Energy Poverty: An Opportunity for CSR and Social Impact? The Case of DOMI Earth in Taiwan

Energy Poverty: An Opportunity for CSR and Social Impact? The Case of DOMI Earth in Taiwan

  • Case
  • Teaching Notes
  • Supplementary Resources
Abstract

In the midst of Taiwan’s clean energy transition, social enterprise DOMI has found an opportunity to support families living with poverty while reducing carbon emissions. Their initial success providing energy-saving lighting to combat household energy poverty has generated interest from other cities and counties in Taiwan. DOMI’s founders think that corporate philanthropy might allow them to scale the initiative to places where government funding is not available. In order to convince corporate donors that their project merits investment, DOMI will need to show the value generated by every dollar invested. In the process, DOMI will need to think deeply about how to make intangible value explicit. This case encourages students to reflect on the multiple facets of value for projects that seek to be efficient while meeting important social and environmental needs.

Case
Learning Outcomes

This case study enables students to reflect on what constitutes meaningful value in the context of corporate social responsibility (CSR) and social entrepreneurship as well as projects that rely on the support of multiple stakeholders, more broadly. It provides insight into the process of how different kinds of value are assessed and made explicit, by introducing students to a relevant methodology for doing so. Students will learn how to assess and communicate social impact in order to enable better quality decision making and strengthen stakeholder dialogue. The process in the case is based on social return on investment (SROI) methodology.

In addition, through an exploration of the energy poverty issue, students will gain an understanding of the interconnections between environmental and social dimensions of sustainability and how governments, corporations, households, and social enterprises differently value these dimensions.

DOMI’s Founding Story: From Coming Home, to Concerns About Air Pollution and Climate Change

It had been a little more than two years since Tammy Hu and her husband, Corey Lien, had started DOMI Earth in 2014. Even though they had both been through the entrepreneur’s journey several times each, they already had a deep sense that there was something very different about this company.

For one, after many years in Beijing, they were back in Kaohsiung. They had both grown up in the southern Taiwanese city, best known for shipbuilding and heavy industry, but had each left as children. They had never built a business there.

The industry was new to them too. The pair had built their careers in the worlds of fashion and e-commerce, servicing the insatiable appetites of mainland Chinese consumers in the early 2000s.

The company was also different from their past ventures because this new company had little in the way of capital investment. In fact, it was little more than a few close friends and family members pooling their time and energy, addressing something about which they cared deeply.

While their previous ventures had come about because of the maturation of a specific technology or a market coming-of-age, Tammy and Corey had been frightened into action this time by a primal human instinct: love for their children. Over years living in Beijing, they had hardly thought about the air pollution that surrounded them every day. But now they were parents. Even though they were home, surrounded by familiar sights and the love of their family, they realized that with these pollution problems Taiwan would not be a safe place for their girls to spend their childhood.

As devastating as Tammy’s research into the effects of air pollution were, the “wake-up call” did not stop there. Instead, her research led her to learn about the even more devastating threats presented by climate change. Tammy realized that it was not just Kaohsiung; if she failed to act, there might not be anywhere left in the world that would be safe for her daughters.

To tackle climate change at the individual level, Tammy and Corey had decided that there was a lot of potential impact in taking little green steps in their home—actions such as upgrading from fluorescent lighting to LED, switching from a table-top water boiler to an electric kettle, and ensuring that they used a fan in conjunction with the air conditioning on Taiwan’s brutally hot summer days. In the home, these represented significant electricity savings, with lighting and air conditioning alone representing around 80% of their household electricity usage.

The idea for DOMI Earth stemmed from there, a simple extension of what Tammy and Corey, as individuals, had experienced—a wake-up call to care, an understanding that choices made today would limit their children’s future potential, and a determination to help people take the same energy-saving actions they had. The difference between themselves and their customers would be the speed at which they understood what actions they could take and moved to complete them. Starting this journey a year before the Paris Climate Agreement was signed in 2015, and drawing from their lenses as entrepreneurs, Tammy and Corey perceived that speed was a trait desperately lacking in the global action against climate change.

Tammy reflected back on their life over the past two years. She was pleased with the new brand and was encouraged by how much people supported the idea. Lots of people were happy that someone was finally taking a stand against climate change and was attempting to leverage the power of business to do it. At the same time, if she was being honest with herself, this was likely the slowest-growing company of which she had ever been a part.

