What is Good Governance

United Nations ESCAP

Recently the terms "governance" and "good governance" are being increasingly used in development literature. Bad governance is being increasingly regarded as one of the root causes of all evil within our societies. Major donors and international financial institutions are increasingly basing their aid and loans on the condition that reforms that ensure "good governance" are undertaken.

GOVERNANCE

The concept of "governance" is not new. It is as old as human civilization. Simply put "governance" means: the process of decision-making and the process by which decisions are implemented (or not implemented). Governance can be used in several contexts such as corporate governance, international governance, national governance and local governance.

Since governance is the process of decision-making and the process by which decisions are implemented, an analysis of governance focuses on the formal and informal actors involved in decision-making and implementing the decisions made and the formal and informal structures that have been set in place to arrive at and implement the decision.

Government is one of the actors in governance. Other actors involved in governance vary depending on the level of government that is under discussion. In rural areas, for example, other actors may include influential land lords, associations of peasant farmers, cooperatives, NGOs, research institutes, religious leaders, finance institutions political parties, the military etc. The situation in urban areas is much more complex. Figure 1 provides the interconnections between actors involved in urban governance. At the national level, in addition to the above actors, media, lobbyists, international donors, multi-national corporations, etc. may play a role in decision-making or in influencing the decision-making process.

All actors other than government and the military are grouped together as part of the "civil society." In some countries in addition to the civil society, organized crime syndicates also influence decision-making, particularly in urban areas and at the national level.

Similarly formal government structures are one means by which decisions are arrived at and implemented. At the national level, informal decision-making structures, such as "kitchen cabinets" or informal advisors may exist. In urban areas, organized crime syndicates such as the "land Mafia" may influence decision-making. In some rural areas locally powerful families may make or influence decision-making. Such, informal decision-making is often the result of corrupt practices or leads to corrupt practices.

















Figure 1: Urban actors

GOOD GOVERNANCE

Good governance has 8 major characteristics. It is participatory, consensus oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive and follows the rule of law. It assures that corruption is minimized, the views of minorities are taken into account and that the voices of the most vulnerable in society are heard in decision-making. It is also responsive to the present and future needs of society.

Figure 2: Characteristics of good governance












Participation

Participation by both men and women is a key cornerstone of good governance. Participation could be either direct or through legitimate intermediate institutions or representatives. It is important to point out that representative democracy does not necessarily mean that the concerns of the most vulnerable in society would be taken into consideration in decision making. Participation needs to be informed and organized. This means freedom of association and expression on the one hand and an organized civil society on the other hand.

Rule of law

Good governance requires fair legal frameworks that are enforced impartially. It also requires full protection of human rights, particularly those of minorities. Impartial enforcement of laws requires an independent judiciary and an impartial and incorruptible police force.

Transparency

Transparency means that decisions taken and their enforcement are done in a manner that follows rules and regulations. It also means that information is freely available and directly accessible to those who will be affected by such decisions and their enforcement. It also means that enough information is provided and that it is provided in easily understandable forms and media.

Responsiveness

Good governance requires that institutions and processes try to serve all stakeholders within a reasonable time frame.

Consensus oriented

There are several actors and as many view points in a given society. Good governance requires mediation of the different interests in society to reach a broad consensus in society on what is in the best interest of the whole community and how this can be achieved. It also requires a broad and long-term perspective on what is needed for sustainable human development and how to achieve the goals of such development. This can only result from an understanding of the historical, cultural and social contexts of a given society or community.

Equity and inclusiveness

A society’s well being depends on ensuring that all its members feel that they have a stake in it and do not feel excluded from the mainstream of society. This requires all groups, but particularly the most vulnerable, have opportunities to improve or maintain their well being.

Effectiveness and efficiency

Good governance means that processes and institutions produce results that meet the needs of society while making the best use of resources at their disposal. The concept of efficiency in the context of good governance also covers the sustainable use of natural resources and the protection of the environment.

Accountability

Accountability is a key requirement of good governance. Not only governmental institutions but also the private sector and civil society organizations must be accountable to the public and to their institutional stakeholders. Who is accountable to whom varies depending on whether decisions or actions taken are internal or external to an organization or institution. In general an organization or an institution is accountable to those who will be affected by its decisions or actions. Accountability cannot be enforced without transparency and the rule of law.

CONCLUSION

From the above discussion it should be clear that good governance is an ideal which is difficult to achieve in its totality. Very few countries and societies have come close to achieving good governance in its totality. However, to ensure sustainable human development, actions must be taken to work towards this ideal with the aim of making it a reality.

High Five Hopes

In our own simple ways, we can make a difference in promoting sustainable community development and poverty alleviation. Realities reveal that our country's main issue is the deepening roots of poverty among poor families.

Most of the big companies are already doing their share to address these perennial problems. Philanthropic way of helping is important, but how can we give our own share if we don't have these resources? Are there other means to extend our help and make a step by step nurturing development?

I recently bumped into a program that is called "High Five Hopes: Bringing Hope Through Hoops", sponsored by "Olympic Village Group". This advocacy identifies the need of children on the basic needs such as food, shelter, and clothing. In addition, they are pursuing and promoting the importance or necessity of sports as one of the building blocks of giving hope. With these activities, the children are being transformed to have a strong character and build self confidence as part of their growth and development to be good and responsible citizens of our country.

High Five Hope

"High Five Hope is an effort to help more children experience greater self esteem, confidence, pride, leadership, teamwork and most importantly, happiness and hope through the power of sports. Every child deserves the opportunity to develop, to smile, and to have greater hope.[ Form http://www.highfivehope.org]

High Five Hope works with street children in the Philippines, specifically those with the greatest needs. It is estimated there are 85,000 street children in Metro Manila alone. High Five Hope uses multi-month basketball and volleyball programs to help both boys and girls living on the street from across Metro Manila."[From http://www.highfivehope.org]

It is their main thrust to bring a little more hope to children around the world through the magic of sports.

The Discipline of Innovation

by Peter F. Drucker

In business, innovation rarely springs from a flash of inspiration. It arises from a cold-eyed analysis of seven kinds of opportunities.

• Unexpected occurrences
• Incongruities
• Process Needs
• Industry and market changes
• Demographic changes
• Changes in perceptions
• New knowledge
  

Innovations require knowledge, ingenuity, and above all else, focus.

