Date: January 14, 2025
Authors: Chen Taotao, Feng Jian, Song Qing, Rong Yu, Qiao Ziyi, Gong Xinyu, Fan Jiwei
This case focuses on the poverty alleviation project designed and implemented by State Grid Brazil Holding Ltd. (hereinafter referred to as SGBH) for the Maiadina Community along the route of Brazil's ultra-high voltage (UHV) transmission line during the line's construction. In strict compliance with local laws on corporate environmental liability, SGBH noticed the poverty challenges faced by the community, took the initiative to communicate with it, and designed and implemented a targeted poverty alleviation project centered on a juice factory based on local realities. In the Brazilian market, SGBH actively sought poverty alleviation partners and collaborated with multiple stakeholders including the government, banks and third-party enterprises, jointly driving the poverty alleviation process of the Maiadina Community, making important contributions to the community's sustainable development, and emerging as an outstanding example of Chinese enterprises' overseas poverty alleviation efforts.
This paper first outlines the basic situation of SGBH, then elaborates and analyzes the specific content of the case in two sections—Analysis of Poverty Scenarios and Causes and Analysis of Poverty Alleviation Solutions and Implementation—applying the 5W1H+ Poverty Alleviation Toolkit as the analytical framework. Finally, it summarizes the outcomes and experiences of the poverty alleviation project to extract replicable poverty alleviation strategies.
I. Profile of State Grid Brazil Holding Ltd.
State Grid Brazil Holding Ltd. is a wholly-owned subsidiary of State Grid International Development Co., Ltd. in Brazil, with its headquarters in Rio de Janeiro, Brazil. In May 2010, State Grid Corporation of China signed an equity purchase agreement with three Spanish companies, successfully acquiring seven Brazilian transmission concession companies and embarking on its development journey in Brazil. At the end of the same year, SGBH was established, officially entering the Brazilian power market. Since its founding, SGBH has continuously expanded its asset scale and improved its efficiency. It won the bids for the Belo Monte Hydropower ±800kV UHVDC Transmission Phase I, Phase II and Phase III projects—milestone projects in the development of Brazil's power industry—in 2014, 2015 and 2023 respectively. Its transmission assets cover 14 Brazilian states, making it an important part of Brazil's backbone power transmission network.
II. SGBH Case: A Juice Factory Transforms Livelihoods
(I) Analysis of Poverty Scenarios and Causes
In compliance with local institutional requirements in Brazil, SGBH identified the poverty situation in the Maiadina Community during the implementation of its engineering projects. Through in-depth communication and research in the community, the company thoroughly analyzed the root causes of poverty there, laying a solid foundation for designing and implementing targeted poverty alleviation projects.
1. Identification of Poverty
SGBH discovered the poverty issue in the Maiadina Community during the Belo Monte Phase II Project while fulfilling the environmental survey and certification procedures stipulated by Brazilian law.
At the institutional level, Brazil's legal system mandates that all UHV transmission projects undergo a series of rigorous environmental impact assessment (EIA) procedures and that environmental compensation plans be formulated for communities affected by the projects. A construction permit can only be obtained after the plan is approved by the Brazilian Ministry of the Environment. Therefore, after successfully winning the independent bid for the Phase II Project in 2015, SGBH's Health, Safety and Environment (HSE) Department promptly commissioned a local environmental assessment enterprise to conduct a detailed survey and EIA of the transmission line. In this process, the Maiadina Community, along the route of the Belo Monte transmission line, was quickly identified as a recipient of legal environmental compensation, and its poverty issue immediately attracted attention and analysis.
2. Basic Conditions of the Maiadina Community
Located in northern Brazil, the Maiadina Community has 72 households with a total of 480 residents. Restricted by historical and geographical conditions, the community has long faced a severe shortage of water resources and relied on backward and low-efficiency livelihood methods. Residents have been trapped in poverty in various aspects including the economy and healthcare, which has seriously affected their quality of life and development potential.
3. Analysis of Poverty Causes
Through an integrated analysis of key scenario factors such as the people, location and time related to poverty in the Maiadina Community, the causes of poverty can be categorized into two types: general causes (common poverty factors shared with other poverty-stricken areas) and specific causes (unique factors exclusive to the Maiadina Community).
(1) General Cause: Remote location and historical exclusion from national development processes
The Maiadina Community is situated in the remote inland of northern Brazil and is inhabited by descendants of former slaves who fled from southern plantations. Due to its remote location, hot climate and extremely poor transportation, the community has long been excluded from national development processes and remained in an undeveloped, primitive state.
