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