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Conserve HRP caters to the "fashion with a conscience" crowd by marketing chic hand-made accessories crafted from recycled materials. Conserve employs 300 under-served laborers, mostly women, who acquire the disposed materials and create bags and belts that are sold in stores internationally.

by Rajya Karipineni - New Ventures India

Conserve HRP exemplifies new environmental trends in India's private-sector by converting trash to treasure. Lower-income employees collect plastic rags from neighborhood streets and press the waste into a thicker, durable material, known as Handmade-Recycled Plastic, used for stylish handbags and accessories. The material can be compared to leather in quality, but produces a wider range of colors without any artificial dyes.

At the heart of this process are the 300 rag-pickers that collect the waste plastic used for the product line. Founders Anita and Shalabh Ahuja started Conserve HRP as an offshoot of their environmental NGO, but take as much pride in the ongoing recycling activities as they take in the sustainable lifestyle provided to their employees. Anita and Shalabh value the connections made with each employee, who come from all over India and even Bangladesh to work with the company. With such a diversified pool of labor, Anita and Shalabh initially had serious language barriers to overcome - the two speak contentedly of their creative solution to this challenge that involved tapping into the only common language among Conserve employees: Bollywood. Each different color of plastic manufactured is named after a famous Bollywood star, an idea that has led to greater communication during the production process and is an example of the innovative spirit driving Conserve HRP.

By tackling the dual problems of waste and poverty, Conserve HRP holds a captive audience among those who buy "fashion with a conscience". Current sales in 2100 European retail stores indicate a clientele that is willing to pay more for fair-trade products, delivering large profits for a low-cost process. International sales return an approximate 30 percent gross per bag sold and international buyers already demand a higher volume of their existing products. Opportunities abound for Conserve HRP to link up with other retail stores as well as expand their product line. In fact, Conserve has started scaling up production of an interior decoration and stationary line. Conserve has seen a 90 percent increase in turnover every year since 2004.

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The authors of Untapped: Creating Value in Underserved Markets outline strategies for accessing both domestic and international BoP markets. More specifically, they examine the ways in which companies can engage with "underserved markets" using five “success factors” that they apply to the “four business functions [that] cover the range of relationships that people in underserved markets have with businesses: as consumers, employees, suppliers, and neighbors. (12) The five success factors are as follows:

1. Mine and translate local market information.
   
   
2. Adapt business model to community realities
   
   
3. Change internal incentives and challenge cultural assumptions.
   
   
4. Create partnerships and strategic alliances. Improve the enabling environment. (9)

Lodge et al. go on to explain the challenges involved in addressing these markets and how one can apply the success factors to overcome them. (9) So far, so good.

While I appreciate the comprehensive approach to the examination of underserved markets—it was refreshing to encounter a multi-faceted, rather than dichotomous (consumer vs. producer) approach to BoP potential — I had difficulty relating much of the content to a developing country context. To be fair, the authors did incorporate some familiar BoP examples, including Cemex. However, some of the strategies described, particularly with respect to the capacity-building aspect of employee training and supplier development, seemed dependent on resources that may be in scarce supply in an developing markets.

For example, the authors describe the creation of the “Marriott Associates Hot Line.” The hotline idea evolved out of the realization that the productivity of Marriott employees was being hampered by a number of “complex, acute, and urgent life issues — car and transportation issues, language and immigration issues, abusive spouses, crime, drugs and alcohol, school problems of children, financial and legal problems, evictions, etc.” (69) Managers found themselves spending more time addressing these issues than performing business-related activities. As a result, Marriott developed a hotline through which employees could receive the advice of trained professionals. (69) This approach makes very good sense, no? Yes, but in some cases, finding and training qualified staff is challenging enough without trying to source additional staff to support the primary staff.

But then again, I suppose one has to know what is exportable and what isn’t. Nowhere do the authors state that hotels everywhere should establish hotlines for beleaguered employees. Based on the five “success factors", many of which echo general ideas about the best way to approach the BoP, it seems that the main principle is to let the local context be the guide. So if hotlines don’t work, find something that does.