(2) Specific Causes
① Primitive fruit picking and juicing methods leading to low production efficiency
Local residents face the livelihood challenge of lacking long-term and stable income sources, yet the region's unique climatic conditions—abundant sunlight, humid and rainy weather, year-round high temperatures and significant day-night temperature differences—provide an ideal environment for the growth of more than 10 types of fruit trees such as cherries, mangoes, pineapples and passion fruits, which is conducive to sugar accumulation. Therefore, their main economic activity relies on the direct utilization of natural resources, namely picking the region's abundant fruits for juicing and sales.
However, from an economic efficiency perspective, the local fruit juice processing methods have obvious drawbacks. First, the traditional juicing method—spreading tarpaulins on the ground, beating fruits with wooden mallets, and collecting the juice in plastic barrels—not only limits production scale but also causes severe resource waste. Second, small and scattered production, with each household producing and selling independently, leads to cut-throat competition among residents, resulting in chaotic local market prices. This fails to leverage the region's potential economies of scale, hinders the formulation of a unified market strategy and brand image, and makes it difficult to safeguard the collective interests of the community. As a result, the community's original production methods only suffice to sustain residents' basic living and are far from supporting the community's further development.
② Lack of basic sanitation infrastructure and access to clean drinking water
Poor water quality and sanitation not only seriously affect the quality of life of local residents but also become a key factor restricting the development of the local fruit juice industry. The community lacks basic drinking water facilities, and residents generally use simple filtration and sedimentation methods to treat rainwater and river water. This inefficient water treatment method significantly increases the risk of disease transmission, especially during the rainy season. Sanitation issues related to water resources not only impact residents' health but also negatively affect the hygiene standards of the fruit juice industry, posing potential food safety risks and limiting the industry's further development. Therefore, improving water quality and sanitation has become an urgent need to enhance the community's quality of life and upgrade the fruit juice industry.
In summary, in compliance with Brazilian institutional requirements, SGBH identified the poverty situation in the Maiadina Community and, through in-depth communication with the community, analyzed the fundamental causes of poverty such as primitive and low-efficiency production methods and poor sanitation. On this basis, the company jointly formulated a targeted environmental compensation plan with the community—the juice factory project—aimed at alleviating poverty in the Maiadina Community and boosting its economic growth.
(II) Analysis of Poverty Alleviation Solutions and Implementation
After accurately identifying the poverty situation and causes in the Maiadina Community, SGBH took the lead in taking action as the core implementer: its internal specialized department collaborated with local environmental assessment companies to formulate compensation plans; the company secured financing from policy banks and partnered with third-party suppliers, leveraging local market resources in Brazil and uniting multiple stakeholders to ensure the smooth implementation of the community's juice factory poverty alleviation project.
1. Responding to the Government's Policy Framework, Establishing a Specialized Department and Fulfilling Environmental Obligations
At the institutional level, the Brazilian government has a series of clear regulations on the environmental liability of UHV transmission line construction projects. Before a project is launched, the winning bidder must undergo a series of rigorous environmental review and certification procedures, invest a significant amount of time and resources in in-depth environmental surveys, and ensure a comprehensive assessment of all potential environmental impacts of the project. This assessment process is extremely detailed, covering more than 20,000 specific inspection items, aiming to select the transmission line route with the minimal environmental impact and implement necessary measures to mitigate potential environmental impacts of the project. In addition, the winning bidder must formulate environmental compensation plans for communities affected by the project and submit them to the Brazilian Ministry of the Environment for approval. A project can only be officially launched after obtaining a permit from the Ministry, and regular reports must be submitted to maintain the validity of the permit.
To meet the requirements of environmental licensing, SGBH established an internal Health, Safety and Environment (HSE) Department with a professional team that conducted in-depth analysis of the environment and population structure. These studies not only helped the company identify areas with inadequate infrastructure but also provided a basis for accurately targeting investment directions. To ensure the project truly responds to the community's needs, the company also actively interviewed key figures such as the mayor, thus ensuring the project's implementation is more in line with the community's actual situation and demands.
2. Hiring Local Environmental Consulting Firms to Formulate Compensation Plans
In addition to its internal specialized team, SGBH also engaged local environmental consulting firms to provide professional environmental services for the project, including compiling environmental research reports and environmental protection measures plans, and supervising their implementation.