Energy, Development, and Security

Energy Issues in the Current Macroeconomic Context

by United Nations Industrial Development Organization

Introduction

• The development of a sustainable, long-term solution to meeting the world’s energy needs is a defining issue of our time. Energy is directly linked with the key global challenges that the world faces -- poverty alleviation, climate change, and global, environmental and food security.
• Current energy systems are failing to meet the needs of the world’s poor. Worldwide, 2.6 billion people rely on traditional biomass for cooking and 1.6 billion people – about a quarter of the human race - do not have access to electricity. The projected cumulative investment required between 2005 and 2030 to meet energy needs is almost US$20.1 trillion, but even if this investment is secured over the next thirty years, 1.4 billion people will still lack access to electricity in 2030 and 2.7 billion will still rely on traditional biomass for cooking and heating.
• Global energy-related carbon dioxide emissions (CO2) will increase by some 50 percent between 2004 and 2030 unless major policy reforms and technologies are introduced to transform the way energy is produced and consumed. Coal has overtaken oil as the leading contributor to global CO2 emissions. Developing countries will account for three quarters of the increase in carbon dioxide emissions between 2004 and 2030 unless major transformative policies and technologies are introduced in the next few years.
• Per capita emissions in developing countries will remain small compared with those in developed countries. Yet, the share of developing country emissions is expected to rise from 39 percent in 2004 to over half of the total world emissions in 2030 unless mitigated by policies that promote more efficient production and use of energy, switching to cleaner fuels, more efficient transportation, and cleaner electricity supply. Many fast-growing developing countries will make their major energy-related investments in the next decade. There is a short window of opportunity to ensure that the energy infrastructure and industrial facilities are as energy efficient as possible.
  

Growing global vulnerability in a rapidly changing environment

• The global economy is currently caught between a severe credit crunch, slowing demand in many developed countries and rising inflationary pressures in emerging and developing economies. This is compounded by volatility in energy and commodities prices. The most pressing global challenges such as energy and climate change will now have to be addressed in an increasingly more fragile macroeconomic context, especially in poor developing countries. For the first time since 1973, the world is witnessing a combination of high oil and food prices, undermining gains achieved in fighting poverty. The current financial and economic crisis will require protracted adjustment as developing countries face a shortfall in capital flows, reduced demand for exports and rising inflation.
• For many developing countries, the recent food, commodities, and oil price shocks are already having severe implications particularly among the poorest. The World Bank estimated that for countries in Africa, the impact of high food, oil, and other commodity prices since January 2007 have reduced their gross domestic product by 3 to 10 percent. The terms-of-trade effects of the combined food and energy price increases are in excess of 10 per cent of GDP in more than 15 developing countries, where the room for maneuver on the macroeconomic front is limited. With millions living on the margin between subsistence and starvation, high food and fuel prices may represent a threat to their survival. Thirty-six countries in Africa, Asia and Latin America now face acute food security crises requiring external assistance.
• Most commodity prices have now peaked and are expected to fall in response to improved supply and slowing demand. Food prices are expected to fall on good supply prospects and weaker oil prices. However, food and fuel prices will remain high and their volatility will continue to be a major concern. While global prices of food and fuel have dropped in recent months, domestic prices remain much higher than in previous years and show few signs of abating.
• The global credit and financial crisis could have a major impact on infrastructure financing in general and energy financing in particular. Some sources suggest that the financing for energy infrastructure will be severely affected – a view that is somewhat moderated by a more optimistic outlook from the renewable energy market. However, some shortfall in the financing for energy sector could be expected.
• For regions such as Africa, where the provision of electricity is by far the greatest infrastructure challenge, this is indeed bad news. Compared to other regions of the world, Sub-Saharan Africa has one of the lowest rates of energy access, capacity per capita and electricity consumption per year. But Africa will not be the only region affected. Immense investment requirements still exist in most developing countries to build additional generation capacity, extension of electricity grids in urban areas, mini-grids in medium-sized settlements, and decentralized installations providing energy services to remote and rural areas. Given the prominent role that foreign banks play in developing countries, scaling back on financing will likely decrease energy financing. According to the World Bank, private capital flows in the energy sector are also expected to decline.
• On the other hand, the economies of the Asia-Pacific region, despite the financial crisis, will continue to have robust economic growth and high energy demand. This, in turn, will have a deleterious effect on climate change. Widening access to energy services will continue to be a major challenge to the region along with addressing climate change. In Asia and the Pacific, a low carbon development path would effectively meet the region’s development needs while addressing the challenges of climate change and local pollution.
  

Energy, poverty reduction and climate change

• Energy today is at the heart of every economic, environmental and developmental issue. The world needs clean, efficient and reliable energy services to meet its long-term needs for economic growth and development. Developing countries need to expand access to reliable and modern energy services to alleviate poverty and increase productivity, to enhance competitiveness and economic growth.
• Climate change is an urgent and critical challenge that the international community needs to address now. An effective response to climate change must combine mitigation of global greenhouse gas (GHG) emissions — to avoid the unmanageable — and adaptation at regional, national, and local levels -- to manage the unavoidable.
• According to the IPCC Fourth Assessment Report, the largest growth in GHG emissions between 1970 and 2004 has come from the energy supply sector (an increase of 145 per cent). During this period, the growth in direct emissions from transport was 120 percent. From industry it was 65 percent, and from land use, land use change, and forestry (LULUCF) 40 percent.
• If business-as-usual trends in the global energy mix continue, fossil fuels will maintain their dominant position, resulting in continuing growth of CO2 emissions. The projected increase in carbon emissions is expected to reach 40 to 110 per cent over the period of 2000-2030. Two thirds of this increase is expected to come from developing regions. However, per capita emissions in developing countries will remain substantially lower than those in developed countries. Decisions taken today on the choice of energy technology will thus have profound consequences for global development over the next 40 to 60 years.
• The demand for primary energy is expected to increase significantly in the next few decades5. Increased energy demand will give rise to challenges in poverty reduction, development and macroeconomic stability worldwide. Some of these challenges will have distinct economic effects on developing and developed countries.
  

Making Sustainability Work

Best Practices in Managing and Measuring Corporate Social, Environmental, and Economic Impacts

By Marc J. Epstein




Introduction

Improving Social and Financial Performance in Global Corporations

The issue of whether companies should consider their social responsibility or the impact of their activities on their stakeholders is no longer up for discussion. These issues, and many, many more like them, have become a central part of the creation of shareholder value and the management of both global and local enterprises.

The challenge has moved from “whether” to “how” to integrate corporate social, environmental, and economic impacts—corporate sustainability—into day-to-day management decisions when managers at all levels have significant incentive pressures to increase short-term earnings. It is now about how to be more socially responsible or sustainable and engage corporate stakeholders more effectively. It is about the specific actions that managers can take to effectively deal with the paradox of trying to simultaneously improve corporate social and financial performance.

Developing sustainability strategies is often an important challenge for senior executives, but implementation is usually the larger challenge. In most of the successful implementations, CEOs are involved and are the drivers of corporate concern to implement sustainability. But these senior managers are often challenged as to how to manage the paradox of simultaneously improving social, environmental, and financial performance, the three elements that make up sustainable performance. Business unit and facility managers are pressured to deliver profits and their performance is typically measured primarily on how successfully they deliver. So, there is often difficulty obtaining an alignment of strategy, structure, systems, performance measures, and rewards to facilitate effective implementations. It is also often difficult to obtain the resources to effectively manage the various drivers of social and environmental performance.

