For-Profit Uses Carbon Credits to Provide Free Water Purification Systems

Image: Saabira Chaudhuri 

A for-profit social enterprise that provides free water purification systems to the poor in developing countries, is using carbon credits to finance its business.

New York Times contributor Tina Rosenberg has written a blog post about how Vestergaard Frandsen, the producers of LifeStraw (I’ve profiled them before for this blog and for Fast Company) – a portable water purification device that filters bacteria and contaminants from water, to make it potable. The company also produces a larger, fixed version of the device, called LifeStraw Family, which they plan on distributing for free in the developing world.

Vestergaard Frandsen plans to adopt a carbon credit model, by which it earns credits for preventing the boiling of water (which can be very damaging for the environment) . Polluters will then buy these credits, providing a sustainable source of income for the company. 

“The company is on the way to getting approval from one of the carbon credit markets for the LifeStraw Family, and expects to win it in February,” writes Rosenberg. “Approval will provide a way for Vestergaard Frandsen to recoup its $24 million initial investment and to turn the product into a sustainable business ─ at no cost to users.”

A Straw that Makes Contaminated Water Safe to Drink

Image credit:Vestergaard
Frandsen

Diarrhoea kills more young children than AIDS, measles and mumps combined. The statistics are staggering: according to the World Health Organization, 1.6 million people die every year, mostly in the developing world, from diarrhoeal diseases that originate from a lack of access to safe drinking water and basic sanitation facilities -- 90% of these are children under 5.

One social enterprise that is innovatively combating this problem is Vestergaard Frandsen, through a product called LifeStraw.

In essence, LifeStraw is a portable water filter requiring no electricity or batteries that claims to remove 99.99 percent of waterborne bacteria and protozoan parasites. It can filter upto 1000 litres of contaminated water. Vestergaard Frandsen also makes a version for use in the home, which practically does the same thing, except that it can filter upto 18,000 litres of water.

The basic idea is to enhance access to safe drinking water for people in the developing world, at home and away from home.

“We are for-profit company and we do make a profit,” says Elisabeth Wilhelm, Vestergaard Frandsen’s new media specialist. “Obviously our products are specifically designed to meet the needs of people in the developing world. That’s where our heart is and that’s where our focus lies.”

Dissecting Social Enterprise

Credit: Tanveer Islam/Wikimedia Commons

Contrary to popular belief, saving the world doesn’t have to be at odds with making a buck. Particularly after Muhammad Yunus started the Grameen Bank in 1983, there are more and more examples, in the US and beyond, offering support for the idea that achieving social aims can be good for business.

The what

The concepts of social enterprise, social capitalism and social entrepreneurship all function by adopting market-driven strategies or business models in order achieve a social aim. While profit is often an important concern, the predominant aim remains pursuing a social goal. Non-profits and for-profits can both function as social enterprises. 

The why

Particularly after the economic downturn, non-profits have seen donations and grants decline. Social enterprise is important because it fosters self-sufficiency and the ability to scale operations to an extent that functioning as a charity would never allow.