Organic Standard Business Plan August 2013
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Executive Summary “I am convinced that biochar will revolutionize Swiss agriculture. I am sure I will be handing down to my son a farm that has more fertile soils than they are today.”
– Bruno Giger, passionately implementing an Organic Standard pilot project.
Fertile soils are an enormous carbon sink. By empowering Swiss farmers to participate in the Swiss Voluntary Carbon Market, it becomes financially viable to implement a farming method that has been used in agriculture for thousands of years by the Indios of South America, where they used biochar to create the world’s most fertile soils – Terra Preta. Biochar is a stable form of carbon that helps the soil retain nutrients and water.
Vision Organic Standard’s vision is a radical improvement in the sustainability of agriculture in Switzerland, an end to soil degradation, and the reduction of greenhouse gas emissions by developing ultra fertile “Terra Preta” soil.
Problem Currently Swiss farmers are not financially rewarded for implementing sustainable farming methods, which reduce greenhouse gas emissions, even though Swiss people care deeply about sustainable farming and climate change.
Concept Organic Standard creates small and medium scale composting and manure treatment projects that incorporate the use of biochar to make agricultural soils ultra fertile. With modern biochar production technologies, Swiss soils could be turned into Terra Preta within decades instead of millennia. Organic Standard creates a market for Swiss Voluntary Cabon offsets where private persons and enterprises can directly financially support farmers who implement sustainable farming practices and thus offset their carbon footprint.
Milestones • Runner-up prize of the 2012 WWF Schweiz Fellowship for Biodiversity and Resource Efficiency • 1st prize at the Falling Walls Conference 2012 in Berlin from over 1’000 projects from 45 countries • Five pilot projects with Swiss farmers currently in progress turning 152 hectares of farmland into Terra Preta, improving the welfare of 283 cows, and reducing CO2 output by more than 58 tons per year • Öko Reinigungsservice AG becomes the first company to offset their carbon footprint of 100 tons of CO2 though Organic Standard for CHF 20’000 per year In August 2014, Organic Standard will start its first full-scale project turning 226 hectares of farmland into Terra Preta soils and reducing the annual output of CO2 by 502 tons. Full implementation of these practices all across Switzerland would lead to a 461’000 ton reduction of annual CO2 output.
Product Description Organic Standard sells tax-exempt voluntary carbon certificates to private persons and enterprises empowering them to offset their environmental footprint. One certificate directly contributes to the creation of ½ hectare of Terra Preta soil and a 1-ton of CO2 emissions reduction.
Organic Standard Business Report | Executive Summary
Opportunity
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Strategic Advantages Swissness – Organic Standard’s projects all take place within Switzerland, improving regional soil fertility and animal health and establish a direct contact between farmers and contributors. Strategic Partnerships – We have established strong relationships with the Zurich University of Applied Sciences, University of St. Gallen, the Delinat Institute, and many more key partners.
Non-profit Status – As a non-profit organization, Organic Standard can offer its contributors tax-exemption for the purchase of carbon-offsets and is allowed to carry out fund raising events on public grounds.
Market Use of biochar could be realistically implemented on more than 3’000 farms by 2017, turning more than 35’000 hectares of agricultural land into Terra Preta soils and reducing CO2 output by more than 75’000 tons annually. High demand for Swiss Voluntary Carbon Offsets gives Organic Standard an accessible market of CHF 6.5 million for 2013 with a strong upward trend. A study by the University of St. Gallen shows that a Swiss private person is willing to pay CHF 213 per ton of CO2 offset by Organic Standard’s projects. Organic Standard’s revenues through direct debit payments from private persons will increase from CHF 60’000 in 2013 to 2.1 million in 2017.
Financial Overview A complete set of the financial can be found in the Business Plan, but key numbers include: 2014
2015
2016
2017
Number of Contributors
288
1'440
4'032
10'032
Number of Active Full-Scale Projects
1
2
5
10
Revenues [CHF]
122'000
429'000
1'129'000
2'486'000
Total Project Expenses [CHF]
81'000
149'000
405'000
995'000
Marketing Budget [CHF]
13'000
33'000
43'000
52'000
Admin Expenses [CHF]
195'000
281'000
379'000
537'000
Cash Flow [CHF]
(167'000)
(34'000)
301'000
902'000
Value of Carbon-offset Certificates per Full-Scale Project per Year [CHF]
100'500
Revenue Share to Farmers
80%
Funding and Proceeds of Funds In order to continue Organic Standard’s fast growth trajectory, the Organization is looking for funding to accomplish the following goals: 1) Development of Organic Standard’s first full-scale project, 2) Development of Organic Standard’s peer-to-peer fundraising pavilion, 3) Development of a user friendly CO2 footprint calculator, and 4) Development of Organic Standard’s web platform. For a planned execution of Organic Standard’s Business Plan, we are looking to raise a total of CHF 300’000 in seed funding. Organic Standard holds no external debt or liabilities.
Organic Standard Business Report | Executive Summary
3 Terra Preta Healthy Food Better Environment Better future for Children
Application of Biochar
Direct Contact
Funds
Farmer
Certified Biochar
Technical and Statistical Info Logistical Support 80% of the Funds
Carbon Offset
Biochar Facility
Project Development
Organic Stadard Flowchart
Management/Leadership Organic Standard draws the vast expertise of its Management Team, Board of Directors, and Advisory Board. Our Management Team combines the in-depth knowledge of down-to-earth farming in Switzerland with extensive management, design, marketing, and IT expertise.
Organic Standard Business Report | Executive Summary
Contributor
Higher yields, Healthier animals Lower fertilizer cost
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Contents
Company Overview 6
Opportunity 6 Vision 6 Problem 6 Concept 6 Objectives 7 Form of Business 7 Carbon Offset Certificates 7 Management/Leadership 7 Location 8 Development Stage 8 Financial Status 8
Market Analysis
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Market Size for Organic Standard Carbon-offset Projects Organic Standard’s Value Proposition for Farmers Feedback from Organic Standard’s active Projects Willingness-to-pay for Organic Standard Carbon-offset Certificates Market Potential for Organic Standard’s Carbon-offsets Certificates Market Maturity The Competition
Organic Standard’s Revenue Streams
14
Marketing Plan and Sales Strategy
17
Private Persons Peer-to-peer (P2P) Street Fundraising in Switzerland Small and Medium Size Enterprises Revenue Potential through Peer-to-peer Pavilion Street Fundraising Events
9 9 10 11 11 12 12
14 14 14 16
Company’s Message 17 Marketing Strategy 17 Media Presence 17 Print Media 17 Television 17 Newsletter 17 Peer-to-peer (P2P) Fundraising Events 18 Yearly Event 18 Poster and Flyer Campaigns 18 Social Media 18 Web Platform 18
Operations 19
Pilot Project Phase until October 2014 Full-scale Project Implementation in 2014 Projects structured as Legal Entities Labor Requirements Administrative Staff (Core Team) 2014-2017 Capacity Utilization Cost Breakdown of Full-scale Carbon-offset Project (8-Year Time-horizon)
19 19 19 19 20 20 21
Organic Standard Business Report | Contents
Executive Summary 1
5
22
Strategic Partners & Sponsors
23
Methodology 22 Copyrights 22
Technology Plan
24
Risk Assessment
25
CO2 Calculator for iPad, iPhone, Android and PC IT Infrastructure
Management & Organization
24 24
26
Annual General Meeting 26 Board of Directors 26 Advisory Committee 26 Consultants/Specialists 27 Audit Committee 27 Compensation and Incentives 27
Development, Milestones & Exit Plan Long-Term Company Goals Milestones 2014 -2020 Exit Plan
The Financials
30
Financial Control Seed Funding Use of Funds P&L and Cash Flow Notes to the P&L and Cash Flow Statement Break-even Analysis
Appendix 33
29
29 29 29
30 30 30 31 32 32
Background information on Biochar Production (Pyrolysis) 33 Certification of Biochar 34 Milestones Achieved to Date 34 Key Figures 35 Laboratory Analysis of Biochar used for Organic Standard Pilot Projects 35 Potential for the Ecologically Sustainable Production of Biochar in Switzerland 36 Glossary of Organic Standard’s Pilot Projects 39 Glossary of Organic Standard’s Strategic Partners 40 Newspaper Articles 44 Awards 47 Glossary 47 Sources 49
Organic Standard Business Report | Contents
Certification and Legal Issues
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Company Overview “I am convinced that biochar will revolutionize Swiss agriculture. I am sure I will be handing down to my son a farm that has more fertile soils than they are today.”
– Bruno Giger, passionately implementing an Organic Standard pilot project.
Fertile soils are an enormous carbon sink. One hectare of fertile soil stores up to 300 to 1’000 tons of CO2 - as much as a Swiss person will create in his lifetime. Building up soil fertility offers a unique opportunity to contribute to solving three of humanity’s most pressing issues: food security, soil degradation and global climate change. By empowering Swiss farmers to participate in the Swiss Voluntary Carbon Market, it becomes financially viable to implement a farming method that has been used in agriculture for thousands of years by the Indios of South America, where they used biochar created the world’s most fertile soils – Terra Preta. Biochar is a stable form of carbon that helps the soil retain nutrients and water. In Swiss industry, landscaping, agriculture and forestry more than 1 million tons of woody biomass remain unused and decompose into CO2. Much of that biomass can be turned into valuable biochar.
Vision Organic Standard’s vision is a radical improvement in the sustainability of agriculture in Switzerland, an end to soil degradation, and the reduction of greenhouse gas emissions by developing ultra fertile “Terra Preta” soil.
Problem The introduction of industrial agriculture 100 years ago have seen natural soil fertility decrease at an alarming rate. The increasingly intense use of heavy machinery, pero-chemical fertilizers, insecticides, herbicides and pesticides and the use of intense concentrations of animal manure have acted as a form of soil-doping, where high short-term crop-yields were achieved at the expense of the long-term health of the soil health. Besides the dramatic consequences on long-term food security and soil-degradation, the continual reduction in soil fertility has released vast amounts of CO2 into the atmosphere. Yet no mechanism exists today which offers farmers a financial incentive to implement sustainable farming methods which can drastically improve soil fertility and reduce greenhouse gases.
Concept Organic Standard creates small and medium scale composting and manure treatment projects that incorporate the use of biochar to make agricultural soils ultra fertile. With modern biochar production technologies, Swiss soils could be turned into Terra Preta within decades instead of millennia. Organic Standard creates a market for Swiss Voluntary Cabon offsets where private persons can directly financially support farmers who implement the use of biochar on their farms and thus offset their carbon footprint. Through the use of biochar, farmers see an improvement in the health of their livestock, a long-term improvement in their yields and an improved nutrient efficiency of their manure. Organic Standard provides farmers
Organic Standard Business Report | Company Overview
Opportunity
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Objectives social business
Organic Standard will provide farmers in Switzerland with the information, logistical support, and financing necessary to enable them to implement the use of biochar on their farms. Simultaneously, we want to establish a basis for a sustainable society by informing people of the importance of sustainable agriculture and reconnecting them with regional farmers.
supporting farmers
Organic Standard will continue to scale the development of its regional high-impact manure treatment and composting pilot projects as well as engage in the marketing and sale of carbon-offset certificates generated through its projects to private persons and enterprises in Switzerland.
scaling up
Organic Standard Business Report | Company Overview
It is our objective to create a financially viable social business to sustainably improve soil fertility in Switzerland and reduce global greenhouse gas emissions.
