Case Study On Aerf, India

CO R P O R A T E WO R L D & B I O D I V E RS I T Y – AN ISSUE AT AERF PROLOGUE It was an early Sunday morning in Pune. The sun was yet to totally spread its reign over the sleeping city. A light breeze made the leaves whisper to each other. Birds were excitedly chirping away. It was a wonderful day for a weekend. Most people were yet to get up from their slumber, but not Mr. JS. The co-director of Applied Environmental Research Foundation (AERF) was a worried man. He just couldn’t relax. Innumerable thoughts were racing in his mind. It had to do with the work of his NGO. Despite a 14 year presence in the field of conservation, AERF still had no guaranteed source of sustainable cash flow. The name ‘AERF’ failed to ring a bell as a premier organization in the eco-field. Attracting and retaining human resources was a major worry. In short, things were simply horrible. And to make matters worse, he had a meeting scheduled for the next day. Companies needed to be contacted at a much faster pace and it was equally important to strike good deals to garner support. After contacting about 52 companies, Mr. JS had finally got a break through to get an appointment fixed with Mr. Aravind of Bharat Mining Company. Bharat Mining Company is a renowned firm dealing with Mining operations. It has mines in Goa. The company is strictly bounded by various environmental requirements especially because of tourists’ interest in Goa. Mr. Aravind knew about the fund issue that AERF was facing and hence had demanded a partnership in Nature Connect, a new venture by AERF, in lieu of the funds they'll be providing. Mr. JS had to take a decision before Monday’s meeting. But, there was a dilemma. There was a chance that the deal could lead to severe commercialization of the NGO’s venture. On the other hand, the stakes were high. The deal could solve the long standing problem of funding. Also, it could give some much needed visibility to the NGO and help in attracting more supporters and sponsors.

CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF BACKGROUND BIODIVERSITY The Millennium Ecosystem Assessment (MA) is the most recent comprehensive statement of the significant environmental challenges facing society today, which include climate change, biodiversity loss, increasing water scarcity, and nutrient deposition. The Convention on Biological Diversity (CBD) defines biodiversity as: “the variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems” The CBD further defines and provides guidance for the ‘sustainable use’ of biodiversity and its component resources. The latter include “genetic resources, organisms or parts thereof, populations, or any other biotic component of ecosystems with actual or potential use or value for humanity”, while sustainable use is defined as “the use of components of biological diversity in a way and at a rate that does not lead to the long-term decline of biological diversity, thereby maintaining its potential to meet the needs and aspirations of present and future generations”. Put simply, biodiversity is ‘life on earth’. At a fundamental level, all economies and all businesses depend, directly or indirectly, on biodiversity and its component resources. Biodiversity is similarly recognized in the MA as the foundation of all ecosystem services, which in turn support and protect economic activity and property. The MA adopts an inclusive definition of ecosystem services, which consist of provisioning, regulating, supporting and cultural benefits provided by natural ecosystems. A growing body of research documents show how biological diversity increases economic productivity in a range of sectors, enhances our direct enjoyment of nature, reduces ecological and health risks, and improves resilience in the face of shocks. Thus, by conserving biodiversity, we secure the ecosystem services upon which all economies rely. Despite the socio-economic importance of biodiversity and ecosystem services, their values are not well reflected in contemporary economic and development policies, investment decisions and private consumption patterns. This has been highlighted repeatedly in multilateral policy discussions, for example the 2007 G8 environment ministerial meeting in Potsdam, which called for a study of “the economic significance of the global loss of biodiversity” as well as efforts to enhance public and private financing of conservation. Humanity’s dependence on biodiversity is increasingly apparent while the global loss of biodiversity is increasingly well-documented. The MA, for example, reports that the current pace of species loss is up to 1,000 times higher than the background rates typical over the earth’s history (Exhibit 1). Habitat is disappearing rapidly, as we continue to develop land for farming, forestry, livestock pasture and other uses. For example, a total of 670,000 km2 of tropical forests were lost in the Caribbean, Central and South America in the period 1980 to 1995. Mangrove forests, once covering more than 200,000 km2 of coastline, have suffered losses of up to 86 percent in certain locations and continue to disappear at a rate of 1–2 percent per year. 20 percent of the world’s coral reefs have been effectively destroyed and Nikhil Mirashi__2008-10__046; Deepti Gupta__2008-10__112

