Founder of bottled water company honoured for work in Third World

The founder of Belu Water, a bottled water company that donates all of its profits to global clean water projects, has won The Independent's Social Entrepreneur of the Year award.

Reed Paget, a former documentary film maker, who launched the company in 2002 with the aim of changing the practices of the bottled drinks industry, was honoured at a ceremony at the British Museum in central London last night.

Belu Water faced stiff competition from six finalists including the Eden Project and MEND, an obesity treatment programme, but Belu was chosen for its "exemplary efforts" to make the bottled drinks industry more environmentally sustainable.

The company uses carbon-neutral packaging in the form of a compostable bottle made from corn, and Mr Paget said Belu is now "a major catalyst for change", as it is inspiring other retailers to consider using similar packaging. Belu is the first carbon-neutral product being stocked at Tesco. The bottles look like ordinary bottles and can be recycled with plastics or commercially composted back to soil in just eight weeks.

Among its clean water projects, Belu has installed hand pumps and wells for 20,000 people in India and Mali, and it is also working on a rubbish muncher to clean up the Thames. The company has a pledge that each bottle of mineral water sold will translate as clean water for one person for one month. As Belu develops and generates higher profits this year, it aims to help many more people around the world. Its message of sustainability reaches more than 500,000 consumers every month. As a campaigner for social change, Belu has shown itself an effective medium for engaging the public in a wide range of environmental issues. Although the company is small, it is growing rapidly. Its model and eco-friendly bottle technology are highly replicable – one of the key criteria for the judging panel.

Accepting his award, Mr Paget said: "It is time that the social entrepreneurship society was no longer on the sidelines."

John Bird, the founder of The Big Issue, who presented the award, said: "These people have gone to the edge and created something that is a social echo. What is so important is that they are based on individuals who have taken risks."

Mr Paget, who produced and directed the award-winning documentary film Amerikan Passport about US foreign policy and the end of the Cold War, founded Belu after hearing a speech by former US President Bill Clinton in which he said that 25 per cent of the planet does not have access to clean water. He launched the company with funding from wealthy benefactors.

The Independent's competition was run in partnership with the Schwab Foundation for Social Entrepreneurship, which operates a similar contest in 40 countries around the world, and business consulting firm the Boston Consulting Group (BCG). Pamela Hartigan, a member of the selection panel and the managing director of the Schwab Foundation, said the standard was so high that this was "one of the most challenging national competitions" the organisation has run.

"All the finalists in the UK are making highly innovative, revolutionary efforts that are acting as a catalyst to change society," she said. "Their approaches have huge implications for our world."

Mr Paget has been invited to Zurich to meet the community of 120 social entrepreneurship winners, who will meet before the World Economic forum at Davos next week. Among the other finalists were Eric Samuel, a lay preacher and founder of the Community Food Enterprise, which provides fruit and vegetables to economically deprived areas in east London, and Amit Chugh and Matthew Scott, of Cosmos-Ignite Innovations, which addresses the challenges of kerosene replacement through a for-profit, sustainable social venture. Its mission is to provide a cheaper alternative for the 1.6 billion people without electricity who are dependent on kerosene.

Tim Smit, of Cornwall's Eden Project, was the best known of the finalists. The Eden Project showcases more than a million plants in its futuristic biomes and all money raised from the educational charity goes towards work on education, research and conservation.

Jonathan Robinson, of The Hub, a members club for social innovators which aims to provide a space for members to come up with ideas that will change society, and Harry MacMillan, Paul Sacher & Ulla Stauch, of MEND Central, which is tackling the UK's growing obesity epidemic, were also in the final.

Alastair Flanagan, a panel member and senior partner at BCG, said: "These social entrepreneurs are all extraordinary people. They show tremendous passion and commitment to their ventures and the social change they are driving."

The Schwab Foundation for Social Entrepreneurship was started by Klaus Schwab, founder of the World Economic Forum, and his wife, Hilde. Since its inception in 2000, the foundation has been searching for the world's leading social entrepreneurs, those who implement innovative and pragmatic solutions to social problems by tackling the root causes and thereby creating a social transformation.