Form of Business Organic Standard will be incorporated as a non-profit Aktiengesellschaft (AG) in November 2013 in Zurich, Switzerland.
non-profit
Products Organic Standard sells tax-exempt voluntary carbon certificates to private persons and enterprises empowering them to offset their environmental footprint. One certificate directly contributes to the creation of ½ hectare of Terra Preta soil and a 1-ton of CO2 emissions reduction. Organic Standard guarantees that 80% of funds raised through the sale of carbon-offset certificates will go directly to the farmers.
voluntary carbon certificates
Management/Leadership The core leadership of Organic Standard covers a broad range of expertise, understanding, and approaches. Our team brings together the vibrancy of three up and coming professionals and the stature of two experts with a combined 50 years of business and organizational experience. The team is very well adjusted with three of the members having worked together on Organic Standard since its inception in November 2011 and two members just recently joining the team after a two-month long intensive vetting period. Thomas Rippel is an Austrian national living in Switzerland since May 2009 with a B permit. Thomas is the initiator of the idea, he has committed all his time to the project from the very beginning in November 2011, he will continue to lead the project, and take up the position of CEO when the company is founded. Thomas is the person of contact for all farmers and parties involved and will be responsible for developing and managing Organic Standard’s projects.
Thomas Rippel ceo
Thomas studied Environmental Sciences at the University of Melbourne, Australia and International Business with Chinese at the University of Nottingham, Ningbo, China. He is currently engaged in a 5-year vocational training program in Switzerland to become an organic-dynamic farmer. Joëlle Hérin is a Belgian national, born in Geneva Switzerland and residing in Zurich on a B permit since July 2012. She has joined Organic Standard’s team full time in July 2013 as its Chief Operating Officer. She is in charge of maximizing the organization’s potential by facilitating a smooth execution of milestones. Joelle has extensive experience in resource management and operations execution in large organizations. With a Physics Masters, her experience combines 6 years of research in particle physics at the European Laboratory for Particle Physics CERN and nine years as Senior Consultant and Project Manager at LogicaCMG. After broadening her vision with economical, political, and environmental sciences, she addressed the global energy and climate challenges of today, with a senior advocacy and campaigning position at Greenpeace Belgium.
JOËLLE HÉRIN COO
8 Hans Rippel is an Austrian national working in both Brazil and Switzerland. He has been committed to Organic Standard part-time since the early hours in November 2011. As of June 2013 Hans is committing 50% of his time to Organic Standard and is responsible for web development, data management, and IT infrastructure.
HANS RIPPEL CTO
zehai peng
Zehai Peng is a Chinese national currently living in Shanghai with plans to relocate to Zurich in December 2013 or as soon as he obtains the necessary work permit. Harry has committed part of his time to Organic Standard since it was initiated. Starting in December 2013 Zehai will commit to a 100% involvement to Organic Standard responsible for managing Organic Standard’s media and design.
Vp of Media AND Design
Harry studied International Business with German at the University of Nottingham, Ningbo, China. He was granted a prestigious scholarship to attend the Instituto Europe di Design in Milan from which he graduated with a Masters in Industrial Design. He is presently Lead Copywriter at Avantgarde Brand Services in Shanghai, where he works on nationwide advertising and pavilion events for Jaguar, Land Rover, Porsche, Lufthansa, and AMG. Roderick tanzer
Roderick Tanzer is a British national and a permanent Swiss resident since 1961. He has joined the Organic Standard Team in June 2013 and will chair the Board of Directors and commit 10% of his time to business development.
Chair OF THE BOARD
Roderick has extensive executive, sales, and marketing experience, having been involved in the successful turn-around of several companies and been integral to the successful launch of a startup. He has held top-management positions since 1994, including interim CEO of Swissmetal USA, Senior Vice-President Sales at Swissmetal AG, and Head of Strategic Business Unit at Kiener-Wittlin.
Location Organic Standard has its main offices at the:
HUB Zürich Viadukstrasse 93-95 8005 Zurich
Development Stage Organic Standard’s pilot projects are currently active in the German part of Switzerland in the cantons of St. Gallen, Zug, Aargau, Zurich, and Appenzell Ausserroden.
Geographical scope
Organic Standard is well within its proof-of-concept stage and continues to scale its activities rapidly. Thanks to five active pilot projects and five pending ones, Organic Standard has demonstrated the feasibility of scaling the use of biochar on Swiss farms to create Terra Preta soils.
Proof-of-concept
We are currently preparing the implementation of a full-scale project starting in August 2014, that will incorporate a biochar production facility with the capacity to supply 40 Swiss farms with biochar, reducing the output of CO2 by 502 tons per year, and creating Terra Preta soils on 226 hectares of farmland.
Full-scale project
Financial Status Organic Standard has received pilot seed funding (CHF 10’000) through WWF Switzerland and the Falling Walls Foundation, as well as generous contributions in the form of services from the HUB Zurich. Organic Standard holds no external debt or liabilities.
Seed funding
Organic Standard Business Report | Company Overview
He is a magna cum laude psychology graduate from Webster University in Thailand, studied positive psychology and sustainable development at Harvard’s Extension School, and New Media Design at the Media Design School in Auckland, New Zealand.
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Market Analysis Market Size for Organic Standard Carbon-offset Projects Of the 60’857 farms in Switzerland (2008), 36’500 are engaging in animal husbandry with an average of 45 cows (or equivalent livestock units – LU) on each farm, giving Switzerland a total of 1.65 million LU, which produce a total of 41,3 million tons of liquid and solid manure per year.
41 million tons
Of the farms engaging in animal husbandry, 27% are actively engaged in some type of manure treatment.
manure treatment
Many Swiss farmers share Organic Standard’s vision for sustainable agriculture and are yearning for viable options to implement this vision on their farms. The top 4 motivations of farmers who are engaging in manure treatment areii:
motivations of farmers
of manure
The costs for these treatments range from CHF 40 to 120 per LU per year.iii Biochar treatment of manure per LU per year costs CHF 110, placing this method well within “the willingness to pay range” of a large proportion of animal husbandry farms.
Biochar treatment costs
Given the current high demand for Organic Standard’s manure treatment and composting projects with biochar, we estimate that approximately 1/3rd of the farms currently engaged in manure treatment and 1/10th of the farms that have not yet engaged in manure treatment – will be motivated to implement biochar on their farms. The increased use of biochar would result in more than 35’000 hectares of agricultural land being turned into Terra Preta soils and CO2 output reduced by more than 75’000 tons annually.
High demand
Organic Standard’s Value Proposition for Farmers Organic Standard offers farmers a highly effective manure treatment with biochar that creates Terra Preta soil on their lands. Farmers benefit by reducing the smell of manure and improving nutrient efficiency of their manure and compost, while improving soil fertility and the health of their animals. Biochar treatment of manure reduces ammonia emissions by an average of 50%.iii These emissions are the main cause of noxious fumes that are a major concern for animal health, and aggressively impact plants and soil by causing acid rain and significant nutrient loss.
Recuced amonia emissions
With biochar treatment, nitrate loss per LU can be reduced by 50kg annually.iv This significantly reduces or eliminates the farmer’s dependence on petro-chemical fertilizers and brings down fertilizer costs by CHF 30 per LU per year. Average veterinarian costs per LU in Switzerland are CHF 160 per year.ii The use of biochar in feedstock and manure improves animal health and reduces medical costs.
Improvement in
As biochar remains in the soil for hundreds of years, the cumulative positive effect on soil fertility increases the humus levels leading to ever-higher yields. Grain and vegetable yields have already been shown to increase by 5-30% when soils are turned into Terra Preta.iv
Increased crop yield
Organic Standard has strong partnerships with transport logistics companies, allowing farmers to benefit from reduced transport costs of biochar.
animal health
Organic Standard Business Report | Market Analysis
- Reduce the smell of manure (64%) - Make manure less aggressive on soil and plants (57%) - Turn manure into a more effective organic fertilizer (39%) - Allow animals to live healthier and eat better (28%)
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Feedback from Organic Standard’s active Projects Bruno Giger
“H
aving tried many manure treatment alternatives over the years, I have never been truly satisfied. The more I read about it and see the effects on my farm, the more I am convinced that biochar will revolutionize Swiss agriculture.”
“W
e have had continuous problems with high ammonia concentrations in our stables affecting the health of my calf. Using biochar in the litter has improved the air quality and the litter in the stables beyond anything I have hoped for.” Christoph Heggli
“W
e have engaged in manure treatment with various products for many years and have not seen any significant positive results. With biochar we have finally achieved the hoped-for results.” Peter Hilfiker
“W
e Swiss farmers live off the direct subsidies that we receive from the Swiss tax payer. If it was just me, I would not be so concerned about the smell of my manure, but since I am supported by taxpayer money, I feel I have an obligation to do my very best to ease up those wrinkled noses of my neighbors.” Martin Hegglin
“I
have always been a pioneer in sustainable farming in Switzerland, therefore I want to also be one of the first to adopt this fantastic method with biochar.”
Pirmin Koller
“I
t is not natural for cows to stand on concrete and shit and piss in the same place. That causes a very bad environment for animals to live in. Biochar can drastically improve this problem.”
Peter Hilfiker
Pirmin Koller
Organic Standard Business Report | Market Analysis
Andreas Huber
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Willingness-to-pay for Organic Standard Carbon-offset Certificates (Bottom-up Analysis) University of St. Gallen
The results of their analysis revealed that the core target audience for Organic Standard VER certificates is indifferently male or female aged 45-53, with a single-person income of CHF 5’000-8’000 per month, putting them at an average income level in Switzerland. This core target audience showed a willingness to pay CHF 213 per ton of carbon-offset through Organic Standard’s projects.
Willingness to pay CHF 213 per ton
Market Potential for Organic Standard’s Carbon-offsets Certificates (Top-down Analysis) Size and Growth Rate of the Swiss Voluntary Emissions Reductions (VER) Market VER certificates made their debut in Switzerland in 2002 with the launch of the myclimate Foundation. In that year 1’800 tons of carbon-offsets were sold by myclimate. By 2011, more than 1 million tons of carbon-offsets were sold in Switzerland annually,vi amounting to more than CHF 25 million in turnover.
1 million tons of carbon-offsets sold in Switzerland annually
The Swiss VER market is projected to continue to grow rapidly in the coming years, expected to increase by 33% annually over the period 2012 to 2016.iv
33% annual growth
Amount (tons) 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
Year
Chart: Swss VER Market
Yet, less than 3% of carbon-offsets sold in Switzerland are also generated in Switzerland. iv Prices for Swiss VER certificates range between CHF 35 and CHF 450 per ton of CO2vii, viii, while VER certificates of international projects are sold for CHF 3 to CHF 20 per ton.viii
CHF 35 to 450 per
With such strong demand for and low supply of Swiss VER projects, Organic Standard is entering the most lucrative niche of this rapidly emerging market.