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF show no immediate prospects of recovery, with a further 24 percent considered at risk of imminent collapse. Today, biodiversity conservation is mainly viewed by business as a risk or liability, rather than a potential profit centre. However, this perception is beginning to change. As public awareness of the global biodiversity crisis grows, an increasing number of companies see a business advantage in developing processes to integrate biodiversity into their operations, as well as seeking market-based solutions and opportunities. Furthermore, even with modest initial returns from most biodiversity business investments – in the range of 5 to 10 percent per annum – there are significant profits to be made as the sector grows from niche markets to mainstream business. From a business perspective, the reasons to invest in biodiversity business are increasingly compelling. They are most obvious in cases where private profitability depends directly on the health of ecosystems – ecotourism ventures, for instance. Similarly, it is now recognized that greater variability in genes, species and ecosystems is associated with increased resilience and biological productivity in agriculture, ranching, forestry and marine fisheries. Even businesses in urban areas, lacking a direct interaction with the natural world, can be motivated by new policy incentives and changing consumer preferences to ‘go green’. Corporate action on biodiversity can help businesses distinguish themselves from competitors while also improving relations with investors, employees, local communities and others. But what is disturbing is the evidence emerging from a range of sources which suggests that current efforts to conserve biodiversity are merely slowing, rather than reversing, the global erosion of biodiversity (Exhibit 2). There is growing realization that the world is unlikely to achieve “a significant reduction of the current rate of biodiversity loss by 2010”, as agreed by government leaders at the World Summit on Sustainable Development in 2002. Long-term prospects for conservation remain very uncertain, due to climate change and a host of other threats (e.g. the rapid spread of invasive alien species through trade, increasing concentration of human populations in coastal areas, developments in biotechnology). Growing awareness of climate change, in particular, has led to increasing concern about its adverse impacts on biodiversity, but also of the potentially significant role that biological resources can play in mitigating and adapting to climate change. The biodiversity challenge is greatest in the developing world, where conservation efforts are often constrained by political and macroeconomic instability, widespread poverty, and underdeveloped local economies, lack of capacity and resources and institutional weaknesses in relevant public sector bodies. It has been estimated that “well over one half of all protected areas occur in nations where governance is weak”. The result is many poorly protected ‘paper parks’, a failure to conserve biodiversity, and, in other cases, conflict with local communities. (Exhibit 3) The world as a whole is not short of funds. What is lacking is the motivation for increased private investment in biodiversity, especially in the tropics, where both the conservation need and funding gap are greatest. The potential for change through increased engagement of the private sector is highlighted in (Exhibit 4), which contrasts the gap in biodiversity funding with the scale of development assistance, private capital flows, exports and domestic markets in developing countries. If even a small fraction of global economic activity can be mobilized for conservation, then prospects for biodiversity could be significantly improved.

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF A second common approach to enlisting the private sector in biodiversity conservation is to persuade producers and consumers to reduce or refrain from environmentally harmful activities. This may be achieved through mandatory or voluntary measures. Examples include environmental assessment and mitigation requirements for large investments, land-use zoning, restrictions on allowable technology, emission standards to limit pollution, voluntary commitments to reduce waste and avoid damage to habitat. Private expenditure to undertake such actions can be substantial, where compliance is good. Like tax-and-spend, however, this approach also involves ‘swimming against the tide’. So long as environmentally-harmful activities are less costly or more profitable than biodiversity-friendly ones, people might be tempted to cheat, or make only token contributions to environmental protection while continuing to devote most of their effort to damaging activities. As a result, governments (and some NGOs) are obliged to spend considerable effort on monitoring and enforcement. Examples can be found in other business sectors, where greater biodiversity is associated with lower costs, increased productivity and ultimately higher profits. In a range of contexts, scientists have discovered that greater variability in genes, species and ecosystems is associated with increased biological productivity, resilience and consumer preference. The main drivers of private investment in conservation are thus legal requirements, charitable impulses and informal pressure from investors, shareholders, local communities and / or NGOs. More generally, the business case for investing in biodiversity is expressed in terms of: •

Avoiding delays, securing access to natural resources as well as access to capital, insurance or partnerships.