Sustainability has been defined as economic development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs. For businesses, this includes issues of corporate social responsibility and citizenship along with improved management of corporate social and environmental impacts and improved stakeholder engagement.

Leading companies have increasingly recognized the critical importance of managing and controlling corporate social and environmental performance. The impetus for implementing a corporate strategy to integrate social, environmental, and economic impacts may be driven by internal factors, such as a management commitment to sustainability as a core value or by management recognition that sustainability can create financial value for the corporation through enhanced revenues and lower costs. Often, however, the leading impetus for a sustainability strategy is from external pressures such as government regulation, marketplace demands, competitors’ actions, or pressure from NGOs (non-governmental organizations).

Managers have now recognized the importance of stakeholder input and engagement and the potential impact on long-term corporate profitability. The consequences for businesses when they do not effectively consider the impacts of their activities on society are often substantial. Thus, effective management of stakeholder impacts and relationships is critical. Some companies have not developed any coherent sustainability strategy or even any systematic way of thinking about or managing their social and environmental impacts. Negative social and environmental impacts have tarnished the reputation of many corporations. However, some have recognized the social and environmental effects of their actions, developed a corporate sustainability statement, and made progress toward defining a policy that confronts the problems. These companies have developed partial systems to deal with social and environmental problems and may have transferred technologies from other parts of the company to use in implementing sustainability.

They may have set up systems for improved costing, capital budgeting, performance evaluations, or product design but have not developed an integrated program that includes sustainability in day-to-day decision-making. Some companies have developed effective reactive systems to address these issues and others have been more aggressively proactive. It is unlikely that any company has fully integrated or achieved sustainability—this is a huge task—but numerous companies have taken important steps toward improving their sustainability performance and reducing their negative social and environmental impacts. Many of these companies are included in this book as exemplars of best practice. Rather than searching for one best company example to model, those companies and managers that want to improve their sustainability performance should instead look to adapt and adopt the various best practices of individual sustainability elements. Through the detailed model, measures, and guidance to implementation presented here and the extensive best-practice company examples from around the world, companies can select those practices that can be used to better implement sustainability in their own organizations to simultaneously improve corporate social, environmental, and financial performance.

Leading companies are examining the impacts of their products, services, processes, and other activities more broadly. They are looking at a more comprehensive set of social, environmental, and economic impacts on a broader set of stakeholders. Managers recognize that stakeholders have numerous impacts on company profits— employees in their desire to work for the company, customers in their desire to buy from the company, the community in its desire to permit the company a license to operate. But they have faced difficulty in managing competing stakeholder interests and simultaneously improving both corporate social, environmental, and financial performance. Business leaders who want to respond sensibly to activist calls for corporate responsibility should think about the issue in the same way they would any other business problem.

But stakeholder management has to be more than identifying the squeakiest wheels and greasing them. Sustainability cannot be managed as just a public relations strategy to pacify stakeholder concerns. Doing so can be quite risky as stakeholders expect actions and results to be consistent with rhetoric. Furthermore, it is only through the identification, measurement, and management of sustainability impacts that social and environmental and financial performance can be improved and value created. For sustainability to be valuable to both the organization and its stakeholders, it must be integrated into the way a company does business.

The size of corporate social and environmental expenditures is increasing rapidly and the necessity of improved identification and management of these impacts has become critical. Business leaders need to make an independent assessment of their social, economic, and environmental impacts to see where pressure is most likely to come and also to see where the company is providing un-priced social, environmental, and economic benefits for which it is not receiving credit. Firms should not underestimate their ability to turn corporate social responsibility into a competitive advantage.

Why it’s important

Here are the four main reasons why sustainability now demands our urgent attention:

• Regulations. Government regulations and industry codes of conduct require that companies must increasingly address sustainability. Noncompliance with regulations was (and still is) costly, as regulatory noncompliance costs to companies include: penalties and fines, legal costs, lost productivity due to additional inspections, potential closure of operations, and the related effects on corporate reputation.
• Community relations. The general public and activist NGOs are becoming increasingly aware of sustainability and the impacts that corporations have on society and the environment. Identifying the social and environmental issues that are important to key stakeholders and improving stakeholder relationships can foster loyalty and trust. Gaining a license to operate from governments, communities, and other stakeholders is of critical importance for corporations to be able to conduct business on an ongoing basis. Good performance on sustainability can garner a positive reputation with stakeholders and improve community relations and business performance. Alternatively, the consequences of mismanaging sustainability and stakeholder relationships can be significant and costly in terms of reputation damage and potential impacts on the bottom line.
• Cost and revenue imperatives. Sustainability can also create financial value for the corporation through enhanced revenues and lower costs. In other words, managing sustainability is just a good business decision. Revenues can be increased through increased sales due to improved corporate reputation. Costs can be lowered due to process improvements and a decrease in regulatory fines. Identifying the areas where good for the society, good for the environment, and good for the company intersects is key.
• Societal and moral obligations. Because of their impact on environment and society, companies have a responsibility to manage sustainability. A personal concern for social and environmental impacts and their social and moral obligations has led some executives and corporations to include sustainability in their strategies. Leadership organizations recognize the relationship between business and society and are redefining their economic, environmental, and social responsibilities around the concept of sustainability.
  

Corporate Citizenship

Profiting From A Sustainable Business

A report from the Economist Intelligence Unit
Sponsored by Cisco, HP, Qualcomm, SAS and Abbott, UTC

Executive Summary

Corporate citizenship is becoming increasingly important to business sustainability. It provides benefits that are both tangible—such as reducing waste and increasing energy efficiency—and intangible—such as improved employee productivity. This report is based on the hypothesis that corporate citizenship can help to improve the bottom line.

Many firms view corporate citizenship as little more than public relations, but a minority are beginning to recognize its potential. Leading companies have moved from a do no-harm, reactive mode to a more proactive approach. For more than a decade US firms like DuPont, 3M and SC Johnson have been showing the way, using corporate citizenship as a source of competitive advantage. In recent years they have been joined by corporations like GE and Wal-Mart.

The strategy is characterized as much by a hunger for new business opportunities as by the urge to do the right thing. However, beyond a small cohort of leading companies, most US firms have yet to maximize the business benefits of corporate citizenship. They are seen as lagging behind their European counterparts. But they are catching up.

There are many lessons to be learned from the leading companies. In particular, they build on four foundations: leadership at all levels, employee engagement, solid measurements and public-private partnerships:

• To be successful, corporate citizenship must be driven from the top. But leaders of this initiative are needed at all levels of the firm.
• Significant companies find ways to channel the passion of their employees into corporate citizenship activities. Such activities help fi rms to recruit better-quality workers and retain them.
• To convince senior executives that corporate citizenship is effective, the financial benefit must be clear. Companies must set ambitious goals, along with ways of keeping track of progress towards them.
• Companies have discovered that financial advantages can accrue from forming partnerships with nontraditional stakeholders. These include local, state and federal government, as well as activist groups and non-governmental organizations.
  