High demand for Swiss VER projects
Analysis of the Swiss Donations Market Organic Standard projects strongly promote regional, ecological, and animal welfare benefits and thus strongly target the Swiss market for private donations outside of the “classical” carbon-offset market. The market for private donations in Switzerland in 2011 amounted to CHF 954.9 millionix with the majority of those donations going to Swiss projects and receivers. Of those, approximate-
Swiss CO2 ton
Organic Standard Business Report | Market Analysis
The University of St. Gallen (HSG) Teamv engaged in a qualitative market analysis through a peer-to-peer pavilion event, jointly organized by Organic Standard. A sample of 88 Swiss nationals was interviewed to determine Organic Standard’s core market audience for carbon-offset certificates.
12 ly 3.8% or CHF 36.3 million went to environmental causes.ix Organic Standard’s Accessible Market Potential
A cross analysis of the Swiss VER and the Swiss donations market gives Organic Standard a conservative estimate of CHF 6.5 million for its easily accessible market potential in 2013 with a strong upward trend.
CHF 6.5 million in easily accessible market potential for 2013
Market Maturity The carbon-offset market in Switzerland has seen steady development over the past decade. The Voluntary Emissions Reductions (VER) market has more than doubled every two years for the past 10 years and continues to grow rapidly while developing in parallel to the Swiss Certified Emissions Reductions (CER) market.vi
market doubling every two years
The groundwork for the Swiss CER market was laid by the Swiss government’s first CO2-law that took effect in 2000.x This law outlined the framework for a CO2 tax to be levied on fuels in Switzerland. As of 2008, a tax of CHF 12 per ton of CO2 emissions was levied, with an increase to CHF 24 in 2010, CHF 36 in 2012, with targets of CHF 60 in 2014 and CHF 120 by 2020.xi
Swiss CO2-law
There are 8 active CO2 projects within Switzerland as of 2011, reducing 37’800 tons of CO2 per year.xii
The Competition Competitive Position At present the Swiss VCS market is dominated in a quasi-monopolistic fashion by myclimate, they hold more than 90% market share. Their advantage lies in their size and public recognition. However, myclimate’s carbon compensation projects are mainly taking place outside of Switzerland, with only 4 active projects within Switzerland amounting to 0.58% of myclimate’s total compensations. As the press has reported many misdoings in the area of environmental enterprises, in countries as reputable as Germany, the Swiss public has become suspicious of activities outside the country. The niche of addressing carbon compensation in Switzerland, where the public can actually go and see, touch and smell the improvement is a major competitive advantage, which Organic Standard will take full advantage off. To emphasize this advantage, Organic Standard will use the buzz words “SWISS CARBON NEUTRAL” and try to develop a label concept around this idea. It is not possible to evaluate Organic Standard’s position against each non-profit organisation fighting for funding in public ground, as they vary from Greenpeace and WWF on the environmental to Jehovah’s witness and the Salvation Army on the spiritual side, not to forget humanitarian organizations like the Red Cross. However the Swiss Public likes to donate money for Swiss projects and have a deep affection for the farming community. Swissness, international and Swiss prizes, endorsement by celebrities, a professional image, a clear message, well trained staff and a clear identification to the Swiss farming community will give Organic Standard the competitive edge that only few fundraisers can compete with.
less than 1% of certificates sold in Switzerland are from Swiss projects
SWISS CARBON NEUTRAL
Organic Standard Business Report | Market Analysis
The University of St. Gallen’s (HSG) group analysis has shown that 18% of Swiss donors contributing to environmental projects within Switzerland fall within the core target audience to purchase certificates from Organic Standard.
13 myclimate myclimate was Founded in 2002 out of a student-professor-initiative of the ETH Zurich. At a climate conference in Japan in 2001, the ETH group proposed that each attendee of the conference should compensate his or her flight-related carbon emissions. It was this proposal that generated the starting capital for what is today a highly respected and successful foundation with a market capitalization of CHF 18.5 million annually.
In 2003, myclimate foundation contributed to the development of the Gold Standard in cooperation with the WWF. Today Gold Standard is the world’s most respected carbon-offset certification standard in the voluntary market, adopted by over 80 NGOs worldwide as their primary carbon-offset standard. In addition to its carbon-offset projects, myclimate goes to considerable lengths to educate people around the world on the consequences of climate change.
Gold Standard
myclimate is a success story that Organic Standard aims to emulate. It is our objective to build on the trust that myclimate has built in the Swiss CER market and to expand the VER horizon beyond global climate change towards sustainable local agriculture.
Expand the VER horizon towards sustainable agriculture
Future Competition While we see no indication of additional project developers entering the market in Switzerland in the short to medium term, we consider it a realistic possibility that current players in the CER market such as South Pole Carbon could enter the Swiss VER market at some point. We also project that the Migros Genossenschaft might develop its own carbon-offset label for in-house products. Organic Standard welcomes these developments and is open to cooperate with all prospective entrants into the Swiss VER market.
Organic Standard Business Report | Market Analysis
The myclimate foundation develops its own VER projects and is a direct retailer of VER certificates. With 69 projects in 29 countries on four continents myclimate has a very strong global presence. Within Switzerland, myclimate operates five carbon-offset projects. xv
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Organic Standard’s Revenue Streams Private Persons Organic Standard’s primary revenue stream comes from private persons who wish to compensate CO2 emissions caused by their lifestyle.
primary revenue stream
31%
CO2
-50%
CO2
The average ecological footprint of an individual living in Switzerland amounts to 5.6 tons of CO2 emissions per year.xiii Of those, approximately 30% are directly linked to the person’s diet.xiv While it is possible to reduce those emissions drastically by eating more regionally and seasonally and consuming less animal products, a large part of these emissions are unavoidable. It is this unavoidable ecological impact of our diet that Organic Standard empowers its contributors to compensate through our projects.
30% of a person’s carbon footprint comes from diet
An average Swiss resident, who tries to eat environmentally consciously, will cause 1.2 tons of CO2 emissions per year through diet alone.xiv To compensate for this ecological footprint, Organic Standard’s projects would charge CHF 20 per month.
CHF 20 per person per month
Our objective is to approach people directly through peer-to-peer pavilion fundraising events where contributors are able to make a lasting commitment to purchase a fixed amount of offsets each month through a direct debit payment (LSV).
direct debit payment (LSV)
Peer-to-peer (P2P) Street Fundraising in Switzerland P2P street fundraising has over 20 years of history in Switzerland. It is the preferred fundraising strategy for most well-known Swiss NGOs and non-profits, including the WWF, Swissaid, pro infirmis, Amnesty International, Helvetas, Fragile Suisse, terre des hommes schweiz, Green Cross Schweiz, and many more. P2P street fundraising is Organic Standard’s primary fundraising strategy mainly because it provides the organization with long-term financial security. The average contributor continues his or her direct debit payments for an average of 5.5 years before cancelling.i This way a CHF 20 donation per month becomes a CHF 1’320 contribution per person over the lifetime of the direct debit payments. Most NGOs in Switzerland engage in approximately 250 P2P street-fundraising events per year, generating more than CHF 4 million in yearly donations.i Having personally been engaged in street fundraising in more than 10 cities across Switzerland, Thomas Rippel has very intimate knowledge of this market.
Small and Medium Size Enterprises In 2012 small and medium sized enterprises (SMEs) were the main customers of VER certificates in Switzerland. Many Swiss SMEs care profoundly about their ecological footprint, especially within Switzerland. These SMEs go to significant lengths to ensure that their products and services are ecologically friendly and pay great attention in communicating their efforts to their customers.
CHF 20 per months becomes CHF 1’320
Organic Standard Business Report | Revenue Streams
We wish to encourage all persons to first look at ways to reduce their environmental impact by making changes to their lifestyle. However, we do recognize that given the society we live in, each and every one of us generates an ecological footprint.
15 first corporate customer
The carbon footprint from an average climate friendly meal amounts to 560g of CO2.xiv To compensate these emissions through our projects would cost CHF 0.11, which would be an attractive proposition for middle to upper price-segment restaurants and catering businesses. While in the short-term, no significant revenues will be obtained from this market segment; we anticipate that SMEs can become a major revenue stream for Organic Standard in the medium and long-term.
compensating meals at restaurants
SV Group (Switzerland’s market-leading catering service) invested over a CHF 1 million in the development of a highly complex, carbon footprint calculator for their menus, which gives us confidence that the carbon-offsets market in the food industry is in the process of truly establishing itself. As customer awareness of food-related CO2 emissions becomes ever more present, it will become increasingly more attractive for restaurants and catering services to offer CO2 neutral meals for customers. Organic Standard aims to play a major role in the development of this market segment.
Organic Standard Business Report | Revenue Streams
Our medium-term objective is to offer SMEs an option of offsetting their carbon footprint within Switzerland through our projects. In order to target the food industry specifically, we have formed a strategic partnership with eaternity, a Zurich based organization that calculates the carbon footprint for menus of restaurants and canteens. In August 2013 Organic Standard acquired its first corporate client to offset their carbon footprint though our farming projects. Öko Reinigungsservice AG will offset their CO2 foorptint of 100 tons per year though Organic Standard for CHF 20’000 per year starting in January 2014.
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Revenue Potential through Peer-to-peer Pavilion Street Fundraising Events (Bottom-up Approach)
Revenue Breakdown for Events
Sample Calculation for 1 Fundraising Staff
2014
2015
2016
2017
Average number of acquired contributors per day
6
Number of fundraisers per year
12
48
108
250
Average annual revenue per contributor
213
Number of fundraising staff per event
4
4
4
4
Average number of years a contributor stays with a project1
5.5
Revenues per event (cash-basis) [CHF]
5,112
5,112
5,112
5,112
NPV per fundraising staff [CHF]
6,431
Salary costs per event [CHF]
0
0
521
1,042
Salary costs per fundraising staff per day (inlc. taxes and allowance) [CHF]
210
Fixed costs per event [CHF]
160
160
160
160
Average incentive per fundraising staff [CHF]
50
NPV per event [CHF]
25,564
25,564
25,043
24,521
Overhead costs
0.6%
0.6%
2.6%
4.7%
Net Present Value of sales [CHF]
306,763
1,227,053
2,704,591
6,130,352
Discount rate
1.25%
Yearly cash-basis revenue generated [CHF]
61,344
245,376
552,096
1,278,000
Fixed costs for the pavilion [CHF]
25,000
Total revenues (cash-basis) [CHF]
61,344
306,720
858,816
2,136,816
Organic Standard Business Report | Revenue Streams
17
Marketing Plan and Sales Strategy Company’s Message Switzerland to play a forerunner role
Swiss people can create a society living in harmony with their ecosystem and create ultra fertile Swiss Terra Preta soils, healthy Swiss animals, and an abundant Swiss ecological diversity.
Marketing Strategy Organic Standard has continued to utilize the media’s interest in its projects for a continuous stream of coverage in the mainstream and niche medias. This attention continues to generate public awareness for our projects and brings name-recognition for Organic Standard. Going forward, Organic Standard will continue to use its media channels for the launch of specific milestones. At the same time, we will be building a strong community of supporters through our web-presence and student-outreach that will become valuable in our guerilla marketing campaigns. Lastly, Organic Standard will engage in targeted paid-advertising online.