•

Relationships with employees, communities and regulators.

•

Policy influence or the potential to inform emerging environmental regulation

As awareness of the business case for biodiversity increases, more companies are seeking to distinguish themselves from competitors and gain favor with the public by supporting conservation efforts. APPLIED ENVIRONMENTAL RESEARCH FOUNDATION Applied Environmental Research Foundation (AERF) is a registered Non Governmental Organization based in Pune, India and is working in the field of community based conservation. Founded in 1994, AERF has been trying to address the issue of biodiversity conservation at the grass roots level. It has developed approaches and models and is working to involve people, especially the local communities, in the cause of conservation. The organization is driven by passion and a commitment to conservation and believes in community based conservation or participatory conservation AERF aims to maintain a balance between conservation of valuable biodiversity, forests, ecosystems and use of natural resources for the development of people. AERF is engaged in creating a link between research in the field of conservation and its actual use in action for conservation on the ground. AERF believes in establishing this link between research and its effective use in the process of development for poverty alleviation; sustainable resource use

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF and ecosystem development. It provides various Bio-diversity offsets 1 to corporate for reducing their ecological footprint2. AERF has been expanding its scope of work and interests by dwelling into pure research based projects that are funded by international foundations. It is also undertaking organized development and livelihood based projects such as the widely publicized World Bank (GVEP) funded program on the development of decentralized bio-fuel centers in Raigad district of Maharashtra. AERF goes beyond research to find practical ways in eco-conservation and community development. AERF takes a scientific approach to conservation, based on analysis of what is needed to ensure the preservation of the local plants, animals, and ecosystems. AERF believes in community based conservation or participatory conservation which implies involving people in the process of conservation. AERF operates through a strong network of organizations. Some of the organizations with which AERF has collaborated in the past are: Misereor Germany, Earth Love Fund UK, UNESCO, IPGRI, GTZ, Plant Life International, Govt. of India - Ministry of Environment and Forests, Govt. of India - Ministry of non conventional energy sources, British Ecological society, Rufford Small Grant, Conservation Leadership Program, Global village energy partnership (GVEP), Dorab Tata Trust, Winrock International India and IDRC. AERF has also seen corporate participation by Lab India and Suzlon Ltd. AERF also has links with educational institutes like Tata Institute of Social Sciences (TISS), Indian Institute of Technology (IIT), Bombay. KEY PROJECTS UNDERTAKEN • • • • • • •

Decentralized Bio-diesel Resource centers Village Electrification Program Eco-restoration of Sacred Groves Revival of Traditional Conservation practices The Great Hornbill Project Medicinal Plants and Livelihood Biodiversity Act Awareness Program

THE SITUATION Conservation is expensive work. There isn’t much scope for mechanization and its labor oriented. Besides, it requires a whole bunch of fiercely dedicated individuals who can vow to devote their body, mind and soul into it. But, what is equally important is a sustainable source of cash flow. Association with corporate world helps as it serves a two-way purpose. Besides lending a financial hand to the NGO, it also serves a way for corporate world to carry out Corporate Social Responsibility (CSR) activities. 1 2

Refer Technical Note for Biodiversity - offset Refer Technical Note for Ecological Footprint

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF ISSUES AERF, like most non-profit companies, always faced a financial crunch. For the same purpose, they recently developed a program called Corporate Conservation Program (CCP). This program offers the corporate a way to make a contribution towards society. AERF offers various programs under this head, such as – Various environmental assessments, Sponsor a forest, Sponsor a Project, etc. They even provide a customized project if required to the company. It

has a mutual benefit as AERF gets funds and the corporate world can get Green Thumb certification, Carbon credits etc. and an offset for the damages caused by them to the environment. This helps the corporate world also to fulfill their environmental requirements.