Based on the lessons learned, we conclude by offering practical advice for firms wishing to use corporate citizenship in order to improve their bottom line. Suggestions include making the business case, tying corporate citizenship to core objectives, identifying the challenge and setting public goals.

Conclusions

Many of the companies mentioned in this report have been practicing proactive, bottom-line-driven corporate citizenship for a long time. For most American firms, however, these activities are in their infancy. But companies increasingly realize the importance of good corporate citizenship for building a sustainable business.

At the same time, with economic uncertainty prevailing, some companies have yet to commit themselves to incorporating corporate citizenship into their core values. They still view it as primarily an exercise in public relations. They can’t see the forest for the trees.

Other companies, by contrast, take a longer-term view. Always on the lookout for new opportunities to enhance and grow their business, they have visionary leadership at all levels, understand that the ability to engage is the best way to recruit and retain high-quality employees, develop and apply rigorous metrics, and are willing to form partnerships with others for mutual benefit.

As this report shows, visible improvements to the bottom line can be achieved through environment related issues such as reductions in waste and improvements in energy efficiency. According to the survey respondents and the other senior executives and experts consulted for this report, the following steps are recommended if companies are to profit from corporate citizenship:

1. Make the business case: “My starting point is that, unless it makes money, it’s not sustainable,” says Professor Hart. And 74% of respondents say that corporate citizenship can help to improve the bottom line at their company. This step is critical, especially during an economic downturn. “Business leaders who have not quantified the financial benefits will clearly do less, whereas those who have clearly defined the benefits will do more, regardless of the broader economic conditions,” Dr Tebo says. Survey-takers agree: among respondents who say that their corporate citizenship initiatives are very important to their company’s overall business strategy today, 52% say they will invest more money five years from now, irrespective of the economic situation.

1. Be proactive: Survey respondents who say their companies are proactive are also far more positive about the benefits of corporate citizenship. For example, 56% of respondents from proactive companies say they are stronger or much stronger than their competitors in terms of investing in corporate citizenship initiatives. For everyone else, the figure is only 32%. “Recognize that you will make mistakes, you won’t always be successful. But unless you try, you won’t be successful at all,” says Mr. Murray of Herman Miller. Cornell’s Professor Hart agrees: “As little as 5% of your investment capital could be enough to create a serious play in the sustainability area.”
2. Identify the challenges: “Ask yourself, what your Achilles heel is? What is it that you really need to focus your efforts on to improve your own performance? For energy-intensive companies, this might be the environmental footprint of your operations; for others with an Asian supply chain, human rights issues,” says Ms Rittenhouse of DuPont. “Pick five or six bold steps that are pertinent to your business,” says Peter White of Procter & Gamble.
3. Set public goals: “It’s OK to have philosophy and principles, but when you set goals, you’re serious. Particularly public ones, because once you go public on your goals, that gives you an extra incentive to meet them,” Dr Tebo says. At the same time, be honest: “Don’t advertise how well you are doing when you haven’t really got far down the track,” says Herman Miller’s Mr. Walker.
4. Measure progress: Respondents who report that their company uses metrics, such as triple-bottom-line reporting or ISO 14001, to measure the effectiveness of corporate citizenship are far more positive about their initiatives than the other respondents in the survey. Specifically, 88% of those who use metrics also say that corporate citizenship can help to improve the bottom line, compared with only 68% of all other respondents who say the same. Not surprisingly, then, 23% of respondents whose companies use metrics also report that their primary motivation for corporate citizenship is revenue growth, compared with only 13% of all other respondents.
5. Tie corporate citizenship to core objectives: Corporate citizenship remains a fringe activity, not integrated into the core values of the company. “Connect to the business, that’s the most important thing, you can’t be divorced from the business,” says Mr. Litow of IBM. Survey respondents who say that their corporate citizenship initiatives are very important to their company’s overall business strategy today also report that their profitability and revenue growth is “stronger” or “much stronger” than that of their closest competitors, at 57% and 52% respectively, compared with 41% and 38% respectively of those who do not see their strategy in this regard as very important. “It should become part of the core values of the company, not an add-on run by a corporate-relations group,” says P&G’s Peter White. Sticking to those values can be especially important during difficult economic times: “That’s what gives employees and stakeholders—including investors—confidence in the company,” Mr White continues.
6. The bottom line: “To make sustainability work, somebody’s got to articulate the financial gain that comes from the results,” says Dr Tebo. Respondents who say that their company’s primary motivation for corporate citizenship is revenue growth also say that they are “much stronger” than their closest competitors in their ability to fi nd and exploit new opportunities (20%, compared with 11% of respondents who do not say that revenue growth is their primary motivation). They are also much stronger in terms of profitability (24% versus 13%) and overall revenue growth (23% versus 11%).
   

We Can Be Wise Only Together

Excerpts from the Foreword of Margaret J. Wheatley

The World Cafe: Shaping Our Futures through Conversations That Matter by Juanita Brown and David Isaacs

The World Café reintroduces us to a world we have forgotten. This is a world where people naturally congregate because we want to be together. A world where we enjoy the age-old process of good conversation, where we’re not afraid to talk about things that matter most to us. A world where we’re not separated, classified, or stereotyped. A world of simple greeting, free from technology and artificiality. A world that constantly surprises us with the wisdom that exists not in any one of us but in all of us. And a world where we learn that the wisdom we need to solve our problems is available when we talk together.

The World Café process reawakens our deep species memory of two fundamental beliefs about human life. First, we humans want to talk together about things that matter to us. In fact, this is what gives satisfaction and meaning to life. Second, as we talk together, we are able to access a greater wisdom that is found only in the collective.

The World Café in Action

The stories will allow you to see two beliefs brought to life in the Café process. In order to provoke your exploration of them, I’d like to underline some of the dimensions of the Café process that bring these beliefs into vibrant, healthy reality.

Belief in Everybody

The World Café is a good, simple process for bringing people together around questions that matter. It is founded on the assumption that people have the capacity to work together, no matter who they are. For me, this is a very important assumption. It frees us from our current focus on personality types, learning styles, emotional IQ—all the popular methods we currently use to pre-identify and pre-judge people. Each of these typologies ends up separating and stereotyping people. This is not what was intended by their creators, but it is what has happened.

The Café process has been used in many different cultures, among many different age groups, for many different purposes, and in many different types of communities and organizations. It doesn’t matter who the people are—the process works. It works because people can work well together, can be creative and caring and insightful when they’re actively engaged in meaningful conversations around questions that count. I hope that these stories inspire us to move away from all the categories and stereotypes we currently use about who should be involved, who should attend a meeting—all the careful but ill-founded analysis we put into constructing the “right” group. We need to be focused on gathering the real diversity of the system, but that’s quite different from being absorbed with these other sorting devices.

