Dr. D. Michael Shafer trained in Government (PhD Harvard) and spent 25 years teaching political science at Rutgers University and consulting in the areas of international development, community re-creation after conflict, and higher education reform. He is a member of the Council on Foreign Relations and a 21st Century Fellow. In 2008, he and his wife started Warm Heart, a community development organization serving northern Thailand. He is particularly interested in attracting investment to rural communities in order to establish dynamic, sustainable, income generating, social wealth creating centers of community growth. Dr. Shafer is also the founder and president of Second Harvest Power Co. (Thailand), Ltd., a start-up green power company which will soon build its first agricultural waste fired community power plant.

1. CSR: Why Waste a Golden Opportunity?
Making CSR profitable for you and the community
Dr. D. Michael Shafer, Director
Warm Heart Foundation
A.Phrao, Chiang Mai, Thailand
www.warmheartworldwide.org
d.michael.shafer@gmail.com

2. Please don’t waste your money
• My name is Michael Shafer and I am a do-
gooder who runs an NGO.
• So pay attention to what I am about to say.
− CSR is an investment, not charity.
− Invest in what you know.
− If it’s not profitable, it’s not a good idea.
− Invest in your own future.
• Down at the base of the pyramid, we need
innovative, strategic investments by
companies with a long-term profit
motivation to stay engaged in our
communities.

3. Phrao is beautiful

4. The mountains are beautiful

5. The view from the
mountains is beautiful

10. Most adults leave to find work

11. The women, children and elderly
left behind suffer the poverty

12. Phrao is typical of north Thailand
• Poor
− Average income 72% of the
national average
− Average monthly wage less
than $70
− 30% live on less than
$1.65/day
− More than 1/3 of people own
no land
• Illiterate
− 13% never went to school;
another 69% went no further
than 4th grade
• Underserved
− Highest infant mortality rate
in Thailand

13. There is nothing special about
Phrao
• Or about northern Thailand
• Or about Thailand
• We are where you work, too.
− Worldwide three billion people
live in the rural periphery
• So what do we want and need?
• And what do we not want and
need?

14. What we don’t need
• Most charitable donations
• Nice, but seldom costless or easily
deployed
− Computers – without a network admin
or provisions for repair and replacement
− Toys – without batteries
− Software – to perform unheard of tasks
• This stuff is nice and often useful –
but donations alone do nothing to
increase a community’s capacity to
sustain itself.

15. What we don’t want
• CSR that’s all about you:
− Reusing your grey water
− Switching to high-efficiency florescent bulbs
− Reducing packaging
• These are all great for global
welfare
• But they are just smart business
decisions
− Spend less on water, electricity and packaging
• They don’t do anything for us.
• They aren’t social.

16. What do we want?
• We want CSR that provides sustained
improvements in community quality of life.
• We want you to define CSR as:
Investment in innovation that improves your bottom
line by reducing costs and/or improving supply
and/or expanding markets and/or increasing
customer loyalty AND provides training, creates jobs,
opens access to markets and to goods, improves
community quality of life and the environment.
• Why? Because:
− CSR programs that are not profit-driven are
at risk;
− CSR programs that are profit-driven create
social wealth, not just social value.

17. Today’s plan
• Talk about what you want.
• Talk about what we want.
• Talk about how innovative CSR
investments can work for both of
us.

18. What you want
• Supply
− Increase supply. improve supply chain, ensure future
supply
• Cost reduction
− Reduce production, distribution, waste disposal costs
− Reduce human capital costs. access trained
manpower
• Demand
− Enable/access base of the pyramid market
• Customers
− Improve brand image and customer loyalty in existing
markets
− Build good will with potential/future customers
• Governments
− Improve government relations
− Create opportunities for government contracts

19. What communities want
• Meaningful training
− Training geared to specific, real jobs
• Quality jobs
− Jobs that offer good pay and benefits
• Access to markets
− Escape from middlemen, access to
market data
• Access to goods
− Ability to buy and use broader range of
products
• Better quality of life
− Electricity, access to basic medical
services, TV

20. What Phrao has
• No real world vocational-technical
training
• No quality jobs
• 90 mountainous km to markets,
crippling transportation costs
• High potential demand for consumer
goods and entry level consumer
durables
• High under-served demand for basic
services
− 20% of population has no electrical
service