DOMI’s principal activity at the time was working with offices and small storefronts to upgrade to LED lighting. Tammy and Corey had developed a service model, eliminating any informational obstacles that would keep their customers from taking action, a strategy they called “Simple.” The other strategy was “Care,” to give context to the big, impersonal, abstract concept of climate change and emphasize individual responsibility. To do this, they built a wholesome, family-forward brand and reinvested revenues from lighting upgrades into planting trees. The vision was to partner with their customers to become “climate changemakers,” people who showcased their experience making these simple changes and spread the word to their friends and family.

Despite their hard work, DOMI had found it difficult to convince people to take the word of a company they had never heard of based on promised cost savings and grand designs of saving the world.

While the small business segment of their company was growing slowly, another area had started to take off. Thanks to DOMI’s position as a social enterprise—unique among energy efficiency consultants—they had seized an opportunity to play the role of a social service provider, delivering and installing money-saving LEDs for Taipei City’s poorest families. By Tammy’s measure, the program had been a success. DOMI had delivered for the city government as expected, but the best part was how all involved were surprised and delighted at the range of unexpected benefits the recipients had expressed. The project had not just brightened homes, but filled hearts too.

Tammy imagined the possibilities of scaling this project to families living with poverty throughout Taiwan. Of course, not all municipalities had the resources of Taipei, the nation’s capital. If DOMI wanted to expand the project, Tammy would need to build new coalitions from among the corporations and foundations that were invested in Taiwan’s future. The challenge would be demonstrating the potential value of the project to these partners, many of whom had limited experience calculating the value of social projects.

Energy Saving as a Systemic Lever for Taiwan’s Clean Energy Transition

Among all countries, Taiwan ranked high on energy use and carbon emissions, per capita. Though industry, including petrochemical refineries and semiconductor foundries, was responsible for the largest demands on the country’s energy resources, Taiwan’s subtropical climate and high level of development drove significant peak electricity demand. Air conditioning, in particular, spiked with midday heat.

Despite high levels of development, Taiwan’s energy supply was problematic—environmentally, politically, and economically. As an island nation with limited access to indigenous sources of fuel, Taiwan had to import 98% of its oil, gas, and coal, the lattermost of these representing a plurality of total fuel stock input for electricity generation (MOEABOE, 2019a). Coal, together with on-shore wind and nuclear fission, made up the majority of electricity supply, while solar and natural gas provided additional supply at peak hours.

Electricity generated from coal firing and nuclear fission were both major issues in Taiwan’s political debate. In a 2011 report that followed shortly after the incident at the Fukushima Daiichi nuclear reactor in Japan, the Natural Resources Defense Council listed all of Taiwan’s nuclear reactors among the 12 facilities worldwide at highest risk from seismic activity (Cochran & McKinzie, 2011). Geographical proximity and cultural affinity between the two island nations made the incident in Fukushima an issue that resonated deeply in Taiwan. Mass protests against nuclear power intensified after the incident, involving hundreds of thousands at the movement’s peak in 2014 (“DW,” 2014). However, as nuclear represented approximately 9% of Taiwan’s year-round energy supply, doing away with it was a challenging proposition. Even without regard for the political landscape, Taiwan’s nuclear facilities, commissioned in the late 1970s and early 1980s, were facing end-of-life (MOEABOE, 2019b). Ensuring a stable electricity supply without this capacity remained a significant challenge.

With less nuclear power available to meet demand, and limited ability to rapidly scale renewable and natural gas sources to replace it, the only viable option to increase supply in the wake of the backlash against nuclear energy was to scale up the burning of coal. In a country that already faced high levels of air pollution from a mixture of sources—transportation, agricultural and industrial production, and electricity generation, as well as exogenous sources from neighboring states—this solution was also unpopular and particularly harmful in the scope of the country’s nascent climate action goals.

In addition to their own experiences, this fraught situation led to Tammy and Corey’s decision first to focus their business on energy saving and efficiency. Not only would short-term reductions in electricity usage reduce household and small business carbon emissions—emissions that would remain in the atmosphere for decades—but these actions would help enable systems change by alleviating some of the pressure on the nation’s precarious energy supply.