Under Brazil's legal framework, the establishment of a mandatory EIA and compensation mechanism has spawned specific market demand, thus fostering a group of local Brazilian "environmental consulting firms". These professional institutions are committed to providing environmental compliance assessment services and formulating social responsibility project plans for enterprises before the launch of their construction projects. They assist commissioned companies in conducting in-depth consultations through public hearings and ultimately submit the plans to government environmental protection departments for approval.
In this case, these professional environmental consulting firms revealed the severe poverty situation in the Maiadina Community through detailed line surveys and in-depth research, and established contact with community residents. During the communication phase before the project launch, residents expressed a strong desire to build a juice factory. Based on this demand, the environmental consulting firms compiled research reports, assisted SGBH in holding multiple public hearings, and jointly designed a comprehensive environmental compensation plan centered on the juice factory project. At the hearings, SGBH conducted a detailed evaluation of each proposal, which not only responded positively to the community's needs but also ensured the project's consistency with the company's values and long-term strategic goals. Through a strict screening process, the company ensured that the invested funds could effectively enhance the community's value and interests. After in-depth consultations with community residents and rigorous demonstration through multiple rounds of public hearings, the specific content and feasibility of the compensation plan were fully guaranteed and ultimately successfully submitted to the Brazilian Ministry of the Environment for approval.
3. Actively Seeking Support from Policy Banks to Achieve Project Financing
After the formulation of the compensation plan and before the project construction launch, SGBH actively seized policy opportunities and applied for financial assistance from the National Bank for Economic and Social Development (BNDES) of Brazil.
As a policy bank, BNDES provides systematic financing support for enterprises in the construction of such environmental projects. In the project loan provided to SGBH, BNDES specifically stipulated that a portion of the loan must be exclusively used for social responsibility projects. This conditional loan not only effectively supervises and guides the flow of corporate funds but also provides the necessary financial support for enterprises to fulfill their social responsibilities, ensuring that enterprises can promote social and environmental development while pursuing economic benefits.
4. Conducting Market-Oriented Bidding for Third-Party Suppliers for Project Construction
In the implementation phase of the juice factory poverty alleviation project, SGBH adopted a sound authorization mechanism, relied on the professional capabilities of local Brazilian engineers, and attracted third-party enterprises to undertake project construction through market-oriented bidding procedures.
In the Brazilian market, many qualified construction companies focus on their respective professional fields. However, as local enterprises have increasingly recognized the importance of social responsibility investment, they have begun to pay close attention to the relevant needs of large enterprises and gradually transformed into reliable partners for social responsibility construction. These supplier companies can provide key professional technical and resource support for enterprises. By cooperating with these suppliers, enterprises can efficiently utilize resources, focus on their core businesses, ensure the efficient and high-quality completion of social responsibility projects, and improve project implementation efficiency and long-term sustainability.
In this case, after the plan was finalized, SGBH selected the most suitable EPC (Engineering, Procurement and Construction) supplier through standardized bidding procedures for the construction of factory buildings and other infrastructure, ensuring the professionalism and efficiency of the project. This cooperation model not only supplemented SGBH's professional technical needs but also constituted an important part of its localization strategy, helping to bridge cultural differences and promote effective communication with community residents.
In terms of specific project details, SGBH provided the entire industrial chain support through EPC suppliers:
① Infrastructure: Addressing the community's lack of clean drinking water resources, 170,000 Brazilian Reals were invested in drilling two wells to provide infrastructure support for the development of the fruit juice industry.
② Factory Construction and Equipment Purchase: 470,000 Brazilian Reals were invested in purchasing machinery and equipment and building a modern juice processing factory.
③ Full-process Production and Operation: Training was provided for workers and managers covering all links of fruit juice production, including operation, packaging, storage and transportation. For example, the company hired food engineering experts to teach local residents fruit preservation and processing technologies, enhancing the market competitiveness of products.
④ Marketing: Supported the juice factory's external communication and sales, and provided guidance on its brand building and marketing management. At present, the Brazilian National Supply Company has signed a contract with the factory, making its fruit juice available for primary school students in public schools as a snack. In addition, the factory has also signed supply contracts with a number of hotels and private institutions.
In summary, SGBH completed the entire construction of the juice factory project by relying on local Brazilian third-party companies. This way of fulfilling social responsibilities not only tapped the potential of the local fruit industry but also enhanced the residents' ability to drive local economic development.