STEPS TAKEN AERF has been contacting companies with this program. They are not practicing any marketing and publicity as they believe that the good work speaks for itself. They have contacted around 52 companies for this program but have not received any positive response. This can be contributed to lack of visibility as most of the corporate world contacted, didn't know about AERF. It is also equally important to direct the CSR activities already being carried out by the corporate world towards proper work. They need to be explained that sustainable contribution can be achieved not by providing water, food, education etc. to the deprived segment of society, but by preserving the bio-diversity. For overcoming the issue of funding the projects, AERF has also conceived the plan of an ecotourism3 venture - 'Nature Connect'4. Nature Connect will be a profit-making organization which will generate funds for the supporting the working of AERF. Nature Connect has been specially planned to avoid the impact of restrictions and bindings on non-profit organisations. It is to be a separately floated independent company managed by AERF. It will be a company or enterprise aiming at conserving the environment and maintaining bio-diversity via ecotourism, people's and corporate participation. The plan is to create an eco-tourism venture at Dapoli in Ratnagiri district. The eco-tourism aims at involving any people interested in undergoing training in Field Ecology and Conservation Biology Course and further contributing to the cause of environmental conservation. It is planned to invite experts from famous institutes abroad like DICE to impart the courses. In addition, the enterprise aims to impart knowledge through practical exposure to environmental benefits. AERF owns 14 acres of forested land rich in biodiversity and this is the most important asset that it can utilize to generate revenue. It is important to make people understand the actual problems facing the environment and convey to them the seriousness of the issue. But this concept will also start bearing fruits after around 3 years. As mentioned earlier, funding is the major problem. AERF has been associated with a few corporates, Suzlon Energy being a major one. But, the requirement of assured source of cash flows for sustainable conservation work still exists. Mostly, it gets project funding which a 3 4

Refer Technical Note for ecotourism Refer Technical Note for concept of Nature Connect

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF corporate gives for a specific project done in association with itself. What ails the organisation is core financing.

OTHER RELATED ISSUES The organisation also faces issue of limited resources in terms of manpower. Conservation work requires lots of dedicated man-power. In order to involve more of corporate as well as general public in conservation activities, there needs to be a dedicated resource working only towards developing these relations as well as marketing strategies for AERF. This is required as such associations do not happen in a day but may even take several months to even a year for conversations to become fruitful. Generally people have a belief that conservation practices are to be followed by the NGOs and government. There is a need to sensitize and motivate people towards conservation so that they actively participate on the ground. This is important to have sustainable efforts. This problem stems from the fact that AERF has failed to attract human resources. Lack of visibility and finance are two major culprits. The visibility of the organization is poor. Despite a 14-year presence in the conservation field, AERF fails to ring a bell as a premier organization in the field. Thus, it so happens that interested people have no idea about the organization. And, it’s difficult for AERF to recruit people like any company since they are not in a position to ensure good pays and added benefits. So, getting needy people looking for any kind of job is also out of question since these people need some assured pay-rise and climbing up the ladder benefits. The lack of visibility also means that other institutes, organizations and companies, who do want to work for conservation, rarely come to know about this NGO. Thus, it loses out on the opportunity to get associated with these.

THE DILEMMA Mr. JS was thinking how should he go ahead with this deal? Or can the organization revamp its structure and functioning so that their goals can be achieved without having to associate with Bharat Mining Company? What were the reasons behind the sorry state of affairs of the NGO? Can they be overcome?

