In India, Envirofit began operations in 2007 after it became Shell Foundation’s partner in Breathing Space. They got their stoves into retail shops in Indian villages. They didn’t sell. The cookstove, it turned out, is a “push” product.

Women didn’t understand why their chulhas needed replacing. Improved health is not an attractive sales proposition; if it were, no one would eat junk food. Women also did not know the Envirofit brand. And they did not control the household’s purse strings, so men, who didn’t care much about kitchen problems, had to be convinced, too.

In four months, Envirofit spent Rs 4 crore ($540,796) on TV and radio advertisements. Roadshows, billboards and demo agents were all used. The result? 20,000 units sold by end-2008, according to a Shell Foundation report.

Regulating The Money Flow

It was a bump, but the company could not burn money at this rate. It pivoted to selling to factories and cooperatives, who have ready consumers in their employees, and had greater success. Envirofit currently does not make claims about health benefits of their wood stoves, since studies are still ongoing, but the stoves improve “the cooking environment (cleaning time, cooking time, time spent gathering fuel) for the women using them,” said Jessica Alderman, communications director at Envirofit.

Still, Envirofit India sustained losses every year until 2017, according to records and the company.

Luckily, the company had a deep-pocketed mentor. Shell Foundation has invested $26 million in the company, according to Gary Almond, communications manager at the Foundation. The company has raised at least $49.2 million in investments, according to a 2018 Shell Foundation report. Shell has also helped Envirofit sell carbon credits and secure subsidies in the form of grants, prizes, and investors who do not expect market-rate returns (“patient capital”).

Envirofit is a strong investment candidate and has successfully attracted growth and impact oriented investors, said Alderman of Envirofit.

In 2012, Envirofit raised $3 million in debt financing from Maryland-based Calvert Social Investment Foundation Inc. It was underwritten by a seven-year $1.5 million financial guarantee by Shell Foundation and Barr Foundation. The guarantee was meant to “unlock debt to further mature the commercial model and build the creditworthiness of Envirofit,” said Almond of Shell Foundation.

The same year, Envirofit sold $2 million of carbon credits to the Swedish Energy Agency in a deal facilitated by the Shell Foundation, according to financial documents.

Envirofit isn’t Shell Foundation’s only beneficiary in the cookstove sector. In 2016, Shell offered a $2 million loan guarantee to the Calvert Foundation. Calvert, in turn, gave $2 million to Cardecho BV. Cardecho is a finance vehicle set up by BIX Capital, which is a collaboration by Shell Foundation, Cardano Development and Goodwill Advisory to fund cookstove ventures. Yes, Shell Foundation underwrote funding to its own initiative.

The loan guarantee allowed BIX Capital to raise capital from other investors like the International Finance Corporation, the Dutch Development Bank, and others, Almond of Shell Foundation said. Money from BIX has flowed into American advanced cookstove companies such as BioLite, The Paradigm Project and C-Quest Capital.

It’s like Shell Foundation moving its money into various pockets to make it appear that the cookstove sector has legs, and companies can raise debt and investments all on their own.

Shell Foundation doesn’t agree with this assessment. “Shell Foundation’s approach is to create a supportive ecosystem for access to energy by identifying barriers and market-based solutions for them,” said Almond. “As such, it works with multiple partners that address blockers in the broader clean cooking space and that help grow the sector.”

Making It Simple

So why not simply give away the money? Because the prevailing dogma in the cookstove space is that it’s possible to make money and do good at the same time. This preserves the expectation that investors will one day get their money back.

“We do expect to recoup the equity investment fully since Envirofit has successfully fundraised multiple times,” Almond of Shell Foundation said.

Some experts say American companies like Envirofit have benefited disproportionately from the philanthropic largesse. In fact, much of the seven funds created by GACC to support the sector has gone to US-originating companies.

Take, for instance, the GACC’s Working Capital Fund. Set up in 2015, it was to provide up to $500,000 of loans to credit-worthy companies. Only two cookstove companies were found credit-worthy—Envirofit and New York City-based startup BioLite. The fund shuttered in 2017. The fund manager had expected the cookstove market to grow rapidly—“a forecast that ultimately did not come true,” an internal analysis later found.