21. How can CSR marry wants and
needs?
• Invest in your own needs and future in
ways that meet community needs.
• For example, invest to:
− Diversify supply and ensure future supply security;
− Cut training costs by making training programs profitable
− Expand your market by enabling consumers
− Show customers your engagement in the community and
win the goodwill of future customers by delivering value
− Improve access to government by solving a key problem
with cost savings
− Build a new product line while reducing green house
gases

22. Securing future supply: the snack
food industry
• Problem: Rising demand, uncertain supply,
global warming threats to current production
methods and sources of supply for corn and rice
• CSR investment: Develop ag extension
capacity to teach farmers low water, minimal
fertilizer, herbicide, pesticide production
techniques
• Your pay-off: Bigger, more stable supply,
risk mitigation, existing and future customer
loyalty, environmental improvement
• Community benefit: Meaningful training,
quality jobs, market access, risk mitigation

23. Reducing training costs:
the hospitality industry
• Problem: Lack of and/or high cost of training
qualified house, garden, front desk and wait
staff
• CSR investment: Build small eco-lodges that
combine training facility with profit-making
operation
• Your pay-off: Reduce net cost of training,
provide new, in-house destination to
guests, earn customer loyalty through
customer participation in program
• Community benefit: Meaningful training
with follow-on jobs, local jobs for suppliers

24. Creating new customers: the
consumer durables industry
• Problem: Huge rural market cannot be
tapped because potential customers do
not have electricity to run refrigerators,
TVs, DVD players
• CSR investment: Design and build village
scale ag waste fired biomass power plant
and install in rural communities
• Your pay-off: New product for
government and private buyers, large,
newly enabled customer base, and
tremendous goodwill
• Community benefit: Meaningful training
with follow-on jobs, enabled access to
goods and improved quality of life.

25. Winning hearts and minds:
packaging
• Problem: Packaging is costly, environmentally
unfriendly & provokes protest; poor consumers
pay more for small packages & buy less; small
shop keepers under-stock
• CSR investment: Develop and distribute
branded, re-usable bulk and retail packaging
system
• Your pay-off: Lower packaging costs, higher sales,
goodwill among new customers and loyalty among
existing customers; major environmental impact
• Community benefit: Better access to goods,
lower costs; reduced air pollution from trash
burning

26. Opening Ministry doors: the
medical devices industry
• Problem: Poverty and geography limit patient
access; health focus on urban areas; ministry
purchasing departments notoriously hard to
access
• CSR investment: Develop automated, cell-
phone connected, village deployable patient
vitals taking instrument packages
• Your pay-off: New product for Ministries of
Public Health that fills critical gap in health
coverage at lower cost than alternatives
• Community benefit: Improved quality of life
through remote monitoring of infants’
progress, hypertension, diabetes, COPD and
other chronic conditions

27. Cleaning up the environment: the
electrical power industry
• Problem: Oil, gas & coal identified as primary
sources green house gases, public resistance to
old & new facilities, target of environmentalists
• CSR investment: Build community-based, ag
waste fired biomass power plants in peripheral
areas
• Your pay-off: Low cost, carbon neutral
additions to generation capacity, current and
future customer support, response to
environmentalist attacks
• Community benefit: Meaningful training, quality
jobs, valorization of ag waste, access to
electricity, ability to buy household durables,
improved quality of life

28. Second Harvest Power: How
CSR Ought to Work
Investing profitably in biomass power, grass-
roots development and a cooler world
Modeling a replicable and profitable solution
for the developing world
Making a profit from a sustainable CSR
investment in community development

29. Thailand – a good place to start
• Middle income country of 65 million with
the legal and banking infrastructure to
protect investors
• National commitment to renewable energy
and progressive regulatory environment
• Heavily foreign energy dependent
• Rapidly rising electricity demand growth
• Agricultural economic base susceptible to
global warming
• Agricultural waste to fire 1,700 MW+