Diversity

It’s important to notice the diversity of the places and purposes for which the World Café is used, and the diversity of participants who are encouraged to attend World Café gatherings. These pages contain a rich illustration of a value I live by: we need to depend on diversity. Including diversity well is a survival skill these days, because there’s no other way to get an accurate picture of any complex problem or system. We need many eyes and ears and hearts engaged in sharing perspectives. How can we create an accurate picture of the whole if we don’t honor the fact that we each see something different because of who we are and where we sit in the system? Only when we have many different perspectives do we have enough information to make good decisions. And exploring our differing perspectives always brings us closer together. One Café member said it well: “You’re moving among strangers, but it feels as if you’ve known these people for a long time.”

Invitation

In every World Café, there’s a wonderful feeling of invitation. Attention is paid to creating hospitable space. But the hospitality runs much deeper. It is rooted in the host’s awareness that everyone is needed, that anyone might contribute something that suddenly sparks a collective insight. Café facilitators are true hosts—creating a spirit of welcome that is missing from most of
our processes. It’s important to notice this in the stories here, and to contrast it with your own experience of setting up meetings and processes. What does it feel like to be truly wanted at an event, to be greeted by meeting hosts who delight in your presence, to be welcomed in as a full contributor?

Listening

When people are engaged in meaningful conversation, the whole room reflects curiosity and delight. People move closer physically, their faces exhibit intense listening, and the air becomes charged with their attention to each other. A loud, resonant quiet develops, broken by occasional laughter. It becomes a challenge to call people back from these conversations (which I always take as a good sign).

Movement

In the World Café process, people generally move from table to table. But it’s much more than physical movement. As we move, we leave behind our roles, our preconceptions, and our certainty. Each time we move to a new table, we lose more of ourselves and become bigger— we now represent a conversation that happened among several people. We move away from a confining sense of self and our small certainties into spaciousness where new ideas can reveal themselves.

As one participant describes it: “It’s almost as if you don’t know where the thought came from because it has merged so many times that it has been molded and shaped and shifted with new dimensions. People are speaking for each other and using words that started somewhere else that they hadn’t thought of before.” We also move into a greater awareness as we look for connections amongst the conversations, as we listen to voices other than our own. Patterns become apparent. Things we couldn’t see from our own narrow perspective suddenly become obvious to the entire group.

Good Questions

World Café dialogues, like all good conversations, succeed or fail based on what we’re talking about. Good questions—ones that we care about and want to answer—call us outward and to each other. They are an invitation to explore, to venture out, to risk, to listen, to abandon our positions. Good questions help us become both curious and uncertain, and this is always the road that opens us to the surprise of new insight.

Energy

I’ve never been in a World Café that was dull or boring. People become energized, inspired, excited, creative. Laughter is common, playfulness abounds even with the most serious of issues. For me this is proof positive of how much we relish being together, of how wonderful it is to rediscover the fact of human community. As one host from a very formal culture says: “My faith in people has been confirmed. Underneath all the formal ways of the past, people really want to have significant conversations. People everywhere truly love to talk with each other, learn together, and make a contribution to things they care about.”

Discovering Collective Wisdom

These are some of the Café dimensions that bring out the best in us. But this is only half the story. World Café conversations take us into a new realm, one that has been forgotten in modern, individualistic cultures. It is the realm of collective intelligence, of the wisdom we possess as a group that is unavailable to us as individuals. This wisdom emerges as we get more and more connected with each other, as we move from conversation to conversation, carrying the ideas from one conversation to another, looking for patterns, suddenly surprised by an insight we all share. There’s a good scientific explanation for this, because this is how all life works. As separate ideas or entities become connected to each other, life surprises us with emergence—the sudden appearance of new capacity and intelligence. All living systems work in this way. We humans got confused and lost sight of this remarkable process by which individual actions, when connected, lead to much greater capacity.

To those of us raised in a linear world with our minds shrunken by detailed analyses, the sudden appearance of collective wisdom always feels magical. I am fascinated by the descriptions given by Café participants of this emergence. Here are a few quotes from them. Notice how unusual these descriptions are:

“The magic in the middle.”
“The voice in the center of the room.”
“The magic in experiencing our own and other people’s humanity around whatever the content is.”
“Something coming to life in the middle of the table.”
“What joins us together—a larger whole that we always knew was there, but never really appreciated.”

For me, the moments when collective wisdom appears are always breathtaking. Even though I know such wisdom is bound to appear, I’m always stunned with delight when it enters the room. And the appearance of such wisdom is a huge relief. We actually do know how to solve our problems! We can discover solutions that work! We’ve just been looking in the wrong places—we’ve been looking to experts, or external solutions, or to detailed, empty analysis. And all this time, the wisdom has been waiting for us, waiting for us to enter into meaningful conversations and deeper connections, waiting for us to realize that we can be wise only together.

World Poverty and the Private Sector

By Jane Nelson

In today’s global economy there are few topics that are as complex or controversial as the relationship between world poverty and the private sector. Depending on the issues, the location and the commentators, private enterprises – especially multinational companies – tend to be seen as either saviors or villains in the fight against poverty. On the one hand, capitalism and the enterprises and entrepreneurs that drive it offer one of our greatest hopes for creating wealth, funding innovation, encouraging competitiveness and transferring the technologies that can support sustainable livelihoods and lift millions of people out of poverty.

On the other hand, unfettered economic liberalization and privatization can destroy local livelihoods, industries and ecosystems, and exacerbate poverty and inequality. This is especially the case when they occur in the absence of good governance systems, effective legal frameworks and social safety nets. The challenge for the private sector is to work in partnership with governments and civil society organizations to minimize the costs of globalization and spread its benefits as widely and fairly as possible.

As United Nations Secretary-General, Kofi Annan, commented to business leaders at a recent World Economic Forum (WEF) meeting, “If we cannot make globalization work for all, in the end it will work for none... the fragility of globalization poses a direct challenge to the self interest of the corporate sector, and a central part of the solution is the need for you to accept the obligations – not merely the opportunities – of global citizenship.”

In response to this and other challenges the WEF has been one of a growing number of business leadership networks that has established an initiative on Global Corporate Citizenship.There is a growing ‘business case’ for corporate engagement in poverty alleviation. In part this is based on investing in the stability of current markets and securing the prosperity of future markets, many of which are likely to be in developing countries.

In his foreword to the publication Tomorrow’s Markets, competitiveness guru Michael Porter argues, “Not only can corporate and social needs be integrated, but the success of the developing world in improving prosperity is of fundamental strategic importance to almost every company.” The business case is also driven by the growth in social and environmental activism, combined with the increased global awareness and sophistication of consumers, investors and future employees. These trends are making it imperative for companies to understand and manage their wider impacts on society. Failure to do so can increase a company’s risks, damage its reputation, limit its innovation and undermine its stakeholder relationships. These intangible assets are an increasingly important component of shareholder value and no company can afford to ignore them.

There is also a growing ‘development case’ for corporate involvement in poverty alleviation. Policy makers and non-governmental organizations (NGOs) are recognizing that private-sector resources, competencies and networks can play a crucial role in helping to address some of the world’s most complex challenges. While some would rather stop the process of globalization altogether, for most NGOs, trade unions and political leaders the challenge is increasingly how to make it more equitable and environmentally sustainable. This includes a more proactive role for private trade and investment, within a global system of fair rules and shared values.

