An innovative fund for supply chain resilience

Sensemaking / An innovative fund for supply chain resilience

Tom Morton, ClimateCare’s Project Director in Nairobi, introduces a new model to finance health solutions in farming communities.

By Tom Morton / 23 Mar 2015

Food supply chains face a volatile future. Resilience means looking outside of the box to build long-term wellbeing in the producer communities as well as the crops. What’s often lacking is a way to invest in supply chain projects that improve health, tackle poverty and fight climate change, at scale. For instance, how can the cost of health solutions for Kenyan farm workers growing food and flowers for sale across UK and European supermarkets be factored into the financial model of the supply chain?

This is a question that we are exploring with food and beverage grower Finlays, through its Horticulture Fairtrade Association. Together, we are creating a funding model that food retailers and manufacturers can follow to deliver similar impacts around the world.

In this instance, the solution we are funding is efficient cookstoves. The Finlays workforce that these supply chains depend on, face a life-threatening challenge in the cost and health implications of cooking on traditional, inefficient stoves or open fires. These emit toxic fumes that kill 15,000 people in Kenya every year, and damage the health of many more. The UN endorses the provision of modern, efficient stoves to address this issue, but for most farm workers the latest efficient stoves are out of reach financially.

Our project makes efficient cookstoves available to agricultural workers by subsidising the initial cost of a stove and creating a revolving fund which provides an interest free loan to assist purchase. As loan repayments top up the revolving fund, the money is used again allowing the project to expand and support more families.

That’s not all. The fund has an innovative second source of income, beyond the loan repayments. Cleaner cookstoves help to save carbon by reducing deforestation for charcoal, and so we are generating and selling carbon credits to boost the fund. This will ensure the long-term sustainability and expansion of this project across the farm workforce community. Setting up these projects is complex. You can’t design the solution and then add on a financial model; they need to be developed hand in hand. From our offices in Nairobi, we ran extensive testing and market research with groups of workers to select the best possible stove within the budget constraints and to develop an effective distribution and retail network. At the same time, we set up a mechanism to manage the loan and repayment facility and arranged for upfront investment by DFID, Kenya.

The project is now launched and at least 8,000 agricultural workers are set to take advantage through 2015. They will benefit from the positive health impacts of a more efficient stove, and will each save approximately £125 in fuel costs every year.

And, the business benefits from a healthier, happier workforce – without which no supply chain is resilient. 

 

Tom Morton is ClimateCare’s Project Director in Nairobi.

To find out how to develop similar projects within your own supply chain contact [email protected]


About ClimateCare

ClimateCare is a Forum for the Future partner and was recently awarded a prestigious Queen’s Award for Enterprise in Sustainable Development for its ‘outstanding contributions to poverty alleviation and tackling climate change’ in the developing world. 

It specialises in Climate+Care projects - activities designed to deliver positive environmental and social outcomes. ClimateCare was selected by DFID to invest money from its Finance Innovation for Climate Change Fund to support the development of practices that will improve health and tackle climate change.

 

Image caption: Over two years, this project with Finlays will improve the disposable income of 8,000 supply chain workers

 

Image credit: ClimateCare

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