30. What motivates Thailand?
• Energy
– Energy accounts for almost 8% of GDP – and
demand/cost is rising faster than GDP
• Poverty
– Rising energy prices and sharp urban-rural
divide in quality of access to electricity
contribute to income and regional inequality
• Global Warming
– Rising sea level floods tourist areas, river
estuaries, and Bangkok to the Gulf of Thailand
– Rising temperatures breed bigger storms &
more virulent forms of deadly diseases –
malaria, dengue, hemorrhagic & yellow fever
– Drought and reduced agricultural production,
notably rice, Thailand’s staple export

31. Thai national energy policy
In direct response to these drivers, Thailand
seeks to:
“…strengthen energy security of the country
by reducing energy imports and promoting
indigenous energy resources, competitive
energy price for sustained economic
growth, and making her contributions in
reducing global emission of greenhouse
gases.”
– Piyasvasti Amranand, Min. of Energy, 2006-08

32. So Thailand can do it the old way
• Untapped biomass potential = 2+ of the coal-
fired 750 MW power plants Thailand is building
• Two 750 MW power stations =
– $2.6 billion national investment costs
– $90 million in transmission system upgrades
– 3.5 million tons imported coal annually
– 310,000 tons of SO2, 21,600 tons of NOx and
1,455,000 tons of CO2 (@ 0.97 mtCO2 per MW)
annually
– Jobs in the hundreds
– $0 to community development

33. Or Thailand can do it the Second
Harvest way
• 1,500 MW = 1,500 1 MW biomass
power plants
– $0 national investment in generation
– $0 investment in transmission
– 0 tons of imported energy annually
– $0 investment in imported fuel handling
facilities
– 0 tons of SO2, 0 tons of NOx and 0 tons
of net CO2 annually
– Jobs in the tens of thousands
– Hundreds of millions of dollars invested
community developments trusts

34. Thailand in perspective
• If Thailand offers the opportunity:
– to prevent the construction of two 750 MW coal-
fired power plants – what about the other 143
countries in the developing world?
– to relieve the government of billions of dollars of
investment – what about the other 143
countries in the developing world?
– to provide a permanent source of locally
managed development funds to hundreds of
communities – what about the 4.5 billion
people in the 143 other countries in the
developing world?
– to electrify rural communities without adding to
global green house emissions – what about the
143 other countries in the developing world?

35. Thailand’s drivers are global drivers
• The world’s poor - 5.4 billion people – and the 143
countries they live in – face three challenges
• Rising global energy prices
– Imperil national security
– Swamp export earnings growth
– Cannibalize foreign exchange earnings
• Rising global energy prices drive global poverty by
– Pushing inflation
– Dragging on economic growth
– Hammering the poorest hardest
• Rising global energy consumption drives global
warming and
– Puts at risk the developing world’s agricultural future
– Raises the specter inundation for many countries
– Threatens public health
• These challenges are not going away.

36. What’s in it for you the investor:
CSR as profit-maker
• The market they create isn’t either!
• The project we propose offers
investors a profitable vehicle for
investing in the huge market for
addressing these challenges
• And the opportunity to do well by
doing good.

37. What’s in it for you the environ-
mentalist: CSR the social value
creator
• A project that offers the potential to
accomplish large, long-term reductions in
green house gas emissions & the damage
wrought by the construction of traditional
power plants & transmission grids without
need for ongoing subsidies, international
organization and other donor support.
• An environmental improvement project
that people want to participate in.

38. What’s in it for you the community
developer: CSR as social change
agent
• A project that provides large, long-term
revenue streams to host communities that
belong to those communities & that they
control.
• A project that provides training & large
numbers of quality jobs with benefits to
community members.
• A project that breaks community
dependence on donor generosity & frees it
from the agendas of donor agencies.

39. Give your CSR a second thought
Are you still burning money?
Just a friendly reminder from Second Harvest Power Company, Ltd.

40. Back to the beginning
• Can meaningful CSR be an investment
in more than customer loyalty?
• Can meaningful CSR be profitable?
• Do communities actually want for-
profit, investment CSR?
• Oh, yes!
• So remember: We want you to be
strategic
− Profits
− Innovation
− Long-term

41. Thank you from Warm Heart and
the people of Phrao
To learn more about Warm Heart,
please visit:
 www.warmheartworldwide.org
 www.facebook.com/warmheart
worldwide
 www.twitter.com/warmheartorg
 www.youtube.com/warmheartvideo