Guerilla marketing campaigns
Media Presence Over the past years Organic Standard has appeared in some of the most respected German-language media outlets in Switzerland, Germany, and Austria. Organic Standard will continue to develop its PR strategy to be present in all types of different publications in the German speaking part of Europe.
Reputable media coverage
Print Media Organic Standard’s innovative concept for sustainable agriculture and its implemented pilot project was covered in front page articles in the science section of prestigious newspapers such as Germany’s Süddeutsche Zeitung and Switzerland’s Tages Anzeiger as well as articles in Blick am Abend, Schweizer Bauer, Austria’s Die Presse, and the Swiss national magazines Schweizer Familie and Tierwelt.
Television Organic Standard is very proud to have been covered extensively by some of Switzerland’s most viewed television programs. SRF’s popular science program “Einstein – alles ist relativ” produced a 10-minute report, which thoroughly explained Organic Standard’s first pilot project. In the weekly talk-show “Aeschbacher – diä Sändig, womä niä numä us Längwili luägt“ Organic Standard CEO Thomas Rippel appeared for a 10-minute interview. In July 2013, Organic Standard appeared in BuureTV with a 5-minute segment on its project at the BG Huber/Giger. In the fall of 2013, the German national broadcaster ARD will be producing a short film on Organic Standard and our projects.
Newsletter Organic Standard publishes a regular newsletter, which is mailed to a broad group of interested farmers, scientists, partner organizations, and supporters. Our newsletter has been a very effective communications tool and very well received among our mailing list. Our more than 400 recipients show a high engagement with our newsletter content, with a click-through rate of 17.4%. In addition, for every one recipient on our subscriber list, 2 people outside of our mailing list receive our newsletter by being forwarded from a friend.
High recipient engagement
Organic Standard Business Report | Marketing Plan and Sales Strategy
It is Organic Standard’s message that -- working together we can create a society that lives in balance with nature. Switzerland must play a forerunner role in this regard, not only because the Swiss are deeply connected to their agricultural roots and value their country’s ecological landscape, but also because the world looks to Switzerland as a guiding post.
18
Peer-to-peer (P2P) Fundraising Events portable pavilion
These P2P fundraising events will take place at highly trafficked locations in cities across the German part of Switzerland. The events will be our primary point-of-contact with our contributors and our greatest source of revenue.
street fundraising
At these fundraisers, four highly charismatic employees of Organic Standard will approach passer-byes with a present: a chance to calculate the ecological footprint of their diet on our slick iPad CO2 calculator. We then introduce our regional carbon-offset projects to these passer-byes and invite them to make a commitment to compensate their food-related ecological footprint through our projects. In the first two years of operation, Organic Standard’s core staff will be carrying out these fundraisers. We will utilize these two years to optimize the overall P2P street fundraising process as well as techniques to approach contributors. We want to leave people with the earnestly good feeling that they have made a significant and lasting contribution to the welfare of Switzerland’s regional ecology and the reduction of greenhouse gas emissions. Building on the experiences of our first two years as peer-to-peer fundraisers, we will then begin training a team of highly skilled, part-time staff to carry out our fundraising events.
Organic Standard’s core staff to carry out fundraisers
Yearly Event Once a year Organic Standard will organize a special event where our supporters, contributors, and donors will be able to meet and get to know first hand what “Terra Preta” means and how biochar production works, as well as meet the farmers who carry out our projects.
farmers meet contributors
The first such event will take place in December 2013, when Organic Standard will invite more than 100 exclusive guest to join us at the HUB Zürich to celebrate the founding of the organization and become the first contributors to officially purchase carbon-offset certificates from our projects.
founding event
Poster and Flyer Campaigns Organic Standard will engage in flyer and poster campaigns at university campuses across Switzerland to engage with the bright young minds of Switzerland to get involved in our projects for their bachelor or master’s thesis, to inform them of the ecological footprint of our society’s diet, keep expanding our community, as well as recruit students to become fundraising staff for Organic Standard.
university and student involvment
Social Media Organic Standard has been actively building its community on Facebook with currently more than 700 likes and more than 30’000 people reached. Organic Standard will put a significant amount of its creativity and resources into online marketing campaigns to attract a larger fanbase and win contributors for our online sales segment of one-time compensations. It is our target to receive 10’000 ‘like’s within 2 years.
going viral
Web Platform Organic Standard’s web platform, to be completed by the end of 2013, will play an integral role in our community building efforts. The web platform will include a registry of all our farms, allowing our contributors to have a transparent overview of the projects they are supporting. Beyond that, our web platform will facilitate direct contact between contributors and farmers to kick-start a dialogue between the two. Private persons and enterprises can directly compensate their carbon footprint on our web platform through a one-time or recurring credit card payment or make a request for a direct debit payment.
transparancy
Organic Standard Business Report | Marketing Plan and Sales Strategy
Organic Standard is currently designing a portable pavilion, which can be de- and re-constructed within a few minutes and transported by two people on a Swiss train. The pavilion incorporates a 50” wide-screen that shows a video portrait of our projects and public engagement, as well as four iPads, available to passer-byes for interactive engagement.
19
Operations Pilot Project Phase until October 2014 optimizing the use of biochar
Organic Standard has five active pilot projects and is in the process of realizing five more pilot projects by October 2013. These projects include two composting projects and three manure treatment projects.
upcoming pilot projects
The pilot phase for Organic Standard projects will last until October 2014. After that period, 7-year agreements will be made with farmers to ensure the long-term build up of Terra Preta soils in Switzerland.
projects to run 7 years
Full-scale Project Implementation in 2014
Terra Preta Healthy Food Better Environment Better future for Children
Application of Biochar
Contributor
Direct Contact
Funds Carbon Offset
Higher yields, Healthier animals Lower fertilizer cost
Farmer
Certified Biochar
Technical and Statistical Info Logistical Support 80% of the Funds Biochar Facility
Project Development
Organic Standard will use the knowledge gained from the pilot projects to implement full-scale projects starting 2014. Each of these full-scale projects will incorporate a biochar facility with a production capacity of 900 m3 of biochar per year. An average of 40 farms can be supplied with biochar from this facility, yielding a carbon-offset potential of 502.9 tons of CO2 per year and creating Terra Preta soils on 226 hectares of farmland. The certificates generated through these projects will amount to a total sales volume of CHF 100’580 annually.
annual revenue of CHF 100’580 per full-scale project
Projects structured as Legal Entities To raise capital for the infrastructure costs of these full-scale projects, each project will be incorporated as its own legal entity, owned and operated independent of Organic Standard. In the case of EN-GE-RO, the operator will be a local farmer who professionally produces compost. Investors in these projects can be offered a very attractive return on investment of over 5% p.a. for 7 years.
Labor Requirements During Organic Standard’s startup phase, our core team will provide all administrative, marketing, and sales operations for the enterprise. The labor costs for certification and monitoring of projects are budgeted at 900 work-hours annually per project certification for full-scale projects plus 80 work-hours annually for project monitoring @ CHF 55 per hour.
certification and monitoring costs
Organic Standard Business Report | Operations
The aim of Organic Standard Pilot Projects is to optimize the use of biochar in animal husbandry on Swiss farms. These projects are designed to improve the practical logistics of biochar use and gather scientific data about the implementation of biochar use in animal husbandry.
20
Administrative Staff (Core Team) 2014-2017 Year
# of full-time Employees
Average Monthly Salary per Employee [CHF]*
Total Monthly Salaries [CHF]
2014
3.5
4,320
15,120
4.5
4,860
21,870
5
5,940
29,700
2017
6
7,020
42,120
*These figures do not include project development and monitoring and fundraising staff expenses.
Capacity Utilization Organic Standard expects to have the capacity to sell significantly more carbon-offset certificates than are generated through its projects in the short and medium term. Therefore, we could optimize our resources by partnering with other carbon-offset project developers in Swiss forestry. This strategy will allow our partner project developers to sell their certificates to full capacity, without diverting valuable resources to marketing. Organic Standard has started negotiations with one of the two active carbon-offset forestry projects in Switzerland to create such a cooperation. The project was started in 2006 with a project run-time of 30 years, reducing 18’000 – 20’000 tons of CO2 annually.
Organic Standard Business Report | Operations
2015 2016
21
Cost Breakdown of Full-scale Carbon-offset Project (8-Year Time-horizon) Infrastructure cost of project [CHF]
525,000
CO2 Credit Price [CHF]
Annual maintenance and operational costs [CHF]
135,000
200
Organic Standard's Margin
20%
900
Certificate sale overhead-costs
4.7%
Biochar selling price [CHF]
148
Discount rate
1.25%
Annual energy production from heat [MWh]2
864
Annual biochar production [m3]1
Yearly emission reduction [CO2eq]
502.9
Certification costs of project [CHF]
49,500
Annual monitoring and verification costs [CHF]
4,400
Biochar Facility Costs
2015
2016
2017
2018
2019
2020
2021
Operational Costs [CHF]
-135,000
-135,000
-135,000
-135,000
-135,000
-135,000
-135,000
Deprecaitation of Facility
-42,000
-42,000
-42,000
-42,000
-42,000
-42,000
-42,000
Investment [CHF]
2014 -525,000
Revenues - Energy
69,100
69,100
69,100
69,100
69,100
69,100
69,100
Revenues - Biochar [CHF]
133,400
133,400
133,400
133,400
133,400
133,400
133,400
25,500
25,500
25,500
25,500
25,500
25,500
25,500
80,500
80,500
80,500
80,500
80,500
80,500
80,500
106,000
106,000
106,000
106,000
106,000
106,000
106,000
Cash-flow without certificates [CHF]
-525,000
Certificate Sale Revenue [CHF] Cash-flow with certificates [CHF]
-525,000
Net Present Value without Certificates [CHF]
-350,500
IRR without certificates
Net Present Value with Certificates [CHF]
179,000
IRR with certificates
Cost Analysis Organic Standard
9.5%
2015
2016
2017
2018
2019
2020
2021
Monitoring costs [CHF]
-4,400
-4,400
-4,400
-4,400
-4,400
-4,400
-4,400
Certificate sale overhead-costs [CHF]
-4,700
-4,700
-4,700
-4,700
-4,700
-4,700
-4,700
20,100
20,100
20,100
20,100
20,100
20,100
20,100
11,000
11,000
11,000
11,000
11,000
11,000
11,000
Investment [CHF]
2014
-21.4%
-49,500
Revenues [CHF] Cash-flow [CHF]
-49,500
Net Present Value for Organic Standard [CHF]
23,600
1 This figure represents 90% of maximum production capacity. 2 Excess energy of 120 kW can be harnessed to produce electricity, heat water, or dry wood chips or pellets
Organic Standard Business Report | Operations
22
Certification and Legal Issues Methodology Verified Carbon Standard Methodology
The VCS requirements were drafted by a group of carbon market experts from the Climate Group, the International Emissions Trading Association (IETA), the World Economic Forum, and the World Business Council for Sustainable Development (WBCSD) in 2005. Organic Standard works in close cooperation with its partners to ensure the validity of its carbon-offset projects. We transparently publish all project reports and applied methodologies on the Organic Standard web platform.
transparent publication
Copyrights Organic Standard is firmly committed to full transparency with its project partners – the farmers – as well as its contributors. We firmly believe that intellectual property should not stand in the way of sustainable farming methods. We work with partner foundations and universities who also firmly believe in transparency and actively oppose the patenting of natural processes. There are no legal restrictions on the sale of voluntary carbon-offsets in Switzerland. 1
no legal restrictions
Organic Standard Business Report | Certficate and Legal Issue
Organic Standard adopts the framework of the Verified Carbon Standard’s (VCS) ‘General Methodology for Quantifying Greenhouse Gas Emissions Reductions from the Production and Incorporation into Soil of Biochar in Agriculture and Forest Management Systems’. VCS is a greenhouse gas (GHG) accounting program used by projects around the world to verify and issue carbon credits in voluntary markets.