So what practical and realistic role can the private sector play in helping to tackle poverty? Business can make a contribution in three main ways.

• First and foremost, through increased investment and the responsible implementation of core business activities, aiming to minimize any negative impacts and optimize positive contributions.
• Second, through poverty-focused social investment and philanthropy programmes.
• Third, through getting engaged in public policy dialogues and institution-building aimed at creating a better enabling environment for both profitable business and poverty alleviation.

By far and away the greatest contribution that domestic and foreign companies can make to poverty alleviation is through increased private investment and through concerted and transparent efforts to ensure that the economic, social and environmental impacts of this investment are positive. Philanthropic donations of funds, products and volunteers can make an important contribution, but these will always be small relative to the responsible application of a company’s core competencies, comparative advantages, and investment and operating expertise.

There is a growing number of inspiring examples where companies are developing innovative partnerships in all of these areas of action. These range in scale from global programmes to address cross-boundary issues such as climate change and fair trade, to local projects focused on poverty issues as simple, but important, as providing loans to support micro enterprises, supplying mosquito nets to prevent malaria and encouraging hand-washing to combat diarrhoeal disease. They include collective initiatives such as the United Nations Global Compact, the Global Alliance for Vaccines and Immunization, the Global Business Council on HIV/AIDS, the Forestry Stewardship Council and the Ethical Trading Initiative. They also include a growing variety of new products, services and community-investment mechanisms provided by individual companies in individual countries and communities.

In some of the world’s poorest rural and urban communities, large energy, infrastructure, information technology, pharmaceutical and financial companies are embarking on new partnerships to increase access to clean water, sanitation, energy, health care, technology and credit. Sometimes these partnerships are based on philanthropic contributions from business. In some cases they are a reaction to an activist campaign against the company or industry.

In a growing number of cases, however, they are examples of corporate innovation, resulting in commercially viable products, services and even new business models. Stu Hart and C K Prahalad6, for example, have undertaken ground-breaking research on business strategies for reaching the 4 billion people who live at what they have termed ‘the bottom of the world’s economic pyramid’. They offer compelling evidence on how companies ranging from local firms in developing countries, to multinational corporations such as Unilever, Citigroup, DuPont, Hewlett Packard, and Avon, are creating new business models and service offerings to reach the world’s poor.

While these voluntary initiatives will be insufficient on their own, they are a crucial step towards tackling poverty if combined with sound basic regulations and market mechanisms.

Another way of looking at the potential contribution of business to poverty alleviation is to focus on what companies can offer at the local, national and global level in terms of addressing some of the key obstacles to equitable wealth creation and distribution.

• First, at the micro-economic local level – the level where poor people live and try to develop sustainable livelihoods to support themselves, their families and their communities.
• Second, at the macro-economic national level, there is a need to create an enabling environment for private-sector development and responsible business practices.
• Third, at the macro-economic global level, there is an urgent need for ongoing international dialogue and reform to build a more open, but fair, stable and rules-based global economy.

Summary

The private sector faces increased opportunities and challenges to help alleviate poverty, driven by a combination of market pressures, changing societal expectations and government requirements. Success will depend on business being able to create both shareholder value and wider societal value, and demonstrate that it is doing so. In the 10 years since the Rio Earth Summit the private sector has made great progress. In particular, leading companies and business associations have started the following transitions:

• From laggards to leaders – instead of simply reacting to regulations and confrontational activists, some of the world’s major companies are starting to take a more proactive, solutions-oriented approach to address the intertwined challenges of sustainable development and poverty alleviation;
• From compliance to creating value – linked to this, they are moving beyond a compliance and risk-minimization mindset, to a value-creation mindset when it comes to addressing wider socio-economic and environmental issues;
• From assertion to accountability – they are recognizing the need to move from ‘one-way’ public relations exercises, to more transparent and open engagement with stakeholders, ranging from shareholders to NGOs and local communities. A key element of this is greater public disclosure and accountability for social and environmental, as well as financial performance;
• From paternalism to partnership – leading companies are recognizing that they do not have all the necessary answers, competencies or resources, even when it comes to their core business activities. They are starting to develop new types of partnership, not only with other companies, but increasingly with non-traditional allies such as NGOs.
  

There is undoubtedly room for improvement in all of these areas and a need to ‘move beyond the usual suspects’ to engage many more companies from developed and developing economies. At the same time, there can be little doubt that the creativity, ingenuity and outreach of private enterprise have the potential to play a crucial role in poverty alleviation. This can best be achieved in partnership with governments and civil society, operating within a framework of clear and fair rules and shared values.

Promotion of Wind Energy

Lessons Learned from International Experience and UNDP-GEF Projects

by Virginie Schwarz for the United Nations Development Program, Bureau for Development Policy, Energy and Environment Group Under the Supervision of Marcel Alers.

Although wind energy is a rapidly growing technology its use remains geographically concentrated, with more than 75 percent of global installed capacity found in just five countries. These countries and others wishing to develop wind energy have implemented various supportive policies covering areas as diverse as tariffs, technical R&D, administrative procedures, or education and communication, and range from direct project subsidies to general awareness raising.

Experience shows that good wind resources are not on their own sufficient to ensure strong wind energy development and reductions of the cost of wind energy. Even fair pricing is not necessarily enough. Only countries that have set up an adequate enabling environment and long-term stable comprehensive public policies, with strong political commitment, have succeeded in developing wind power. Their policies have been focused, not only on reducing costs and improving revenues to increase profitability, but also on reducing risks.

Policies giving market access to wind energy are the most critical. Feed-In laws – the main instrument used in Europe to promote wind energy – have the advantage of giving developers long-term stability and predictability and have helped create three of the world’s largest wind energy producers. In the European context, they have been more cost-effective than Quotas. However, apart from Canada, large industrial countries in the rest of the world (USA, Japan, and Australia) have chosen Quota-based instruments, combined with subsidies or tax credits. Some of these Quota-based systems have been effective in giving rise to new wind capacities but only when carefully designed, and in countries using them, it has not been proven that Quotas effectively provide the lower costs that theory credits them for. China and India have, like Canada, in theory chosen to mix Feed-In tariffs and Quotas, even if, in practice, the Chinese
Feed-In pricing system will actually be based on tendering results. Tender-driven policies have major drawbacks and until now, there has been no successful experience of tendering as the sole instrument of a nationwide ambitious wind dissemination policy. The same conclusion can be reached for voluntary policies, such as green pricing.

Whatever policies are chosen, in most countries the development of wind energy will require specific financing, generally through public subsidies and/or an increase in electricity prices, however small. In almost all countries, policies such as Feed-In laws and Quotas are combined with tax credits, subsidies or soft loans. The necessary public or private money is not always available, especially in developing countries. Available funding should be first allocated to creating an adequate general environment for wind projects, removing barriers, and activities of this kind. The Clean Development Mechanism (CDM) can potentially bring additional revenues to specific wind energy projects.