Municipal Government’s Role in Energy Saving

At the national level, the Bureau of Energy set policy for the regulation of energy, including electricity, and worked with the Taiwan Power Company (Taipower) and other stakeholders to advance public policy goals. However, the Bureau determined that the majority of their initiatives aimed at small businesses and households could best be managed by setting general policy aims and allowing the delivery to be planned and executed by cities and counties (the highest level of administrative division in Taiwan). Delegating to lower levels of government not only helped to ensure that solutions would be context-specific, but also allowed the Bureau of Energy to use Taiwan’s 22 municipalities as laboratories for innovation. Each year, the Bureau gathered together the relevant authorities in each municipality so that each might exhibit their initiatives and share the outcomes they had generated.

Energy Prices and Energy Poverty

Each country defines energy poverty in a way that makes sense for its national context. In developing nations, it is often defined by a lack of physical access to electricity. In this context, alleviating energy poverty is achieved through electrification projects. In developed nations, energy poverty may be defined by its financial burden. The example that Taiwan used, borrowed from the United Kingdom, defined it as a share of monthly household expenses in excess of 10% (Boardman, 1991).

Taiwan’s electricity generation, distribution, and retail were all controlled by a single, state-owned monopoly. As such, Taipower was constrained in its ability to raise electricity prices (pricing levers are often cited for their ability to incentivize or penalize users to align individual behavior with societal goals) due to perceived political risk. The political risk of increasing electricity tariffs stemmed, in part, from the impact on vulnerable families. A later report issued in 2018 by the Risk Society and Policy Research Center at National Taiwan University revealed that electricity prices would rise by nearly 30% (RSPRC, 2018).

Taipei City Takes Action on Energy Poverty

Between the city’s mandate to design and execute energy-saving programs and the realization of the potential expansion of energy poverty, Taipei City’s Environmental Protection Department began looking for a way to tackle both issues with a single solution.

First, the Taipei City Government set out to understand more about energy poverty in the city. They found that a significant portion of these households were still using fluorescent lighting. By upgrading to LED, residents would be able to start saving energy—and money—each time they turned on a light. But if this was true, why had these families not chosen to make these upgrades on their own?

As LEDs have a higher upfront cost than fluorescents, it follows that, when comparing two functionally similar products on the store shelf, a majority of consumers will choose the option that appears less expensive. Consumers may feel uncertain about the savings, which occur over time, or be unable to afford the additional upfront cost. In addition, adopting new technology often requires gaining some understanding of what has changed. For example, a long-standing marketing practice was to use a device’s watt-power as a proxy for brightness. When the technology changed, this widely understood convention became irrelevant. Another confusing aspect for people purchasing LEDs is the question of whether changing the tube also requires changing the fixture that powers it. Doing so requires an electrician but can help extend the lifespan of each tube.

With a direction set to address energy poverty through lighting replacement, Taipei City officials began reaching out to the leading manufacturers of LED lighting to provide the inventory and to arrange the installation services. Despite the relatively easy public relations opportunity, and even though the city was willing to pay for the equipment, all of the manufacturers declined to participate in the city’s project. However, one of these manufacturers recommended DOMI, a social enterprise operating in the space.

DOMI’s Work: The First Year

DOMI set to work putting together the pieces to provide 1,500 families with free LEDs. They began by reaching out to families that could use the support, surveying homes to model what was needed, purchasing inventory, and working with contract electricians to complete the on-site work.

That Chinese New Year, DOMI received thank-you letters from some of the families. Better yet, in the letters, beneficiaries told of all of the ways that their lives had improved, now that their homes were properly lit. The unexpected nature of these stories was the clearest sign that DOMI’s engagement strategy was making a real difference in people’s lives.

After the First Year: Potential New Partners

At the end of the first year, Tammy had gone to exhibit the results of the project on behalf of Taipei City in front of representatives from Taiwan’s other 21 cities and counties. Many of the other cities were impressed, though not all had the social welfare budgets to devote to such a project.

Positioned as a social enterprise, Tammy found that DOMI was in a unique position, able to bring together multiple stakeholders to co-create positive impact. After that conference, she found herself with an increasing number of inquiries from city governments, from non-governmental organizations, and from private corporations, about how they could come together to help alleviate energy poverty in Taiwan and enlist everyone—even families living with poverty—in collective action against climate change. The question would be, how to turn interest into action; to demonstrate value to these various stakeholders in order to build the partnerships necessary to deliver results.