That said, discovering and implementing what works sometimes involves changing the local context or creating the infamous "enabling environment" (principle #5). But who and what are enabled when you do that? In both domestic and international contexts, MNCs have the power to shift the legal and regulatory environment in their favor, a power that they often exercise. What concerns me is the potential for abuse, given the lack of governmental oversight in some contexts. However, as the authors assert:

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The World Bank has translated The Next 4 Billion into Japanese, and the Bank held a launch event in Tokyo, May 23. "The World Bank Tokyo Office is pleased to make this important research available to a broad audience in Japan," said Lester Dally, World Bank Acting Special Representative in Japan. "The emerging role of the private sector in poverty alleviation is a topic of considerable interest here. Japan has a long history of leadership in overseas development assistance, and this research points the way toward a strong and complementary role for the private sector, working alongside bilateral and multilateral institutions."

William Kramer, one of the work's principal authors, and deputy director of DTE, delivered the keynote address at the launch. "As a market approaching $4 trillion, Asia represents the largest opportunity for beneficial business engagement with low-income communities," he said. "Companies in Asia are leaders in BOP innovation, and that Japanese companies are waking up to the potential is a real tipping point."

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Following famed venture capitalist Vinod Khosla to the speaker’s podium at the huge annual conference of The Indus Entrepreneurs (TIEcon 2007) was interesting. First, some of the audience decided it was time to go to lunch. More interesting was the unexpected similarity of what we both had to say about quite different fields.

Mr. Khosla described how important it was to find sustainable energy solutions to address the climate challenge, and pointed to a number of promising technologies and the growing market for them. But his basic message was that we know how to solve business and technology problems—and we will. His firm is putting its money to work doing just that.

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Andrew Mack is a former World Bank official and Principal of AMGlobal Consulting; Jeremy M. Goldberg is the Director of Communications for AMGlobal. They blog at Andy's Global View.

By Andrew Mack with Jeremy M. Goldberg

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If you're in Washington DC today and/or tomorrow, be sure to stop by the Development Marketplace event at the World Bank.  For those unable to make it to DC, or stuck in meetings both days (me), don't fret - there's a blog! 

The Development Marketplace blog, Hot Ideas/Cool Projects, launched a few days ago and features Tom Grubisich and a team of guest writers.  Early posts include stats on the number and type of projects vying for the $4 million prize pool and even a link to John's thoughts after last year's Marketplace.  Good stuff - check it out.

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Reminder: This is on Wednesday; please RSVP.

Ever wondered how you can move into the elusive world of BOP consulting?

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I had spent a lot of time trying to figure out how best to work at the base of the pyramid, even before I knew what BoP was.

In 2003, I moved to Nigeria to pursue a career in international development, focusing on democracy and governance. Nearly two years of this work taught me that democracy, or the pursuit thereof, doesn’t always pay the bills. In a country where collaborative government means equitable access to oil wealth, one quickly understands how deeply poverty impacts life in Nigeria. But market forces are alive and well there—from the shoeless boy hawking newspapers in the street to the shops selling eggs at midnight. This is what spurred my interest in business and economic development—that and Todaro’s textbook, Economic Development. However, I realized that despite my interest in development issues, I was less impressed with the institution of development.

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The following article provides summary analysis of two events last week hosted by WRI-IFC and IFC-EMPEA. The conferences dealt with the issues of green investment in emerging economies and the broader growth of emerging economy investment, respectively.

Sustainable SME finance is evolving from its status as an interesting trend to becoming a sizable sector in the future, but for now the investors involved in this area are a pioneering group, searching out stable returns in unknown territory. That was the gist of last week's IFC-WRI workshop on sustainable investment in emerging economy green sectors.

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A wrap of the recent spate of announcements in the microfinance space shows some interesting trends:

Investments are coming from across the world and are of significantly larger scale.

Dubai-based privately-owned finance firm Legatum Capital, run by one of New Zealand’s richest men - Christopher Chandler committed a $25 million investment in a leading Indian micro financier Share Microfin.

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