24
Technology Plan CO2 Calculator for iPad, iPhone, Android, and PC determine food-related CO2 footprint in 30 seconds
Organic Standard’s partner eaternity has developed its own CO2 calculator for food-related CO2 emissions geared towards restaurants and catering businesses. A highly simplified and modified version of eaternity’s CO2 calculator will become Organic Standard’s CO2 calculator. Organic Standard will be hiring a programmer through freelancer.com for the iPad, iPhone, and Andriod app of our CO2 calculator. The programming is budgeted at CHF 30’000 and the app is planned to be ready by December 2013.
IT Infrastructure During Organic Standard’s startup phase, we are able to harness a wide array of cross-platform open source and freeware services for our database management, task management, internal communications, and desktop publishing. Most of these solutions are seamlessly scalable. Organic Standard’s core team is well equipped with a high-tech infrastructure of PCs and mobile devices that will be put at Organic Standard’s disposal.
scalability
Organic Standard Business Report | Technology Plan
The Organic Standard CO2 calculator for iPad, iPhone, Android, and PC will be an easy-to-use app that allows users to determine their food-related ecological footprint within 30 seconds through just a few parameters. These parameters include the users eating habits (at home or outside), how regional their food consumption is, how much meat and dairy products they consume, and how much they purchase ‘organic’-labeled food.
25
Risk Assessment In its cooperation with the University of St. Gallen (HSG), Organic Standard has undergone a careful examination of the risk factors to Organic Standard’s business model.
Risk Factor 1: Credibility
Evaluation To ensure the validity of our projects, Organic Standard works closely with the Zurich University of Applied Sciences and the Delinat Institute. Organic Standard’s projects adhere to the most stringent additionality and project evaluation criteria. Additionally, all Organic Standard projects are located in Switzerland, in close proximity to our contributors. We encourage contributors to conduct site visits to our projects and personally see the positive impact our projects are making. Lastly, we are proud to be a 100% transparent organization, openly publishing all our standards, methodologies, and project reports in a registry on our website.
Risk Factor 2: The Federal Office for Agriculture’s Policy regarding Biochar is not defined beyond 2016 The Federal Office for Agriculture (FOAG) current permission for the use of biochar in agriculture will expire in 2016. If the FOAG fails to renew its permission for the unlimited usage of biochar in agriculture beyond 2017, Organic Standard’s business model would be fatally flawed. Evaluation While the FOAG’s policy time frame is relatively short, the use of biochar has an extensive track record in Switzerland. The trial period for biochar has been closely monitored and extensively evaluated for five years, with very positive results. It is possible that the FOAG will issue more stringent emissions standard for biochar production, such as heavy metals and PAH (polycyclic aromatic hydrocarbon) values. This possibility, however, should not pose a problem as current biochar emissions are about six times below the current emissions standards.
Risk Factor 3: The Bio Suisse’s Position on Biochar is not yet defined The Bio Suisse has not yet added the use of biochar to its list of permissible additives (Positivliste zugelassener Hilfsmittel). Since a large proportion of the farmers interested in applying biochar on their farms are Bio Suisse certified, a rejection of biochar by the Bio Suisse would significantly reduce the potential market in Switzerland for Organic Standard’s projects. Evaluation About one third of the farms applying to implement an Organic Standard pilot project on their farms are Bio Suisse certified. The Bio Suisse has been very forthcoming in issuing permissions for biochar use on farms, as the Bio Suisse is currently working on adding biochar to its ‘Positivliste zugelassener Hilfsmittel’ by early 2014 (Schweizer Bauer, 2013).
double counting problem
Organic Standard Business Report | Risk Assessment
Organic Standard’s VER projects cannot be certified by an internationally recognized standard like the Verified Carbon Standard or the Gold Standard due to the double counting problem in Switzerland. Lacking such a standard, Organic Standard must rely entirely on its own reputation as a trustworthy organization to win the trust of its contributors.
26
Management & Organization Annual General Meeting
Board of Directors The Board of Directors carry non-transferrable duties acting as the company’s most senior management body and issuing the necessary directives; establishing the organisational framework; shaping accounting, financial controls, and financial planning; appointing and dismissing persons entrusted with senior management roles; ultimate oversight of persons entrusted with senior management roles, specifically with regard to compliance with the law, the Articles of Association, regulations, and directives; producing the annual report, preparing for the AGM, executing the resolutions passed by the AGM and informing the judge in the event of excessive debt. In order for Organic Standard to act quickly and decisively during its startup phase, the board of directors is made up of three trustworthy people and who are physically present at Organic Standard’s office on a regular basis. Besides Roderick Tanzer, Eric Kuenzi, and Manuel Klarman will each take a position on Organic Standard’s Board of Directors. All members of the Board exercise their position on the Organic Standard’s unsalaried, as required by law. Eric Kuenzi is the founder and Partner at ek | Law and has been Organic Standard’s legal advisor since January 2012. Eric specializes in advising social and environmental-impact startups and has been a valuable asset to Organic Standard.
Eric kuenzi Board of Directors
Manuel Klarmann is the founder and CEO of eaternity and has been a close advisor to Organic Standard since January 2012. His own experiences as the CEO of a successful startup, as well as his in-depth knowledge of the subject matter of carbon emissions of food and diet, provide a valuable voice on the Board of Directors of Organic Standard.
Advisory Committee The Advisory Committee is a voluntarily organ of the organization. Members of the advisory committee offer the organization guidance and advice in their respective areas of expertise. The Advisory Committee will be regularly updated on organizational matters and activities of Organic Standard and will convene at least once a year for a half-day meeting to engage in a more in-depth dialogue.
Manuelklarmann Board of Directors
Dr. Jost Hamschmidt is coordinator of studies at the Department of Management, Technology, and Economics, ETH Zurich. His interests include corporate sustainability strategies, collaborative entrepreneurship, and social innovation. He is a founding member of the Hub Zurich Association and has consulted impact driven start-ups such as Urban farmers, Avensol, South Pole Carbon Asset Management, and Cree by Rhomberg. Jost has been advising Organic Standard since March 2013 on corporate strategy and market analysis. Jost Hamschmidt, PhD
Hans-Peter Schmidt is the CEO of The Delinat Institute for Ecology and Climate Farming, Chairman of the Biochar Science Network Switzerland, Board Member of the European Biochar Foundation, and editor of the Ithaka Jounal for Ecology and Viticulture. Hans-Peter has been very closely involved initiating Organic Standard and has been a close adviser on scientific matters, policy issues, and project development since March 2012.
Hans-Peter Schmidt
Organic Standard Business Report | Management and Organisation
The Annual General Meeting (AGM) is made up of the shareholders of the company. The voting rights of the AGM are proportionally distributed to each shareholder’s equity stake. The initial share distribution is 76.67% for Thomas Rippel, 10% for Hans Rippel, 5% each for Zehai Peng and Joëlle Hérin and 3.33% for Roderick Tanzer. Zehai and Joëlle’s vesting stock agreement give them each a 15% and Roderick a 9.99% stake in Organic Standard over 3 years. Thomas Rippel’s stake is expected to decrease to 50.01% by 2016.
27 Dr. Holger Hoffmann-Riem is currently the Innovation Manager at WWF Schweiz and has been the Project Coordinator for the WWF CLIMATE GROUP.
Holger Hoffmann-Riem, PhD
Fredy Abächerli is the chairman of the Maschinenring Kanton Zug and Verora GmbH. Fredy works in agriculture and has extensive experience with biochar production and composting. He has been advising Organic Standard since March 2012 on project implementation and logistical issues. Fredy Abächerli
Andreas Fliessbach has been working as an expert on soil sciences at the Research Institute for Organic Agriculture (FiBL) since 1995 and specializes in the areas of soil microbiology, soil fertility indicators, soil pollution, toxicology, and the interaction between agriculture and climate change. Andreas joined Organic Standard’s advisory committee in June 2013.
Consultants/Specialists Organic Standard solicits the expertise of outside specialists for tax, accounting, and programming expertise.
Andreas Fliessbach Dr. sc. agr.
Sarah Rupprecht is currently an Associate Director at UBS AG in Zurich and has participated in the founding of two startup enterprises in Switzerland. Sarah was a candidate for the position of COO for Organic Standard before becoming an external consultant on financial and accounting matters for Organic Standard in June 2013. Christine Corbett Moran is a world-class mobile application developer, having developed award winning mobile applications on iOS, Android, and others which have been featured in Cosmopolitan, Marie Claire, Wired, MTV, TechCrunch, the New York Times, Lifehacker, and even by the White House. Christine has been advising Organic Standard since January 2012. As part of Organic Standard’s Social Impact Startup Award, she has a mandate to advise Organic Standard on its CO2 calculator app development over a 4 month period.
Sarah Rupprecht, MSocSc
Christine Corbett Moran, MSc
Audit Committee Organic Standard acts on its right as an AG to forego the establishment of an Audit Committee. It is nonetheless the right of every shareholder to call for a limited audit (eingeschränkte Revision) no later than 10 days before the AGM. In this case, the General Assembly must appoint an Audit Committee.
Compensation and Incentives To retain its excellent core team, Organic Standard offers each member of the Board of Directors a 3-year equity incentive program to compensate for low salaries during the startup phase.
equity compensation
The founding members Thomas Rippel, Hans Rippel, and Zehai Peng receive an up-front equity stake in Organic Standard with an additional 2-year vesting stock arrangement with a one-year cliff for Zehai Peng. Roderick Tanzer and Joëlle Hérin will enter into a three year vesting stock arrangement with a one-year cliff. Zehai Peng, Thomas Rippel, and Joëlle Hérin will be receiving a monthly salary of CHF 4’000 starting in January 2014. Hans Rippel will continue to work outside of Organic Standard and will receive a monthly salary of CHF 2’000 per month. The three board members will not receive a salary, as required by law.
salaries
Organic Standard Business Report | Management and Organisation
In January 2012, Holger organised the WWF Schweiz Fellowship for Biodiversity and Resource Efficiency at which Organic Standard won the runner-up prize. Holger manages WWF Schweiz’s contact to startups in the area of social entrepreneurship. Holger has strongly supported Organic Standard within WWF Schweiz since January 2012 and has been a close advisor for Organic Standard on matters of public policy, fundraising, and strategic partners.