5. Multi-stakeholder Supervision and Project Sustainable Development
After the completion of project construction, the Brazilian Ministry of the Environment and the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) ensure the continuous progress of social responsibility projects through the annual review of the "environmental permit". SGBH is required to submit a detailed annual report explaining how it follows a clear social responsibility path in project operation and adopts various measures to mitigate environmental impacts. These reports are not only a reflection of the company's commitment to environmental responsibility but also a necessary condition for maintaining the validity of the permit, ensuring the sustainable implementation of the project. BNDES also clearly stipulates in the project loans issued to enterprises that a portion of the loans must be used for social responsibility projects, and as a fund provider, it supervises the flow of corporate funds.
In summary, the juice factory poverty alleviation project is the result of the collaborative efforts of multiple subjects and institutions. As the core leading subject in the project, SGBH acts as both a resource integrator and an action coordinator, effectively utilizing various resources in the Brazilian market and uniting all sectors of society to ensure the successful implementation of the juice factory project. At the same time, Brazilian government agencies such as the Ministry of the Environment have provided a solid institutional guarantee for the sustainability of the poverty alleviation project through supervision and other means.
(III) Project Outcomes: Win-Win Economic and Social Benefits
Economically, the project has led to a leap in production efficiency and a substantial increase in residents' income. By introducing modern juicing technologies and production lines, the project has greatly improved production efficiency and output. Large-scale production has also helped stabilize market prices, leverage the economies of scale of regional resources, and enhance the community's market competitiveness. As a result, community residents can better utilize natural resources and achieve stable income growth. In 2023, the average annual income of workers in the fruit processing factory reached approximately 8,000 Brazilian Reals (equivalent to about 11,000 Chinese Yuan).
Socially, the project has improved residents' quality of life and enhanced community cohesion. The construction of the juice factory has created more employment opportunities for community residents, helping them break free from the predicament of lacking long-term and stable income sources; the project has also invested in basic sanitation infrastructure, ensuring the supply of clean drinking water, which has significantly improved residents' quality of life and health, and also provided a guarantee for raising the hygiene standards of the fruit juice industry; the juice factory has also promoted community-level cooperation, formed a unified market strategy and brand image, safeguarded the collective interests of the community, and enhanced community cohesion.
In summary, for the Maiadina Community, SGBH's poverty alleviation project has had a far-reaching impact. The successful establishment of the community's juice factory project has brought significant economic and social benefits to local residents. It has not only solved the problems of traditional production methods but also promoted the sustainable development of the community, demonstrating the great potential of poverty alleviation projects.
III. Experience Summary
Through an in-depth analysis of this case, we can extract the following valuable experiences:
First, Brazil's series of institutional frameworks have effectively guided enterprises to engage in social responsibility construction and pay attention to community poverty issues in practice. In Brazil's institutional design, not only institutions such as the Ministry of the Environment and IBAMA play a key supervisory and review role, but BNDES also provides the necessary financial support for poverty alleviation projects. In addition, thanks to the legal emphasis on corporate social responsibility construction, the Brazilian market has successfully fostered a poverty alleviation-focused market ecosystem, which has not only spawned the growth of a group of local environmental consulting firms but also connected previously isolated enterprises with local third-party suppliers, realizing a positive interaction between policies, the market and entities, thereby promoting the effective participation of local enterprises in poverty alleviation work.
Second, enterprises must deeply integrate into the local institutional environment, seek strong local partners, and adopt tailored measures based on local realities to achieve the best poverty alleviation results. The smooth progress of SGBH's juice factory project benefits from the multi-party cooperation of the government, banks, enterprises and other stakeholders. Establishing cooperative partnerships is crucial for resource integration and project success. In the formulation of the poverty alleviation plan, the project utilized the region's abundant fruit resources and planned the construction of the juice factory in a tailored manner. This indicates that when planning and implementing poverty alleviation projects, enterprises should always pay close attention to the specific needs of the target community and make adjustments based on local realities to ensure the pertinence and effectiveness of the project.
In conclusion, through the detailed analysis of the 5W1H+ Poverty Alleviation Toolkit, all dimensions of SGBH's juice factory project have become more clear and specific. The causes of community poverty targeted by the project and the roles of various participants in the implementation of poverty alleviation solutions have been clearly defined. Ultimately, the project has achieved remarkable results: it has not only brought substantive changes to the Maiadina Community but also become an outstanding case of Chinese enterprises carrying out poverty alleviation work on the international stage, and provided valuable experiences and references for enterprises' social responsibility practice worldwide.