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF EXHIBITS EXHIBITS 1: EXTINCTION PER THOUSAND SPECIES PER MILLENIUM

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF EXHIBITS 2: RED LIST INDEX FOR BIRDS IN DIFFERENT ECOSYSTEMS

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF EXHIBITS 3: REGIONAL VARIATION IN THE PERCENTAGE OF THE OVERALL COST OF EFFECTIVE RESERVE NETWORKS THAT ARE MET

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF EXHIBITS 4: BIODIVERSITY IN DEVELOPMENT FINANCE: TAPPING NEW SOURCES

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF

T EA C HI N G N O T E SYNOPSIS/OVERVIEW Environmental conservation is a tough task. This case is about the problems faced by AERF, a non-profit organization working to preserve bio-diversity. It talks about the issues of funds, visibility and resources that the organization is facing and the dilemma that crops up as a result of these. The co-director of the organization must act for the future of the company. He knows that the NGO is in desperate need of funds but at the same time, he needs to decide whether the NGO can allow an external company to take control by giving up some stake in lieu of financing or can he pinpoint the pain points ailing the NGO and bail it out of trouble. TEACHING OBJECTIVES This case not only deals with the problems of a NGO but also handles the marketing and HR aspect. After completing this case, students should have an increased understanding of the following: 1. 2. 3. 4. 5. 6.

Understanding bio-diversity and the effects of harming it The problems faced by non-profit organizations The unstructured world of NGOs The pros and cons of involving corporates with NGOs The need for an NGO to project and market itself The proper way to attract and manage human resources

PEDAGOGICAL OVERVIEW This case can be handled in two parts. A single session of around 90 minutes would be sufficient to discuss it. Part 1: (20-25 min approx.) The first part should discuss about bio-diversity, environment and the effects of harming them. Also, a discussion can be initiated over the various organizations that work for ecoconservation and the different kinds of activities carried out by them. The problems of nonprofit organizations, resource-availability for them and the way they operate in an unstructured environment can give a basic idea to students about the main case issue that follows. Part 2: (45-60 min approx.) The second part handles the main issue which has managerial implications. Here, students should be asked to identify potential problems faced by NGOs and various solutions to them. Then, problems pertaining to this case can be discussed. The students should be asked to suggest actions that can be taken by the organization to counter the problems. The issues of funding, visibility, resources are the major ones and these three should be analyzed separately. Besides, it’s important to have the discussion on how corporates can benefit from Nikhil Mirashi__2008-10__046; Deepti Gupta__2008-10__112

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF involvement with the NGO and vice-versa. The corporate involvement angle is very important since this forms a major issue of the case. It is suggested that students should go through the case as well as the technical note so that they can suggest activities and solutions to tackle the problem faced by the NGO. ASSIGNMENT QUESTIONS 1. What are the other possible activities that AERF can include in Nature Connect so as to attract more people and also generate more cash-flows? 2. Suppose you have been appointed as a marketing consultant for AERF. What suggestions can you give the co-director to improve the visibility of the NGO? 3. You have been selected as a HR consultant for the NGO. Suggest ways to improve the problem of human resources faced by the organization. ANALYSIS: Here, possible solutions to handle the issues have been stated. AERF’s main problem is that of funds for its projects and activities. But, there are several underlying problems that the organization faces. Lack of visibility is an important reason for corporates not coming up to get involved with AERF. So, the issue here is the different ways how AERF can market itself. Some ways are mentioned below. It is evident that AERF needs to go for strong brand building to increase its visibility and reputation as a leading eco-organization. This will also help to garner support from corporates, funding agencies and involvement from the people. The company should focus towards creating visibility first in areas in and around Pune. For this they can get associated with local TV channels and ask them to contribute not in monetary terms, but by providing free television advertisement. They can also target local magazines and newspapers to contribute by providing space for advertising and publicity. The other problem is of insufficient man-power to handle its work. Generally people have a belief that conservation practices are to be followed by the NGOs and government. There is a need to sensitize and motivate people towards conservation so that they actively participate on the ground. This is important to have sustainable efforts. Active participation from students can be achieved by communication through posters and events organized at school level. This will help students know about the organization and volunteer during their vacations or take up a part time work. Many retired people wish to keep themselves busy in social work and AERF could be an ideal way for them to channelize their energies. AERF should also involve in events conducted at local level during days like Earth Day, World Environment Day and other such awareness campaigns. Presence at various conferences, exhibitions, fairs etc. is another way to improve public exposure. Thus, the organization needs to move from its belief that work speaks for itself and understand that things will start moving speedily only after creating an image in the society as people want to get associated with big and famous institutions.