28 Fundraising staff will receive an industry-standard incentive for good performance in addition to a fixed salary of CHF 22 an hour plus CHF 20 per day for out-of-pocket expenses. The incentive structure is incremental, as experience has shown that fundraising staff who are able to acquire higher numbers of contributors per day also tend to acquire contributors who continue their direct-debit payment to projects for a longer period of time.
compensations for fundraisiers
Organic Standard Business Report | Management and Organisation
29
Development, Milestones & Exit Plan Long-Term Company Goals It is Organic Standard’s long-term goal to play a crucial role in making Switzerland a worldwide forerunner in the development of biochar usage in agriculture in order to effectively and lastingly combat the global climate- and the regional soil degradation-crisis.
Switzerland to become a world-wirde forerunner
With our conservative estimate of 25 full-scale projects operational in Switzerland by 2017, our projects would reduce more than 5’000 tons of CO2 annually. Biochar output per year [m3]
Annual CO2 reductions [tons]
Year
Full-scale projects added
Cumulative Fullscale projects
2014
1
1
900
502.9
2015
1
2
1800
1,005.9
2016
3
5
4500
2,514.6
2017
5
10
9000
5,029.3
Exit Plan Profits are fully reinvested into Organic Standard to grow the business.
reduce 5000 tons CO2 annually by 2017
Organic Standard Business Report | Development, Milestone and Exit Plan
Milestones 2014 -2017
30
The Financials Financial Control meticulous budgeting
Organic Standard will be very vigilant to always be on top of its finances, with each member of the Board of Directors scrutinizing the organization’s financial statements on a monthly basis. We will examine our financial reports for any deviations from our plans and will thus be able to avoid cash-flow problems throughout our organization’s growth.
cash-flow management
Seed Funding Organic Standard is aiming to raise CHF 300’000 in seed-funding over the next twelve months through several grants by foundations as well as business-competitions in the area of sustainability.
raise CHF 300’000
Organic Standard is applying for funding at the Swiss Climate Foundation, the Klimafond der Stadtwerke Winterthur, Gerbert Rüf Stiftung, W.A. de Vigier Foundation, SWISS STARTUPS AWARDS, Climate-KIC, the Heuberger Winterthur Jungunternehmerpreis, and Venture Kick.
funding sources
Use of Funds Organic Standard plans to use the seed funding for the development of its fundraising pavilion (CHF 35’000), its web-platform (CHF 30’000), its CO2 calculator app for iPad (CHF 35’000), and to cover operational expenses of CHF 200’000 until Organic Standard is profitable in mid-2015. If we shall receive more funds than we are budgeting for in this business plan, Organic Standard will fully invest the available funds into its first full-scale project.
operational expenses
full-scale project investment
Organic Standard Business Report | The Financials
While Organic Standard has strong expertise in finance and accounting and is meticulously planning its finances for the coming years, we are very aware of the fact that the single most underestimated factor causing startup enterprises to fail is poor cash-flow management. We know that things generally “cost more and take longer” than anticipated, so we take special care to be conservative in our budgeting.
31
P&L and Cash Flow INCOME STATEMENT
Jan-14
Feb-14 Mar-14
Apr-14 May-14 Jun-14
Jul-14
Aug-14 Sep-14 Oct-14
Nov-14
Dec-14 2014 Total Q1 2015 Q2 2015 Q3 2015 Q4 2015
2015
2016
2017
10,300
10,300
121,700
100,400
105,700
109,000
113,500
428,500 1,128,500 2,485,800
TOTAL REVENUES
9,800
9,800
9,900
10,100
10,300
10,300
10,300
10,300
TOTAL Project Costs
10,800
10,800
10,900
11,100
11,200
11,200
11,200
11,200
9,500
9,500
9,500
9,500
126,800
79,700
83,900
103,800
116,000
383,500
986,900
TOTAL Marketing Exp
1,100
1,100
1,100
1,100
1,100
1,100
1,100
1,100
1,100
1,100
1,100
1,100
13,200
8,300
8,300
8,300
8,300
33,000
43,200
51,900
TOTAL Admin Expenses
15,900
15,900
15,900
16,400
16,400
16,400
16,400
16,400
16,400
16,400
16,400
16,400
195,300
70,100
70,100
70,200
70,300
280,800
379,000
537,400
P&L
-18,100
-18,100
-18,100
-18,500
-18,500
-18,500
-18,500
-18,500
-16,800
-16,800
-16,800
-16,800
-213,600
-57,700
-56,600
-73,300
-81,100
-268,700
-280,600
-492,200
4,500
4,500
4,600
4,700
4,900
4,900
4,900
4,900
4,900
4,900
4,900
4,900
57,400
64,300
68,500
71,200
74,800
278,800
742,800
1,796,700
-100
-100
-100
-400
-600
-800
-1,500
-1,500
-1,500
-1,500
-1,500
-1,500
-11,300
-4,600
-4,600
-15,000
-20,100
-44,400
-160,900
-402,300
Net Cash Flow (EBT)
-13,700
-13,700
-13,600
-14,200
-14,100
-14,300
-15,100
-15,100
-13,400
-13,400
-13,400
-13,400
-167,500
2,000
7,300
-17,100
-26,400
-34,300
301,300
902,100
Cumulative Cash (EBT)
-13,700
-27,400
-41,000
-55,100
-69,300
-83,600
-98,700 -113,800 -127,200 -140,700 -154,100 -167,500
-167,500
-165,500
-158,300
-175,400
-201,800
-201,800
99,500
1,001,600
Withheld payment to own projects Payments to project - 12 months delay
10,300
10,300
2,388,700
Notes to the P&L and Cash Flow Statement Because the number of projects Organic Standard develops and the number of P2P street fundraising events Organic Standard organizes is flexible, we include the salaries for project development and monitoring as well as the overhead costs of fundraising events, in ‘Project Costs’ rather than ‘Admin Expenses’. Farmers receive payments through CO2 certificates with a 12 months delay. Thus Organic Standard’s cash basis is continuously ahead of our P&L.
Organic Standard Business Report | The Financials
34
Certification of Biochar biochar trial period
Following further scientific studies and the success of the trial, the FOAG approved in February 2013 the unlimited use of certified biochar for agriculture until 2016. In Switzerland, however, biochar producers must obtain certification through the European Biochar Certificate (EBC), developed by the Delinat Institute. The EBC verifies the levels of toxic substances, including heavy metals and PAH compounds.
approved agricultural useage of biochar
Milestones Achieved to Date Jan 2012 – Runner-up Winner of the WWF Schweiz Fellowship for Biodiversity and Resource Efficiency April 2012 – Cooperation with The Delinat Institute for Ecology and Climate Farming Aug 2012 - Cooperation with the Zurich University for Applied Sciences: several students doing semester theses and one student doing a Bachelor thesis on our projects Sept 2012 – 1st pilot project realized - 7.26 tons of CO2 reductions per year, 12 hectares of pasture land sustainably and lastingly improved, 30 cows living healthier Nov 2012 - Winner of the Falling Walls Conference in Berlin for “Breaking the Wall of Sustainable Farming” - http://is.gd/62ysFg March 2013 – Extensive TV segment about Organic Standard on SF1’s science journal ‘Einstein’ - http://is.gd/QujrOs March 2013 – Cooperation with the University of St. Gallen: 3 month intensive co-development of the market potential and risk analysis for Organic Standard April 2013 – Interview by Organic Standard CEO Thomas Rippel on SF1’s talk-show ‘Aeschbacher’ - http://is.gd/LsgOeS April-June 2013 – Start of four new pilot projects - 58.1 tons of annual CO2 reductions, 152 Ha of land sustainably and lastingly made more fertile, and 283 cows living healthier April 2013 – Preliminary agreement with the Oberalmig Korporation Schwyz on the sale of carbon-offsets for their forestry project May 2013 – Partnership with Swiss Climate and the Delinat Institut to develop a methodology, recognized by the Federal Office for the Environment, for manure treatment and composting with biochar May 2013 – Partnership with eaternity for the sale of carbon-offsets to their customers June 2013 – Partnership with EN-GE-RO to develop a medium scale project starting August 2014, that will reduce 502 tons of CO2 annually July 2013 – TV segment in BuureTV - http://is.gd/IXljA2 July 2013 – Participation at the 7-day Lindau Nobel Laureate Meeting July 2013 – Winner of the 2013 Social Impact Startup Stipend Switzerland August 2013 – Öko Reinigungsserive AG, a social business with 55 employees pased in Zurich, Switzerland becomes Organic Standard’s first SME to offset their carbon footprint of 100 tons of CO2 though Organic Standard
Organic Standard Business Report | Appendix
Starting in 2012, the Swiss Federal Ministry of Agriculture initiated a limited 5-year trial for biochar as a soil improvement additive. The FOAG appointed the Delinat Institute for Ecology and Climate Farming to oversee the trial.
Key Figures
Laboratory Analysis of Biochar used for Organic Standard Pilot Projects
Price per VER certificate [CHF]
200
Producer
Verora AG
Price per m3 of biochar [CHF]1
260.0
Labor Nr.
1122039596
Cost of biochar transport (self delivery) [per km in CHF]
0.22
Test Date
08.08.2012
Cost of biochar transport (Reichmuth AG) [CHF per m3]
45.60
kWh price [CHF] Organic Standard's revenue share to farmers
0.08 80.0%
Biochar per LU [m3]
0.5
Mass of biochar per m3 in tons
0.34
% of DM content of biochar
75%
% C-content of biochar
77%
Turnover rate of biochar C over 100 years
20.0%
Biochar related fossil fuel emissions as % of total CO2 sequestration
5.00%
C to CO2 ratio
Carbon-offset certificates per m3 biochar [tons of CO2] Discount Factor Base salary for project managers [CHF/hour]
3.76 0.56 1.25% 55
1 This represents the Swiss market price for biochar in July 2013, excluding the CHF 92 per m3 of biochar farmers receive through carbon-offset certificates sold by Organic Standard.
