From local initiative to international ambition: what does it take to scale up social and environmental impact?
The Sustainable Green Fuel Entreprise’s success story
The In-Venture team
In most developing economies, the heavy reliance on wood-based charcoal as power source is one of the leading causes of deforestation and, therefore, of the staggering rise of green house gas emissions. GERES, an NGO taking action for cleaner energies in developing economies like Cambodia, has given birth to the Sustainable Green Fuel (SGF) social enterprise in 2008 in partnership with PSE, another NGO campaigning for child education. Both organizations have worked side-by-side to design SGF in response to some of the major social issues and environmental degradations in the country. 10 years later, this NGO-born social business has met with unprecedented success…
SGF’s flagship product, the “charbriquette”, builds its sustainability on the French motto “rien ne se perd, rien ne se crée, tout se transforme” (nothing is lost, nothing is created, everything is transformed). Indeed, the factory uses biomass wastes such as coconut shells or wood charcoal residues to manufacture its eco-friendly charbriquette. Nothing is left to chance: even the heat necessary to burn the coconut shells is extracted and redirected to the manufacturing process.
In partnership with PSE, the company selects its workers from the most vulnerable families in Phnom Penh and offers them fair working conditions. Employees have for example access to a health insurance and benefit from a 13th month salary. In return, all workers must send their children to school: a contract intended to avoid intergenerational poverty in the area.
Today, the sustainable charbriquette appeals to more than 250 direct customers, including restaurants and retailers. The factory doubled its production in 2 years and went from less than 600 tons in 2015 to 1140 tons of recycled charcoal in 2017. Even though this environmental and social bet seems to be paying off today, the entreprise’s early days were more uncertain. Carlo Figá Talamanca, an Italian engineer, took over the firm in 2012. Back then SGF was facing financial difficulties. “We were so low that I had to request a grant from a friend and invest my own money” he confesses.
When most people ask the CEO his secret recipe for success he highlights the importance of cost efficiency “As we design products for the poor, we save every single cent”. Albeit sold at competitive prices, charbriquettes are not conceding on quality either as they last longer and emit less unhealthy smoke. SGF has seemingly found the right balance between manual labor providing jobs and the use of machines ensuring rendering quality.
“For a social business to be financially sustainable, a bit of luck is needed, a lot of work but, more importantly, a strong business mindset”. As an example, Carlo points at their renovated delivery tuk-tuk, which went from an earth green color to screaming flame designs. “As our customers care more for the value for money than the sustainable nature of our product, we therefore revised our approach: from selling eco-friendly charcoal we then decided to advertise the quality product”. Without conceding on its core missions and values, SGF has adapted its marketing strategy to meet the domestic demand.
This rigorous business model has allowed SGF to break even in 2015 and to increasingly make profits in the last three years. Today, the social business is reaching out to impact investors to finance a brand new factory and to turn its Cambodian model into a world-know franchise.
As an advice for the next generation of social entrepreneurs, the CEO advises to focus solely on the problems a thorough business model can solve, even if this means to adjust the goals downward in the beginning of the entrepreneurial adventure. “The reliability of your business model is the only thing that will allow your project to achieve better social and environmental results on the long term and at a bigger scale”.