Below we illustrate how the four elements of our approach – financial viability, scaleability, deployment of business DNA and harnessing of corporate value-creating assets – are present in and add value to what we do as a corporate foundation.
We draw in detail in the main text on material from our Energise and Breathing Space programmes which address the energy and poverty challenge.
We also refer extensively to other activities of ours in the footnotes and in Annex 2.
Fostering pro-poor energy markets As already explained, the Shell Foundation has elected to focus a significant portion of its efforts on tackling the issue of ‘energy access’ in poor countries. There is a robust poverty rationale for tackling these issues.
Many hundreds of millions, perhaps billions, of poor people in developing countries can’t go home at night or into their workplace or out onto their farms first thing in the morning and switch on the lights or start up their sewing machines or irrigation pumps. They lack easy, affordable access to reliable, modern energy sources and the modern energy ‘services’ of light, heat, motive and mechanical power. This matters because increased consumption of modern energy services is one of the fundamental features of the economic development of poor countries.
Thus pro-poor ‘energy access’ in poor countries has a critical role to play not just by improving quality of life but in dynamic development terms as power of some form is required for all productive activities.
Moreover, allowing production to escape from the constraints of muscle power is a key stepping-stone to development. So the lack of energy access seriously constrains economic development and slams the door on billions of poor people trying to get started on the journey out of poverty.
The attention given by the IDC to energy access by the poor – especially the rural poor – has waxed, waned and changed over the years and now has the following features. First, there are new aid-funded, multi-stakeholder but NGO dominated initiatives underway, intended to help poor countries put in place sensible strategies to tackle energy access.
Second, the size of the problem and limited public funding for rural electrification means marketbased solutions to rural energy access are considered necessary – though there is also a view that sufficient local capital is not available to finance these solutions. Finally, concerns about the global climate change impacts of billions of poor people escaping poverty by using the same fossil fuels as do rich people, means the IDC is heavily biased towards the promotion of renewable energy sources in tackling the energy access problem.
The Shell Foundation consulted widely with others to understand this landscape.As a result, we decided to pursue a strategy to tackle the pro-poor rural energy access problem that complements and builds on the IDC’s efforts but at the same time differs from the dominant approaches in a variety of ways.
Not surprisingly, market-based solutions to energy access problems are at the heart of our strategy. But we don’t think local capital or income availability is the major challenge to be overcome in making the market work. We see the core problem being the lack of an SME sector (enterprises and supporting entities) able to deliver affordable energy services to poor people. The main contextual constraints to be overcome are institutional risk, rules that don’t work and lack of the right kinds of capacity.
We’re also concerned about the environmental impacts of poor people using fossil fuels but don’t believe that distorting the market via renewablesonly rules is the most efficient and most equitable way to make things happen. Finally, while planning clearly needs to be done, our strategy for catalysing action by others has been to build a track record demonstrating there are financially viable ways of ensuring greater and sustainable access by poor people to modern energy services.
Our portfolio of energy access initiatives include a fair number of social investments in individual enterprises from which we have learned a great deal. But we’ve found the greatest returns are coming from our institutional pilots, some with local financial sector partners, and involving innovation in the delivery of finance and technical assistance to our field partners and to pro-poor energy SMEs and their customers. Wherever possible the strategic exploitation of Shell Group assets has been pursued to advance our charitable objectives and those of our partners.
To learn more about this author, visit Shell Foundation's Website.
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Shell Foundation
(Visit Shell's Website)
The Shell Foundation is established to
support efforts to achieve a balance
between economic growth, care for the
environment and equitable social
development - the goal of sustainable
development.
The Foundation's focus on sustainable
development is based upon the Shell
Group's belief that the long-term health
and prosperity of societies of which it is
part, and its own future, depends on the
ability of all stakeholders, worldwide, to
attain such balance.
However, as one of the most significant
international oil and energy groups, Shell
recognises the global dimension of many
sustainability issues related to its
activities. It believes it has a
responsibility and an opportunity to play
its part in addressing these issues.
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