The founding of Euglena Co., Ltd. began when President Izumo visited Bangladesh as a student and witnessed children suffering from malnutrition, and decided to solve the nutrition problem. Based on that determination and the Euglena philosophy of “Sustainability First,” the company is working in the social business field in Bangladesh. For the past 10 years, Euglena Co., Ltd. and Grameen Euglena have been working to solve agricultural issues in Bangladesh through mung beans, but with an eye on the next 10 years, they have revamped their efforts in 2024 under the framework of “social procurement.” Which is Japan’s first “social procurement”? We will explain what kind of initiative it is.
*1 “What kind of country is Bangladesh? An explanation of its culture and lifestyle”
“https://www.euglena.jp/times/archives/17274”
*2. Grameen Euglena is a local joint venture established as part of the Yunus Social Business by the Grameen Group, which was founded by Dr. Muhammad Yunus, the first Bangladeshi to win the Nobel Peace Prize, and Euglena Co., Ltd., which upholds the philosophy of “Sustainability First.” The company aims to improve the food situation in Japan and raise incomes and improve the lives of people in poverty-stricken rural areas of Bangladesh.
“https://www.grameeneuglena.com/”
What is social business in the first place?
A social business is a business model in which the reduction of social issues leads to the scaling up of the business, and the more successful the business is the more social issues it can bring to resolution. Among them, the “Grameen Social Business” that Euglena Co. and Grameen Euglena are working on is a new economic system that solves social problems through business, advocated by Dr. Muhammad Yunus, founder of Grameen Bank and winner of the 2006 Nobel Peace Prize.
Grameen Social Business is based on the seven principles listed below. The concept is that even in a capitalist society, the goal is to solve social issues rather than maximizing profits, while uncompromising in ensuring economic and financial sustainability.
Source: Yunus What is Social Business –Yunus Japan
The past 10 years: What we have done in social business and agriculture
Based on the principles of social business listed above, since 2014 Euglena Co. has been providing guidance to farmers in Bangladesh for mung bean cultivation through its local subsidiary Grameen Euglena and has been exporting mung beans to Japan, purchasing them at above market price, in order to build a win-win relationship between Japan and Bangladesh, with the aim of stabilizing Japan’s food supply and alleviating poverty in Bangladesh.
Current business models of agricultural social businesses.
※3 <Reference> “Making people healthy through social business: Returning to the roots, the current state and future of social business that has developed from the founding spirit”
https://www.euglena.jp/times/archives/22863
By 2023, the number of local registered farmers who cultivated mung bean and doing business through it will reach 6,520. The network that Grameen Euglena has developed by building local supply chains and conducting export business by including not only contracted farmers but also government, partner companies, aid agencies, etc., is one of its greatest strengths.
The next 10 years: The world we want to reach with “social procurement “Why engage in agriculture in Bangladesh? – New possibilities as a place of origin for agricultural products.
According to statistics from the World Bank, Asian Development Bank, and other sources, agriculture accounts for 11% of Bangladesh’s GDP, and it plays an important role in both labor force and land use. However, the value of agricultural exports is one-tenth of Japan’s, and the rate of machine use during sowing and harvesting is only 2%. The country faces the challenge of extremely weak export capacity and productivity. Many farmers are small-scale and poor, and there is a need to improve productivity through capacity building and then create an export market.
[Agricultural situation in Bangladesh]
Source: World Bank, Asian Development Bank, Light Castle Partners.
Jute is a special product of Bangladesh, which is processed into bags and strings for domestic use and export. Other products that have been exported include potatoes and sesame. However, these agricultural products have issues with quality and weather risks.
Euglena Co., Ltd. and Grameen Euglena have a track record of handling mung beans and sesame seeds, but they have also begun investigating the possibility of handling soybeans, fruits, spices, coffee, and other products in the future.
So why “social procurement”? We believe that “social procurement” is a framework that can provide solutions to the many issues producers face in raw material procurement, such as the ever-increasing demand for sustainable procurement based on sustainable management, unstable raw material supplies due to factors such as climate change, and ensuring visibility and traceability of procurement and supplier origins.
[What Euglena Co./Grameen Euglena Co. aims to become]
Grameen Euglena has been working hand in hand with local farmers to share technology for over 10 years, and is able to procure raw materials all the way to the place of origin. We can also customize our raw material supply model according to the circumstances of partner companies that require raw materials in Japan. For example, there are two models below.
[Supply chain model that Grameen Euglena can provide]
Taking advantage of these strengths of Grameen Euglena, we aim to improve farmers’ productivity and income while contributing to solving the problems of Japanese companies that procure from them. This is called “social procurement.” The concept was originally proposed by the Grameen Group, which was founded by Professor Yunus, and aims for companies to proactively and directly create a positive social impact in their procurement destinations. As a result, we can move up the ladder of sustainability.
Traditionally, sustainability/ESG management requires supply chain visibility, compliance regarding quality assurance and credit, and ESG risk response including human rights and environmental due diligence. All of these are based on the “Do not harm” approach from the perspective of risk management. The same goes for green procurement and CSR procurement. On the other hand, “social procurement” is based on the “Do good” approach, which aims to address these risks while also solving social issues beyond that. Grameen Euglena aims to increase the income of local farmers in Bangladesh, so it plans to develop this as an activity called “social procurement” in the future.
[Grameen Euglena’s goal of “social procurement”]
For example, at Grameen Euglena, members work as a “mobile” team on the ground to address risks that are often identified in developing countries.
① Regarding occupational safety and health management
✓ Guidance on the use of protective equipment when spraying pesticides, etc.
✓ Improvement of occupational safety and health standards at our own factories
✓ Start of initiatives to improve safety awareness, including external improvements
② Regarding child labor and forced labor:
✓Explanations on preventing child labor and forced labor at farmer meetings before cultivation.
✓ Obtaining written consent from farmers.
✓ Regular monitoring by our own staff.
③ Promoting women’s participation
✓ Providing employment opportunities for women in rural areas (mung bean cultivation, dal factories)
✓ Promoting the expansion of female farmers and the participation of female group leaders
④ Weather risk countermeasures
✓ Risk dispersion through cultivation of multiple crops
✓Use of weather forecast reporting system provided by international organizations(demonstration stage)
✓ Improvement of cultivation methods and development and use of varieties suited to the local climate in collaboration with local government organizations
On the other hand, there are still many challenges to overcome before “social procurement” can be realized. For example, with regard to the digitalization of farming, as most cultivation records are paper-based, it is necessary to consider financial inclusion initiatives through the use of electronic money. Difficulties due to cultural background remain an issue when it comes to creating employment opportunities for female farmers, and it is possible to form and expand farmer groups consisting of only women, such as single mothers. With regard to weather risk, which can be a major issue in agriculture, regional diversification is in effective and seasonal diversification is limited as rice cultivation is the main crop. Other major challenges for the future include diversifying crops, improving cultivation techniques, improving the accuracy of weather forecast systems, and improving farmers’ understanding.
Looking ahead
“Social procurement” initiatives are still not well known around the world, and in reality, many companies are doing their best to diversify their raw material procurement sources while dealing with supply chain risks. Grameen Euglena’s “social procurement” initiative is a system that can contribute to solving this problem, and is the first of its kind in Japan.
We are still in the process of creating a model for success with our partner companies, but the seeds are certainly beginning to emerge. We would like to partner and collaborate with stakeholders who agree with our approach to business aimed at solving social issues.