Parameter
Unit
Reference Value for Premium Biochar
Powder density
kg/m3
340
Dry mass (DM)
%
75.3
Ash 550°C Gross calorific value Heating value Carbon
%
20.1
KJ/kg
25994
KJ/kg % of DM
35
25708 >50
77.4
H/C molar ratio
<0.6
0.21
O/C molar ratio
<0.4
0
pH value
<10
11.6
Conductivity
µS/cm
1730
Nitrogen N
% in DM
1.02
Phosphorus P
% in DM
0.3
Potassium K
% in DM
0.98
Magnesium Mg
% in DM
0.3
Calcium Ca
% in DM
4.74
Sodium Na
% in DM
0.08 0.16
Iron Fe
% in DM
Silicon Si
% in DM
1.91
Sulfur S
% in DM
0.06
Lead Pb
mg/kg DM
<120
4
Cadmium Cd
mg/kg DM
<1
<0.2
Copper Cu
mg/kg DM
<100
31
Nickel Ni
mg/kg DM
<30
9
Mercury Hg
mg/kg DM
<1
0.07
Zinc Zn
mg/kg DM
<400
190
Chromium Cr
mg/kg DM
<80
Boron B
mg/kg DM
9 40
Salt content
mg/100g DM
Sum 16 PAH
mg/kg DM
<4
0.66
972
PCB value excl. BG
mg/kg DM
<0.2
0.000377
Indicator PCB
mg/kg DM
<0.2
0.000377
Organic Standard Business Report | Appendix
36
Potential for the Ecologically Sustainable Production of Biochar in Switzerland Dry Mass
Technical potential
Ecologically Sustainable
Economically viable
(in tons DM)
Potential (in tons DM)
Potential (in tons DM)
Conversion Rate of Biomass to Biochar
Biochar output
(DM) / Ha / Yr
1,535,264
5.91
8,560,232
705,234
247,353
25%
61,838
275,401
8.68
2,389,626
290,753
145,377
25%
36,344
129,813
8.68
1,126,374
281,593
56,319
25%
14,080
Extensive Wiesen (pasture in flatland)
86,526
4.88
422,522
-
-
25%
-
übrige Dauerwiesen (pasture in flatland)
528,027
4.88
2,578,453
105,631
21,126
25%
5,282
Reben (permanent culture)
13,084
1.38
17,991
17,991
16,192
25%
4,048
Intensiv-Obstbau (permanent culture)
7,413
1.25
9,266
9,266
8,339
25%
2,085
Sömmerungsweiden (pasture in Bergstufe)
495,000
4.07
2,016,000
-
-
25%
-
Forest and Wood
1,273,086
5,137,997
4,367,282
1,205,015
30%
361,505
Produktiver Wald (productive forest)
1,141,336
4,610,997
3,947,282
973,015
30%
291,905
Origin of Biomass Agriculture Offenes Ackerland (Arable land, energy crops)1 Kunstiwese (arable land, energy crops)
Area (Ha)
4.04
(in tons DM)
davon Stamm- und Industrieholz (industrial)
-
2,444,908
2,444,908
464,908
30%
139,472
davon Energieholz (energy)
-
1,502,374
1,502,374
508,107
30%
152,432
davon Totholz und geschützte Wälder
-
1,452,718
-
-
30%
-
527,000
420,000
232,000
30%
69,600
Holz aus Landschaftspflege
131,750
4
davon Landwirtschaftsgebiet
62,371
231,880
-
-
davon Siedlungsraum
27,667
110,670
-
-
davon Hecken
27,667
110,670
-
-
davon Strassen und Bahnlinien
28,445
73,780
-
-
1. Ecologically sustainable potential = recoverable harvest residue as stated in Source 4 2. Assuming an average C-content of 80% and a turnover rate of 20% over 100 years Sources: 1 “Kohle-Produktionspotenzial Schweiz”, Stephan Gutzwiller, Kaskad-E GmbH, 2013 2 “Arealstatistik Schweiz 2010”, Bundesamt für Statistik BPS 3 “Treibhausgasinventar 2005”, Bundesamt für Umwelt BAFU 4 “Biogene Güterflüsse der Schweiz 2006”, Bundesamt für Statistik BAFU 5 “Bioenergy in Switzerland”, Steubing, 2010
Total biochar output potential (in tons)
423,343
Total biochar output potential in m3 Total CO2 sequestration potential per year
1,778,751 2
894,912
Organic Standard Business Report | Appendix
37
Glossary of Organic Standard’s Pilot Projects Pilot Project #1: Hof Zündli
Pilot Project #2: BG Huber/Giger
Person in Charge on Site
Pirmin Koller
Person in Charge at Organic Standard
Thomas Rippel
Number of Farms in the Project
1 Zündli 329
Location of the Project
9655 Stein
Person in Charge on Site
Bruno Giger
Person in Charge at Organic Standard
Thomas Rippel
Number of Farms in the Project
2 Lettenhof
Location of the Project
9526 Zuckenriet
Ative Since
01.09.2012
Ative Since
01.04.2013
Project End Date
31.08.2014
Project End Date
31.08.2014
Number of Livestock [LU]
30
Number of Livestock [LU]
77
Geaographical Scope [in hectares]
12
Geaographical Scope [in hectares]
40
Biochar Applied [m3]
13
Biochar Applied [m3]
39
Biochar Applied per LU [m3]
0.43
Biochar Pickups per Year
4
Distance of Project to Biochar Facility [in dirivng km] Cost of Biochar Transportation/Delivery [CHF]
81.7 145.10
Sauerkraut Juice Transports per Year
2
Distance of Project to Sauerkraut Facility [in driving km] Cost of Sauerkraut Juice [CHF]
176
0.51
Biochar Pickups per Year
0
Distance of Project to Biochar Facility [in dirivng km]
95.7
Cost of Biochar Transportation/Delivery [CHF]
1778.4
Carbon Certificates [tons of CO2]
21.79
Area Covered per Certificate [hectares]
0.54
Organic Standard's Margin
20%
156.29
Carbon Certificates [tons of CO2]
7.26
Area Covered per Certificate [hectares]
0.61
Organic Standard's Margin
20%
Cost Breakdown of Project
Cost Breakdown of Project Inflow
Outflow
Annual Net
Oroganic Standard
CHF 1,452.91
CHF 1,162.32
CHF 290.58
Project
CHF 1,162.32
CHF 3,681.39
-CHF 2,519.06
Cost recovery of Project
Biochar Applied per LU [m3]
31.57%
Inflow
Outflow
Annual Net
Oroganic Standard
CHF 4,358.72
CHF 3,486.97
CHF 871.74
Project
CHF 3,486.97
CHF 11,918.40
-CHF 8,431.43
Cost recovery of Project
29.26%
Organic Standard Business Report | Appendix
38
Pilot Project #3: BG Heitersberg
Pilot Project #4: Peter Hilfiker
Person in Charge on Site
Christoph Heggli
Person in Charge at Organic Standard
Thomas Rippel
Number of Farms in the Project
3 Heitersberg
Location of the Project
8957 Spreitenbach
Person in Charge on Site
Peter Hilfiker
Person in Charge at Organic Standard
Thomas Rippel
Number of Farms in the Project
1 Jรถndliweg 11
Location of the Project
4802 Strengelbach
Ative Since
01.05.2013
Ative Since
01.06.2013
Project End Date
31.08.2014
Project End Date
31.08.2014
Number of Livestock [LU]
55.2
Number of Livestock [LU]
34 35
Geaographical Scope [in hectares]
42
Geaographical Scope [in hectares]
Biochar Applied [m3]
26
Biochar Applied [m3]
Biochar Applied per LU [m3] Biochar Pickups per Year Distance of Project to Biochar Facility [in dirivng km]
13
0.47
Biochar Applied per LU [m3]
7
Biochar Transports per Year
47.2
0.38 4
Distance of Project to Biochar Facility [in dirivng km]
47.2
Cost of Biochar Transportation/Delivery [CHF]
146.70
Cost of Biochar Transportation/Delivery [CHF]
83.83
Carbon Certificates [tons of CO2]
14.53
Carbon Certificates [tons of CO2]
7.26
Area Covered per Certificate [hectares]
0.35
Area Covered per Certificate [hectares]
0.21
Organic Standard's Margin
20%
Organic Standard's Margin
20%
Cost Breakdown of Project
Cost Breakdown of Project
Inflow
Outflow
Annual Net
Oroganic Standard
CHF 2,905.81
CHF 2,324.65
CHF 263.57
Project
CHF 2,324.65
CHF 6,906.70
-CHF 4,582.05
Cost recovery of Project
33.66%
Inflow
Outflow
Annual Net
Oroganic Standard
CHF 1,452.91
CHF 1,162.32
CHF 263.57
Project
CHF 1,162.32
CHF 3,463.83
-CHF 2,301.50
Cost recovery of Project
33.56%
Organic Standard Business Report | Appendix
39
Pilot Project #5: Oberbrämen Person in Charge on Site
Martin Hegglin
Person in Charge at Organic Standard
Thomas Rippel
Number of Farms in the Project
1 Oberbrämen
Location of the Project
6313 Menzingen
Ative Since
01.06.2013
Project End Date
31.08.2014
Number of Livestock [LU]
20
Geaographical Scope [in hectares]
22
Biochar Applied [m3]
13
Biochar Applied per LU [m3]
0.65
Biochar Transports per Year
4
Distance of Project to Biochar Facility [in dirivng km]
7.9
Cost of Biochar Transportation/Delivery [CHF]
14.03
Carbon Certificates [tons of CO2]
7.26
Area Covered per Certificate [hectares]
0.33
Organic Standard's Margin
20%
Cost Breakdown of Project Inflow
Outflow
Oroganic Standard
CHF 1,452.91
CHF 1,162.32
CHF 263.57
Project
CHF 1,162.32
CHF 3,394.03
-CHF 2,231.71
Cost recovery of Project
Annual Net
34.25%
Organic Standard Business Report | Appendix
40
Glossary of Organic Standard’s Strategic Partners Climate-KIC Switzerland
Organic Standard Business Report | Appendix
The Climate Knowledge and Innovation Community (Climate-KIC) is Europe’s largest public-private innovation partnership focused on climate change, consisting of dynamic companies, leading academic institutions and the public sector. Its vision for the future is to provide the people, products, and leadership to address the challenge of global climate change. The mission is to create opportunities for innovators to address climate change and shape the world’s next economy. Climate-KIC Switzerland has provided valuable knowhow to Organic Standard’s staff through its Carbon Revenues Master Class.
The Delinat Institute for Ecology and Climate Farming The Delinat Institute for Ecology and Climate Farming is a non-for-profit research foundation in Valais, Switzerland. The group is one of the leading research centers for carbon sequestration through agronomic methods and development of concepts for the remediation of agro-ecosystems. The Delinat Institute coordinates the European working group on biochar characterization and established the European Biochar Certificate. The Delinat Institute is a close partner of Organic Standard since March 2012. They provide Organic Standard with its research data and established the foundation for Organic Standard’s first pilot project.
eaternity eaternity is a Zurich based non-profit organization providing restaurants and canteens with education on climate-friendly cooking and a highly sophisticated CO2 calculator to determine the climate footprint of food.
climate footprint of food
eaternity has been a close partner of Organic Standard since January 2012 and agreed to provide their customers the option to offset food-related CO2 emissions through Organic-Standard’s projects.
Energiegenossenschaft Roggwil (EN-GE-RO) EN-GE-RO is a non-profit collective, which develops and finances regional renewable energy projects. EN-GE-RO currently operates two solar projects in the canton of Thurgau, with a total capacity of 111’000 kWh. They plan to begin operating six wind-, solar-, and hydro-power projects in Thurgau in the coming three years, with a total capacity of 598’000 kwh, in addition to a medium sized 500kw pyrolysis facility. EN-GE-RO is looking for ways to generate carbon-offset certificates through their planned pyrolysis facility and is currently in talks with Organic Standard to open the pyrolysis facility as the first full-scale Organic Standard VER project.