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF REFERENCES 1. Applied Environmental Research Foundation - http://www.aerfindia.org/ 2. IUCN - Building Biodiversity Business; Joshua Bishop, Sachin Kapila, Frank Hicks, Paul Mitchell and Francis Vorhies, 2008. 3. Biodiversity and Ecosystem Services – Bloom or Bust? A Document of the UNEP FI Biodiversity & Ecosystem Services Work Stream (BESW), March 2008. 4. Biodiversity Indicators for National Use - Experience and Guidance; a Document of UNEP.

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF

T E CH N I C A L N O T E 1. BIODIVERSITY OFFSET Biodiversity offsets are conservation activities intended to compensate for the residual, unavoidable harm to biodiversity caused by economic development projects133. The basic idea of biodiversity offsets is to extend the traditional mitigation hierarchy of avoid, reduce, rescue and repair in an effort to achieve no net loss or a net positive impact on biodiversity (Figure 1).

FIGURE 1: BIODIVERSITY OFFSETS AND NET POSITIVE IMPACT

2. ECOLOGICAL FOOTPRINT ASSESSMENT This is a new jargon but highly in vogue now and relates again to impact of the company activities on environment. Calculation of carbon emissions, loss of species and habitats are the major indicators of such assessments. This assessment is imperative in order to decide the scale and method of environmental offset. Nikhil Mirashi__2008-10__046; Deepti Gupta__2008-10__112

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF 3. ECOTOURISM: Ecotourism is entirely a new approach in tourism. Ecotourism is a preserving travel to natural areas to appreciate the cultural and natural history of the environment, taking care not to disturb the integrity of the ecosystem, while creating economic opportunities that make conservation and protection of natural resources advantageous to the local people. In short, ecotourism can be categorized as tourism programme that is - "Nature based, ecologically sustainable, where education and interpretation is a major constituent and where local people are benefited." All this together can be called ecotourism. If a travel does not satisfy any one of these constituents, then it is not called a real ecotourism venture.

4. NATURE CONNECT: Applied Environmental Research Foundation (AERF) owns some 14 acres of land in Dapoli, Ratnagiri district of Maharashtra. Via Nature Connect, we plan to create an eco-tourism venture at Dapoli. Besides normal tourism, this eco-tourism aims at involving any people interested in undergoing training in Field Ecology and Conservation Biology Course and further contributing to the cause of environmental conservation. It is planned to invite experts from famous institutes abroad like DICE to impart the courses. In addition, the enterprise aims to impart knowledge through practical exposure to environmental benefits. AERF owns 14 acres of forested land rich in bio-diversity and this is the most important asset that it can utilize to generate revenue. It is important to make people understand the actual problems facing the environment and convey to them the seriousness of the issue. To cater to the variety of customers, some of the proposed activities at the site of the resort are as follows•

Guided Nature hikes

•

Bird watching, wild life viewing if any

•

Interaction with Field Biologists. Tourists may have an opportunity to discover more on conservation issues with researchers on site. Depending on scientists

schedules,

tourists may be able to help collect data and experience a more intimate relationship with the wildlife. •

Canopy walkway

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CORPORATE WORLD & BIODIVERSITY – AN ISSUE 2009 AT AERF They also plan to have off-site activities and events for members throughout the year such as•

T-shirts, mugs, conservation kits, calendars, photo-frames for members

•

Newsletters, magazines, Guidebook encouraging advertisements

•

Events, discussions and conferences with experts, interested, environmentalists

Based on various sectors and implementing differential pricing, we plan to have different types of memberships•

Students (1-2 day educational trip, projects, internships)

•

Family (2-4 days vacation and leisure amidst nature)

•

Researchers, environmentalists (study and conservation work, long duration)

•

Corporates (group activities, team-building outward bound exercises, CSR)

•

Foreigners (any of the above)

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