April 30, 2007


Environmental Community Businesses Spreading in Japan

Keywords: Newsletter 

JFS Newsletter No.56 (April 2007)

In Japan, the idea of "environmental community businesses" has drawn a lot of attention recently and is being widely practiced throughout the country. An environmental community business is a community-based business initiative driven by local citizens in areas that could help solve global and/or local environmental problems. Such businesses can help solve local problems directly and revitalize the community as well.

Sakae Nagasawa, the executive director of the Community Business Support Center, a Japanese non-profit organization (NPO), says that the center is receiving an increasing number of inquiries about starting community businesses, from groups of people who until now have not shown much interest in starting businesses, the elderly, housewives and students. He points out two factors behind this growing awareness about environmental community businesses in recent years.

One is that the way people feel about affluence is changing. More people prioritize making a living from what they want to do and being comfortable over earning lots of money. They think achieving a work-life balance is essential for a true feeling of satisfaction in life.

Another big factor is what collaboration between public and private sectors, or between businesses and volunteer groups, has brought to environmental community businesses. These sectors traditionally had little interaction, but in recent years, cooperation between different sectors is producing favorable results by increasing business efficiency and building partnerships. Community business is particularly regarded as a promising strategy to achieve more productive collaboration in local communities, since it combines aspects of both public interest and business profit.

Community businesses are also being seen as a way to solve various problems. They are playing a role in encouraging post-war "baby-boomers" (now in their 50s or 60s) to participate in the local community, boosting local economies, creating jobs, revitalizing shopping districts, establishing local character or "brands," helping people find purpose in life, making NPOs more sustainable, and so on. The Ministry of Health, Labour and Welfare estimates that community businesses will create about 1.2 million jobs in Japan between 2003 and 2012.

The Ministry of Economy, Trade and Industry launched an environmental community business program in fiscal 2005, and has held open competitions for business models in which various core organizations in a local community work together to try to solve local environmental problems based on the business perspective. The ministry adopts and supports model projects, paying one million to four million yen (about U.S. $8,400 to U.S. $33,800) in support fees per project. It also gives them advice on how to operate business activities, through promotion committees who have plenty of experience and knowledge.

The ministry describes the purpose and background of the program: Countermeasures against global warming and establishment of a sustainable society are pressing issues on the national agenda. Also, local communities urgently need to shift toward more sustainable social structures. To address these issues, it is essential that various local bodies, including businesses, citizens and governments, collaborate and make effective use of human and other resources available. However, it is often difficult to develop such collaboration without assistance, and in fact, opportunities and routes for cooperation are often limited.

Under these circumstances, the ministry offers support to selected business models proposed by the public in order to promote environmental community businesses, and it encourages companies, NPOs, and citizens to bring out their full potential. Prospective business models here involve operations with collaboration among small and medium-sized local enterprises, local residents and others, sharing common aims of solving environmental problems in their own communities and revitalizing the communities at the same time. The achievements and future tasks are evaluated and reported widely, in order to promote similar activities for effective and sustained improvement of the environment.

Here are some examples of the environmental community businesses selected as model projects by the ministry in fiscal 2006. A biodiesel project in Hokkaido promotes used cooking-oil recycling business in cold climates. An oyster-shell recycling business in Miyagi Prefecture, one of Japan's major oyster farming areas, tries to conserve "sato-umi," local coastal seas, by producing commercial products from discarded oyster shells. A micro-hydro power generation business in Yamanashi Prefecture uses a head drop of three meters in a local river to make a village become self-sufficient using natural energy.

In addition to three examples above, there are also two model projects related to Lake Biwa, a popular tourist spot in Shiga Prefecture. One is a rental business of solar-powered houseboats to support the promotion of ecotourism on the lake. The other is project that grows reeds in the lake (two crops per year) to reduce eutrophication of the lake, while incorporating water purification function into a business model by producing various products from the harvested reeds.

In a project operated in Fukuoka City, Fukuoka Prefecture, where people frequently face severe water shortages, the citizens are encouraged to install a used liquor barrel as a rainwater tank at home. This project aims at increasing water storage capacity and securing ample water resources by restoring the water cycle in the community. In a case of Okinawa, tourists are able to enjoy coral-planting using farmed coral planting kits. This aims at promoting the development of local industry as well as the restoration of the natural environment.

As described above, these model projects are initiatives to solve local environmental problems and revitalize communities by utilizing local assets.

According to Nagasawa, corporations typically focus on increasing revenues and expanding business, while civil activities such as volunteering focus on social benefits such as contribution to the community. In community businesses, however, the key is to create systems that take advantage of both aspects.

In addition, community businesses have distinctive advantages, such as being flexible enough to incorporate ideas from citizen participants, functioning through human networks, motivating people by having a mission to tackle local challenges, providing well-designed products and services that target local niches not covered by big corporations, and in some cases being able to be more stable and robust than volunteer-based activities.

Nagasawa says that "environmental" community businesses have three necessary factors that are different from those of other community businesses, such as those that focus on community or personal welfare.

The first factor is professionalism based on expertise. Expertise is required to scientifically prove the credibility of products or services that are said to be good for human health and the environment. For example, reusing tableware instead of using disposables could be a way to reduce environmental impacts. However, it is necessary to evaluate this idea from different angles, such as by showing data on the environmental impacts of water consumption and detergents used to wash reusable tableware. To promote a "healthy" food product, proponents must prove how it works and how it is beneficial to human health.

Secondly, funding is particularly important. Most community businesses run with small budgets covered by their founders. In contrast, environmental community businesses often require expenditures for research, purchase of plants, transportation and facilities. They should depend not only on bank financing, but also need a variety of fundraising at the local level, such as private placement bonds, community funds, etc.

The third factor is collaboration within the community. Instead of working with a limited range of people, it is necessary to broadly seek collaboration from local people, municipalities, local companies, financial institutions, universities, NPOs, etc. Particularly in environmental community businesses, key elements include the research capacity of university institutions, technological development capacity of private enterprises, and permission-granting authorities of local municipalities. To gain all of them, it is extremely important to involve as many stakeholders as possible from many diverse fields who share the same purpose of creating a more prosperous community.

Environmental community businesses cover many aspects of local issues: solving environmental problems, responding to local needs, utilizing local resources, starting with what they can realistically do, and utilizing local networks. In spite of various challenges, people involved with this kind of business field usually feel their efforts are worthwhile and feel motivated to keep going. Under such a beneficial scheme of environmental community businesses, more people are sharing their discoveries and satisfaction from these activities in which they take the lead. Such movers and shakers appearing all over Japan are sure to energize more people, more communities, and the planet.

(By Junko Edahiro)