Wind energy projects will generally be able to comply with the CDM eligibility rules.

CDM and Joint Implementation (JI) can be useful by financing projects in a country for the first few years and help them reach a volume where national competence can develop. As more and more projects are developed, local skills in designing, planning, maintaining and operating wind farms will increase, paving the way for private investor-based projects. In small countries, the financing of these projects can rely mainly on CDM. However, because of the administrative burden linked with the international assessment of individual projects, it is doubtful that CDM or JI could by themselves be the basis for long-term wind energy development in large countries.

CDM often needs to be combined with other policies designed to bring additional revenues and remove non-economic barriers. Feed-In laws are the easiest of the market access policies to combine with CDM revenues. Such a combination would be most adequate for medium to large-sized projects in countries with medium wind energy potential.

Policies on permitting and licensing and grid issues are also critical. To meet wind energy penetration targets in a cost-effective way, it is necessary to create a process that will facilitate increased generation in a timely and simple manner. If obtaining all the necessary permits and licenses is a complex, costly and uncertain process, investors can be deterred and project profitability jeopardized. Grid access is of course critical to wind energy development, but even when regulations giving grid access to wind farms are in place, many critical issues related to grids can remain – including connection delays and charges, transmission charges and grid stability and ancillary services. Electric grids in most countries were designed to bring electricity from large production centers to urban areas. They were not made for distributed generation.

Both issues – permitting/licensing and grid issues – have been among the focuses of European policy in the past few years and are beginning to be considered in China and India.

Many countries have also implemented policies on national industry promotion, wind resource assessments, technology development, standards and testing, education and awareness-raising because they reduce risks and bring solidity and confidence to a business plan. This is even more important in countries that are seen in themselves as risky for investors, whatever the type of investment.

Setting up an effective and comprehensive wind energy policy requires dealing with a large number of various, often complex, issues. However, much experience has been gained in developed countries, and more recently in some developing countries such as China or India. This should help make things easier, and also faster, for countries wishing to promote wind energy.

To help governments transform the markets for wind energy by implementing enabling policies, the GEF has financed, or is considering financing, 14 projects through UNDP, of which only one has been completed. These projects are generally located in countries with good wind resources and some experience with liberalization/ privatization. Electricity prices are very diverse in the different countries.

In order to remove barriers to the development of wind energy, the design of the projects integrates some of the lessons learned from existing successful wind policies. These include the necessity of reviewing the regulatory environment to offer developers clear and expeditious procedures, the importance of giving developers access to data on wind resources and the need to increase awareness of public authorities, companies and the public through education and training programmes.

Demonstration sites are included in all projects but efforts towards enhancing the replicability of these demonstrations need to be continued. The most recent projects increasingly emphasize the need to have defined, stable, business models and financing schemes with guaranteed market access at the end of the project rather than concentrating essentially on financing the demonstration plant. This should be generalized. Education or wind assessment policies, however important, will not lead to effective wind farms if there is no profitable economic model for developers. The importance of grid-related issues seems generally underestimated.

For future projects, some guidelines can be offered.

Concentrating projects in countries where they stand the best chances of success because of the country’s wind energy policies can help maximize the effectiveness of the money available. Wind energy generally has better chances of being successfully developed in countries with the following characteristics:

• A real commitment by policy-makers to develop wind energy;
• A legitimate public authority to set rules and obligations and enforce them in a way that will appear credible to investors;
• Some privatization/liberalization of the electricity market and some experience with Independent Power Production;
• A grid that has enough capacity and technical stability to accept large amounts of wind energy without jeopardizing its security;
• High electricity prices compared to which wind energy will be more easily competitive; and
• A large enough commercial wind energy potential. One strategy for UNDP could be to start working systematically on countries that have successfully participated in the Solar and Wind Energy Assessment Programme (SWERA).
  

Some public action on energy efficiency/ energy savings should also be a prerequisite for initiating a wind energy project.

In order to be successful in each country, wind energy policies should :

• Be long term and consistent;
• Include legally binding targets or obligations;
• Offer wind energy producers standardized long-term contracts with secure payment mechanisms and an acceptable rate of return;
• Provide fair and open grid access and development;
• Provide good governance and appropriate streamlined procedures; and
• Create strong public acceptance and support.
  

In terms of market access policies, a Feed-In system is probably the safest overall policy choice for any country really committed to developing wind energy. Feed-In systems have provided good results and experience for replication is widely available. However, design and adequacy with national specificities and economic culture are critical to a successful policy.

The Conference on Grid-Connected Renewable, hosted by the World Bank in Mexico in February 2006, highlighted the fact that many developing countries are still searching for the most appropriate mix of regulation, market incentives and tendering process to attract private wind energy developers without requiring unacceptable subsidies from ratepayers or the public treasury. The different types of policies can be more or less adequate depending on local circumstances.

All policies should be designed in a way that makes them easy to understand and to use for wind energy developers. They should be kept as simple and stable as possible. Geographic distribution of projects is also an issue that needs to be given consideration, whatever the type of policy.

For each type of policy some key issues require special attention.

Feed-In Laws

The key elements of a successful Feed-In law are:

• A stable policy applicable over a long period of time;
• A long-term contract allowing for guaranteed prices until developers have recouped their costs;
• A reasonable rate of return;
• Enough flexibility to capture effective cost reductions; and
• A cost-recovery mechanism for monopoly utilities and a cost-sharing system for utilities in competitive markets.
  

Quotas

The key elements of a successful Quota system are:

• A long-term obligation (at least 10 years or even 15 years) with strong enforcement;
• Realistic target levels (that can be reached at reasonable cost but significantly exceed existing capacities);
• A level of penalty at, or above, compliance costs;
• A regulator to monitor the system;
• Long-term power purchase contracts; and
• Clear rules and limitations regarding eligibility (existing/new plants) and compliance flexibility (banking/borrowing).
  

Tenders

The key elements of a successful tendering policy are:

• Long-term objectives and planning of tenders made public with regular rounds;
• Sufficiently large tenders to achieve economies of scale;
• High penalties for plants not built and:
• Choice of projects, based not only on price, but also technical and financial capacity to avoid committing resources to projects that will not materialize.
  

When setting up on-grid wind energy barrier removal projects, using these guidelines to choose priority countries and to select key issues that will be dealt with during the project can help concentrate funds and resources on those countries and projects which have the best chances of success with their wind energy policy.

Delivering Energy Services for Poverty Reduction

Success Stories from Asia and the Pacific

Regional Energy Programme for Poverty Reduction
UNDP Regional Centre in Bangkok

Executive Summary

Efforts by countries in the Asia-Pacific region to meet the Millennium Development Goals (MDGs), especially the goal of halving the number of poor, will be impaired unless adequate attention is paid to the crucial role energy services play in the development process. As many as 1.7 billion people in Asia-Pacific rely on traditional biomass for fuels and 1 billion do not have access to electricity.