Discussion Questions
  • What is the efficiency of DOMI’s Energy Poverty Project, in terms of costs and benefits, per household? (You may refer to data provided in the appendices.)
  • What is the efficiency of this intervention if environmental impact is taken into account?
  • Regarding social impact, specifically:
    • What kind of social impact is created through an intervention such as this one?
    • How would you measure the social value that is generated through this intervention? (Please refer to the data provided in Appendix 3.)
  • In general, what are the benefits of measuring different kinds of value, beyond financial ones?
  • For DOMI, this project’s impact, in terms of social value, was partly unexpected. Now that this is better understood, should DOMI continue to closely monitor the social performance of future iterations of this project? What are the pros and cons of doing so?
Acknowledgment

The authors thank Alfred Tu (PwC Taiwan) and Chiayuan Wu (Chairman of Social Impact Institute in Taiwan) for their advice regarding the SROI methodology.

Further Reading
Anti-nuclear protests in Taiwan draw tens of thousands. (2014). DW.de. https://p.dw.com/p/1BMAw
References
Boardman, B. (1991). Fuel poverty: From cold homes to affordable warmth. Belhaven Press.
Cochran, T. B. , & McKinzie, M. G. (2011). Global implications of the Fukushima disaster for nuclear power. Paper presented at World Federation of Scientists’ International Seminars on Planetary Emergencies. https://web.archive.org/web/20120726084146/http://docs.nrdc.org/nuclear/files/nuc_11102801a.pdf
Ministry of Economic Affairs Bureau of Energy. (2019a). 經濟部能源局(2019),能源統計月報,2019年8月15日更新,貳、能源供需概況分析。. (In Chinese). https://www.moeaboe.gov.tw/ECW/populace/web_book/wHandWebReports_File.ashx?type=office&book_code=M_CH&chapter_code=C&report_code=01
Ministry of Economic Affairs Bureau of Energy. (2019b). 經濟部能源局(2019),107年全國電力資源供需報告,pp.13–14. (In Chinese). https://www.moeaboe.gov.tw/ECW/populace/content/wHandMenuFile.ashx?menu_id=6985&file_id=5340
Risk Society and Policy Research Center, National Taiwan University. (2018). 趙家緯(2018),邁向轉型時代-破除「以煤易核」、「犧牲生態」與「成本昂貴」的三重迷思. (In Chinese). http://rsprc.ntu.edu.tw/zh-tw/m01-3/883

This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2021 SAGE Publications, Ltd. All Rights Reserved

You are not authorized to view Teaching Notes. Please contact your librarian for access or sign in to your existing instructor profile.
Resources
Appendix 1: Project Costs

Price to sponsor per household served

NTD 10,000

Labor cost share

25%

Materials cost share

40%

Overhead cost share

35%

Appendix 2: Tangible Benefits

Average number of lights

8

Lighting hours per month before intervention

240

Lighting hours per month following intervention

300

Average watts per hour per light prior to intervention

27.4

Average watts per hour per light following intervention

11.7

Average cost of electricity per kWh

NTD 3.1

Kg CO2e coefficient per kWh

0.55

Reference carbon price per metric ton (ADB, 2016)

NTD 1,116

Appendix 3: DOMI Energy Poverty Project Video

In this video, DOMI’s founders, partners, and beneficiaries explain the project and some of its unexpected social outcomes. Click below to watch the video with students.

Video 1. DOMI Energy & Poverty Stoplight

Appendix 4: Tables
Table 1. Household Cleanliness

Average housekeeping hours per week prior to intervention 1

3

Percent decrease in time required to clean house

10

Average housekeeping years

10

Table 2. Elder Care

Average number of elderly household members

0.5

Average caretaking hours per week prior to intervention 1

7

Average caretaking years

5

Percent decrease in time required to deliver care

12

Percent improvement attributed to external caretakers 3

20

Table 3. Children Doing Homework at Home

Average number of children per household

1

Average hours of homework per child per week prior to intervention 1

5

Average number of homework years

5

Percent increase of homework hours following intervention (Year 1)

50

Percent increase of homework hours following intervention (after Year 1) 2

10

School weeks in the year

40

Hourly cost of a desk in a study space

NTD 35

Notes

1. Deadweight: What would have happened without the intervention?

2. Dropoff: Does the outcome drop off in future years following the intervention?

3. Attribution: What percentage of the improvement can be attributed to factors beyond DOMI’s intervention?

locked icon

Sign in to access this content

Get a 30 day FREE TRIAL

  • Watch videos from a variety of sources bringing classroom topics to life
  • Read modern, diverse business cases
  • Explore hundreds of books and reference titles