumption is 4.4 kg per capita per year. It increases by 2% per year
and was expected to reach nearly 160 million tons in 2008. In Cambodia, 20,000-
40,000 tons of palm sugar are produced each year. Palm sugar boosts a low glycemic
index (a great option for diabetics) and a high mineral content.
The Eco-Biz Approach
Wood is required to fuel stoves used to cook palm juice into palm sugar. Eco-Biz will
pay a premium over the market price for granulated palm sugar produced in a
sustainable manner. This premium price provides an economic incentive to drive palm
sugar producers to use sustainably-cut wood from certified community forests instead of
illegally logged wood. Eco-Biz will brand, market and distribute the granulated palm
sugar to domestic and international wholesalers.
Developed by GERES, the Vattanak stove greatly improves upon the traditional palm
sugar stove. It uses wood more efficiently (30% less wood), more evenly distributes
heat and produces less smoke—reducing deleterious effects on villagers’ health and
smoke contamination of the palm sugar. Therefore, Cambodian palm sugar can be
produced in an environmentally and socially responsible manner with the Vattanak
stove, a point of differentiation that can be leveraged in the high-end market.
Green Charcoal and Wood Vinegar
Currently, 85% of domestic energy use comes from wood, charcoal and other forest
biomass sources. As forest resources have decreased, the prices of wood and wood
charcoal have rapidly increased in recent years. This has resulted in a market for
cheaper wood charcoal made from illegally-cut wood, primarily in the capital of Phnom
Penh where 90,000 tonnes of wood charcoal are sold annually and 40% of households
use charcoal as their main source of energy. Research shows that 99% of the charcoal
sold is made from illegal wood. Therein lies an opportunity for green charcoal. In
addition, no branded charcoal is currently sold in Cambodia.
Wood vinegar is derived from the condensation of smoke produced during charcoal
processing. The market for wood vinegar in Cambodia is still in its infancy with potential
to grow. Currently, it is understood to have uses as an organic fertilizer and bio-
repellent. A recent buyer cited its potency over wood vinegar from other countries,
buying 400 litres within six months. There is also a potential market in the CEDAC
network of 1.8 million rice farmers
The Eco-Biz Approach
Similarly with charcoal and wood vinegar, Eco-Biz will pay a premium for CFA wood in
order to discourage illegal logging. Using the high-efficiency Yoshimura kiln developed
by GERES, Eco-Biz will produce charcoal and wood vinegar. It will also brand, market
and distribute the charcoal and wood vinegar directly to the end-consumer in the
Cambodian domestic market.
Compared to regular charcoal, green charcoal (charcoal made from sustainable wood)
is 20% more efficient and can be made in 48% less time and with 30% less wood.
Therefore, switching to green charcoal can reduce pressure on forests and encourage
the use of sustainably-produced wood.
A financially sustainable business
Eco-Biz seeks an external investment of US$500,000 for a 49% equity stake. The
projected IRR is 6% for a 5-year holding period or 25% for a 10-year holding period1
Eco-Biz is projected to break-even by Year 2 with revenues of US$2,650,000 and a net
profit of US$550,000 by Year 5.
This assumes exiting by selling shares to other interested investors.