The report was developed as part of UNDP’s ongoing efforts to enhance knowledge by sharing experiences on energy projects for poverty reduction in the region. Through a process of peer review and selection, twelve case studies have been compiled to examine their experiences, particularly in terms of their design, implementation and outcomes. The cases range from small, local pilots to full-scale, national projects and are based on the premise that satisfying people’s needs for modern forms of energy can be an effective entry point for reducing poverty, creating new jobs and business opportunities, improving standards of living, health and education, and contributing to country progress in achieving the MDGs.

In meeting the energy needs of poor communities, calls for a shift in focus from a supply side to a more demand-oriented approach, meaning paying greater attention to end-users and energy services. This requires providing energy in useful, convenient and affordable forms to poor rural households and businesses, where the need is the greatest. It also means that the energy provided needs to be in an appropriate form to improve productive applications and enhance opportunities for income generation.

In many rural areas of the Asia-Pacific region, the extension of the electricity grid to villages is planned for far into the future or is not cost-effective. Since the initial needs of rural households are relatively modest, they can often benefit greatly from small scale off-grid solutions. Even where electricity is available, insufficient attention is often paid to cooking and heating needs of the poor and to mechanical power to reduce the burden of repetitive and time-consuming tasks, which disproportionately affect women and children.

Although the projects considered offer promising approaches, most of them encountered significant social, economic and technical challenges. However, they are considered successful because they have been largely positive in improving people’s lives. They have expanded access to modern energy services, promoted the efficient use of energy and increased access to financing.

Our hope is that the experiences drawn from these projects will be useful for others that are helping communities – especially poor, rural communities – in creating initiatives to take advantage of more affordable, efficient, safe and convenient forms of energy.

Based on the case studies reviewed, the factors that contributed to successful energy projects can be summarized as follows:

• Projects should involve participatory consultations both at the community level and in policy development at the national level in order to ensure the needs and priorities of communities are addressed.
• Regardless of whether an integrated or a single-issue approach is used, projects must remain focused on securing benefits to reach development objectives that improve the livelihoods of the poor.
• Gathering and analyzing accurate and realistic information on the socio-economic context, the barriers to improved energy access and the benefits of different options is critical to ensuring projects reduce poverty and enhance development outcomes.
• Cost-effective solutions exist and can provide affordable, efficient and quality energy carriers and energy services to meet the divergent and differentiated needs of rural populations.
• Projects can be designed to provide energy services that can free up people’s time, reduce the burden of difficult and repetitive tasks, increase productivity and reduce expenditures on energy.
• The use of appropriate energy carriers and end-uses for productive purposes can expand opportunities for income generation. However, it should not be assumed that productive uses will occur automatically as a result of the provision of energy services, especially with the expansion of electricity.
• Projects that are able to offer a combination of energy carriers, technologies and end-uses will be more likely to satisfy a range of people’s needs and priorities, including cooking and heating needs, mechanical power and electricity for illumination and communications.
• While the main focus of capacity development efforts has been the transfer of information on energy technologies, effective capacity development is best centered on the acquisition of knowledge based on a prior understanding of the local socioeconomic context, technical practices and policy environment.
• The outcomes of energy projects are more likely to be sustained when projects take into consideration technical and financial sustainability, coordinate with local institutions and develop business skills in addition to technical skills.
• Taking into consideration local energy project experiences can help to develop national policies that are adapted to local conditions. At the same time, energy projects that advance national development objectives are more likely to be mainstreamed into national policies if they are flexible and adapt to changing conditions.
  

Success FACTORs

Based on the experiences summarized in the report, a number of principles of successful energy projects can be gathered and summarized as follows:

• Projects should involve participatory processes both at the community level and in policy development at the national level in order to ensure the needs and priorities of communities are addressed. Projects should be sensitive to the different roles and entitlements between wealthier and poorer members of participating communities, between men and women, and of disadvantaged groups. Consultations should ensure that the poor, women or vulnerable are included.
• Regardless of whether an integrated approach or a single-issue approach is used, projects must remain focused on securing benefits to reach development objectives that improve the livelihoods of the poor. An integrated approach addresses the needs of communities based on the community’s identified priorities for improving livelihoods. On the other hand, a single-issue approach starts with an identified issue and works to find communities that will benefit from the approach.
• Gathering and analyzing accurate and realistic information on the socioeconomic context, barrier to energy access and the benefits of different options is critical to ensuring projects are designed to reduce poverty and enhance development outcomes. A common problem in energy development is a lack of understanding of the role energy can play in reducing the burden associated with repetitive or time-consuming tasks and freeing up people’s time for income-generation activities, education, health and other basic needs.
• It is not enough just to make energy available, but it is necessary to ensure that end-use devices critical to women and men are actually made available to them and are managed or owned by them. This means not only consulting men, women and vulnerable groups directly to understand their energy needs, but also including them in the implementation, management and ownership of a project.
• Energy end-uses and services for productive purposes can expand opportunities for income generation. It is therefore a very powerful approach to meeting the energy needs of the poor and simultaneously increasing their incomes. However, it should not be assumed that productive uses will occur automatically as a result of the provision of energy services, especially with the expansion of electricity. Expanding access to reliable modern energy services increases opportunities for income generation for the poor when the energy services provided are designed for productive applications in a way that increases the affordability of basic energy services and also their accessibility. While different approaches can be used, they are all based on improving productivity and livelihood options.
• Cost-effective solutions exist and can provide affordable, efficient and quality energy carriers and energy services to meet the divergent and differentiated needs of rural populations. Solutions can be scaled up and mainstreamed, but this requires harnessing the lessons from experiences and building on them, as well as adapting technical solutions to the community needs.
• A combination of energy sources and technologies is generally needed to satisfy the range of people’s needs and priorities, including cooking and heating needs, mechanical power and electricity for illumination, communications and other needs. Projects can be designed to provide energy services that can free up people’s time, reduce the burden of difficult and repetitive tasks, increase productivity and reduce expenditures on energy. Energy efficiency and conservation can provide energy savings, the provision of fuels for cooking and heating needs can reduce the burden of fuel wood collection, indoor air pollution and energy expenditures, which are especially burdensome on women and children, and mechanical power can reduce the burden of repetitive and burdensome tasks, such as milling and grinding.
• While the main focus of capacity development efforts has been the transfer of information on energy technologies, effective capacity development is best centered on the acquisition of knowledge based on a prior understanding of the local socioeconomic context, technical practices and policy environment. Being innovative in how capacity development is delivered will help to tailor efforts to the individual, organizational and social capacity needs.
• The outcomes of energy projects are best ensured when projects take into consideration technical and financial factors coordinate with local institutions and develop business skills in addition to technical skills. This involves addressing issues of quality, fit for - purpose, standards and warranties for maintenance, high up-front costs, a lack of access to credit, a lack of capacity of local institutional partners and energy entrepreneurs.