Falling Walls Foundation The Falling Walls Foundation is a non-profit charity dedicated to sustaining science and humanities. With this purpose, they organized the Falling Walls Conference, the Falling Walls Lab, and the Falling Walls Circle.
partner for first full-scale project
41
The HUB Zurich The HUB Zürich was founded in 2010 as part of a global network of collaborative co-working spaces to bring entrepreneurs and social innovators together to realize their ideas for a sustainable society.
collaborative coworking space
Today the HUB is Organic Standard’s main office, and among other things, has facilitated the match-up of Organic Standard with Roderick Tanzer, who became the co-founder and Senior Partner of Organic Standard.
Organic Standard’s main office
iq Consult iq Consult is a Berlin-based consulting firm which specializes on social entrepreneurship and innovation and is the co-sponsor of the Social Impact Startup Award 2013. As the winners of the Social Impact Startup Award 2013, Organic Standard is receiving extensive consulting over an 8-month period, starting in August 2013, by iq Consult valued at CHF 7’500.
Kaskad-e GmbH Kaskad-e GmbH is a Basel-based consulting bureau specializing in pyrolysis and energy systems. Kaskad-E has developed its own innovative biochar cooker for small-scale usage. Kaskad-e received a CHF 40’000 grant from the Swiss Climate Foundation to develop a larger version of their current biochar cooker. For the MIGROS competition for sustainable products, Organic Standard and Kaskad-e co-developed the concept of biochar substrates as a sustainable substitute for peat in home gardening. They are a close advisor to Organic Standard on biochar production methods.
MIGROS competition
Oberalmig Korporation Schwyz The Oberalmig Korporation (OAK) Schwyz is an established family law corporation of more than 17’000 members owning some 9’036 hectares of forest in the canton of Schwyz. The founding of the OAK Schwyz dates back to the early middle ages, prior to the founding of Switzerland. They are the main landowner in the canton Schwyz and operate the CCBA Oberalmig Climate Protection Project which offsets 19’000 tons of CO2 annually. Since March 2013, we have been in talks with OAK Schwynz regarding potential collaborations.
potential collaboration
Reichmuth AG Reichmuth AG is a transport logistics company based in Romanshorn, Thurgau. Organic Standard has signed a partner agreement with Reichmuth AG to transport biochar to our project farms. Because of our projects’ large demand for biochar, we were able to guarantee transport costs of CHF 45.60 per m3 of biochar to all of Switzerland. This cost is 34% less than transport costs for biochar from the biochar facility in Lausanne, where an exclusive agreement was made with DHL.
transport logistics partnership
Organic Standard Business Report | Appendix
The HUB Zürich has been a very close partner of Organic Standard since its inception, providing Organic Standard with office space, a wide network of likeminded entrepreneurs, and professionals.
42
SAP AG SAP AG is a German multinational software corporation that makes enterprise software to manage business operations and customer relations. SAP is the co-sponsor of the Social Impact Startup Award 2013. As the winners of the Social Impact Startup Award 2013, Organic Standard is receiving extensive consulting over an 8-month period, starting in August 2013, by SAP valued at CHF 7’500.
receiving extensive consulting
The Schoeni.ch Holding AG is the operator of Switzerland’s largest Sauerkraut facility, producing more than 3’000 tons of sauerkraut and disposing of more than 1.5 million liters of sauerkraut juice annually. As a lot of our project farms are interested in the use of sauerkraut juice for manure treatment, Organic Standard has made an agreement with Schoeni for the delivery of their waste sauerkraut juice to our farmers at cost-covering rates.
largest Swiss Sauerkraut facility
In addition, Schoeni.ch Holding AG, subsidiary of Schoeni Transport AG has agreed to transport the sauerkraut juice to our farms at a cost-covering rate (approximately 40% below market rate).
Swiss Climate Ltd. Swiss Climate Ltd. is a firm of consulting and project development experts in the climate protection and sustainability sectors. The company headquarters is in Bern, Switzerland. Swiss Climate Ltd. was founded in 2000 to take advantage of the opportunities offered by the Kyoto Protocol in the forestry sector. Today Swiss Climate diversified to include all project activities under the scope of the Kyoto Protocol and beyond - that provide financial services for climate projects. Swiss Climate has signed a partner agreement with Organic Standard in May 2013. We will cooperate to secure financing and develop a FOEN recognized methodology for projects on CO2-offsetting, composting, and manure treatment for the Swiss CER market.
developing a new methodology
University of St. Gallen (HSG) The HSG provides its more than 7’000 students with a practice-oriented education, guided by an integrative view of business, economics, law, social sciences, and international affairs. The HSG has constantly been ranked among the top business schools in Europe and is among the top 10 worldwide. As part of their practice-oriented education, the HSG launched an integration seminar for its bachelor students to get an integrative view of social impact entrepreneurship. Organic Standard was one of five select social enterprises invited to participate in this seminar from February to May 2013.
one of five selected social enterprises
As part of this seminar, Organic Standard worked with four bright Bachelor students to explore Organic Standard’s market potential and risk factors to the business model. The HSG team’s valuable input contributed to the decision to found Organic Standard as a non-profit AG. Organic Standard maintains a close relationship with the HSG and has been invited to join the HSG CEMS Block Seminar in September 2013, when ten Masters students of International Management will work on a topic of Organic Standard’s choosing.
invited partner to the HSG CEMS Block Seminar
WWF Schweiz WWF Schweiz, headquartered in Zurich, is Switzerland’s largest NGO with 260’000 active members; they are one of the biggest financiers of the global WWF. Organic Standard was born out of a WWF competition where the jury believed in us - when Organic Standard was just a dream.
Organic Standard born out of a WWF competition
Organic Standard Business Report | Appendix
Schoeni.ch Holding AG
43 WWF Schweiz continues to actively support Organic Standard through its network and expertise.
Verora GmbH biochar facility operator
Verora GmbH’s CEO Fredy Abächerli has co-pioneered biochar production in Switzerland with their pre-commercial PYREG facility. The group jointly operates several research projects with the ZHAW and has received CHF 180’000 in funding from the Swiss Climate Foundation for their pilot biochar facility.
pioneering production of biochar
Zurich University of Applied Sciences (ZHAW) The ZHAW is one of the largest and most productive university of applied sciences in Switzerland, with a strong nationally and internationally presence. The ZHAW has been Organic Standard’s partner since August 2012 and has co-developed Organic Standard’s first pilot project on the Hof Zündli. The ZHAW cleared all regulatory hurdles for the pilot project and furthermore, allowed one of their bachelor students the opportunity to supervise the scientific results of the project.
co-development of the first pilot project
For the coming semester, starting September 2013, several students will be supervising Organic Standard pilot projects, and one student’s Bachelor thesis will focus on manure treatment with sauerkraut juice.
students writing semester and bachelor thesis
Organic Standard Business Report | Appendix
Verora GmbH is the operator of one of the two active biochar facilities in Switzerland, located in the canton of Zug. They are a close partner of Organic Standard since May 2012.
47
Glossary AG (Aktiengesellschaft) - Aktiengesellschaft is a German word for a corporation that is limited by shares, i.e., owned by shareholders, and may be traded on a stock market.
Audit Committee – The Audit Committee of an AG in Switzerland whether the accounting, the Group accounts and annual financial statements, or the proposal for the appropriation of the net profit for the year comply with the law, the AG’s statutes. The AG in Switzerland can forego an Audit Committee if: a) AG has less than 10 full-time employees on a yearly average (1000% Stellen) and b) all shareholders of the AG agree to forego an audit committee. Biochar - A name for sustainably produced charcoal when it is used for particular purposes, especially as a soil amendment. Biochar is an inert compound that remains stable in soil over thousands of years. CER (Certified Emissions Reductions) – As opposed to Voluntary Emissions Reductions, CERs are a type of emissions unit (or carbon credits) issued by the Clean Development Mechanism (CDM) Executive Board for emission reductions achieved by CDM projects and verified by a DOE under the rules of the Kyoto Protocol. Dopplezählungsproblematik (Double-counting Problem) - Due to the fact that the Swiss Federal Statistics Office (SFSO) automatically includes all CO2 reducing projects into its nation-wide CO2 count with regard to its Kyoto-Agreement obligations, the Swiss government takes credit for all reductions with in Switzerland and thus adjusts its purchasing of carbon-offset certificates abroad accordingly. It is due to this fact that if certificates from Swiss carbon-offset projects are sold to enterprises, this reduction is counted twice, once by the Swiss government and once by the enterprises. EBT (Earnings Before Tax) - An indicator of a company’s financial performance calculated as revenue minus expenses, excluding tax. EBT is a line on the company’s income statement that shows how much the company has earned after the cost of goods sold, interest and selling, and general and administrative expenses have been subtracted from gross sales. FOAG – The Swiss Federal Office for Agriculture FOEN – The Swiss Federal Office for the Environment LSV (Lastschriftverfahren - direct debit payment): An LSV is financial transaction in which one person withdraws funds from another person’s bank account. Formally, the person who directly draws the funds (“the payee”) instructs his or her bank to collect (i.e., debit) an amount directly from another’s (“the payer’s”) bank account designated by the payer and pay those funds into a bank account designated by the payee. LU (livestock unit) – An LU is a unit measurement of the living weight of animals in agriculture equaling to an average cow of 500 kg live weight. An average pig would equal 0.12 LU and an average chicken equaling 0.003 to 0.01 LU. NGO – Non- Governmental Organization PAH (Polycyclic aromatic hydrocarbons) – PAHs are potent atmospheric pollutants that are carcinogenic.
Organic Standard Business Report | Appendix
AGM (Annual General Meeting) - The AGM is the highest organ of an AG in Switzerland. The AGM may a) change the statues of the company; b) assign the members of the Board of Directors and Audit Committee; c) issue the Annual Report and financial statements; d) decide on the appropriation of corporate profits; e) make any resolution that is not prohibited by law or the statues of the shareholders’ meeting.
48 Petro-chemical fertilizer – Synthetically produced fertilizers relying on fossil fuel energy Pyrolysis - A thermochemical decomposition of organic material at elevated temperatures in the absence of oxygen (or any halogen). It involves the simultaneous change of chemical composition and physical phase, and is irreversible.
SFSO – Swiss Federal Statistics Office Terra Preta – Literally “black soil” refers to the ultra fertile soils that were built up over hundreds of years by the inhabitants of the tropical Amazon Forest. It allowed them to farm and live off the banks of the river, which were otherwise sandy and infertile. A further advantage in today’s world is Terra Preta’s ability to permanently capture carbon into the ground, which leads to a reduction of CO2 in the atmosphere. VER (Voluntary Emissions Reductions) - VER projects are not legally required and thus may not fall under the Kyoto protocol or other legislative frameworks. VER projects are usually certified through a voluntary certification process.
Organic Standard Business Report | Appendix
Sauerkraut juice – Sauerkraut juice is a byproduct of sauerkraut production. Millions of liters of sauerkraut juice are disposed of, against payment, in wastewater treatment plants, which is disposed of in sewage facilities. Sauerkraut juice contains a very high quantity of lactic acid bacteria. Adding sauerkraut juice to manure lowers the manure’s pH to below 6.5 where the conversion of urea to ammonia is prevented. The liquid manure no longer stinks and the nutrients are retained and fixed.
49
Sources i [BFS] Bundesamt für Statistik (2011). Schweizer Landwirtschaft. Taschenstatistik 2010. Neuchâtel.Clement et al. (2011).
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