Finance & Sustainability

Group No.-7
Exponential growth is UNSUSTAINABLE
The global economy now uses up 1.5
times the earths capacity to regenerate
the natural capital upon which the system
and life depends.
- The Global Footprint Network
Why we need Sustainable growth
FACT
If everyone were to live like
Americans we would need 5 Earths

financial institutions
sustainability
Managing
environmental and
social risks
Identifying and taking
advantage of
environmental business
opportunities
Effectively managing environmental and social opportunities and risks
financial institutions create long-term value for their business.
Business models that address these two
dimensions
1) help financial institutions
2) differentiate themselves from competitors,
3) attract new capital,
4) generate goodwill and support from
stakeholders through increased transparency.

0 10 20 30 40 50 60 70 80
Reduction in risk
Improvrd access to international capital
Improved brand value and reputation
Developed new business
Improved community relation
Expanded market share through new business lines:

Innovative product/first mover advantage (greater margins, less competition)
Sell on value to customer, not pricing .
Monetize existing client base, attract quality new clients .
New marketing channels through vendor partnerships.
Reduced risk profile of portfolio:

Lower credit risk .
Mitigation of environmental risks .
Lower liability risk .
Client cost savings from efficiency gains (such as energy) as part of cash-flow.
Reputation:

Reduce reputational risks
Positive image and market differentiation
Enhanced brand value

Improved access to international financing:

International financial organizations increasingly provide financial resources
to financial institutions for targeted lending/investing in energy efficiency
and renewable energy projects


Enviromental
Business Opportunity
By Industry sector
Energy
Efficiency
Renewable
Energy
Cleaner
Production
Sustainable
Supply Chain
Carbon
Finance
Agri Business
& Food Production
Infrastructure
Retail & Services
General
Manufacturing
Oil and Gas
Mining
Forestry
Power
Chemicals
Financing for renewable energy projects
Increase provision of electricity generation from natural sources
Many countries have established subsidies or market mechanisms .
to support renewable energy investments
direct grants,
generation quotas,
feed-in tariffs,
emissions trading or state concessions.
Renewable energy financing
Microfinance for Renewable Energy in Bangladesh

ArmeriaBank Profits Off Small Hydro Loans

Ceska Sporitelna Bank Finances Wind Power in Bohemia

Microfinancing Solar Panels in Jordan

Kenyan Geothermal Project Financing Reduces CO2

ScotiaBank Group Finances Wind Farms

Bank of America


Funding for companies that produce energy efficiency equipment .
Solar water heaters .
Provide energy efficiency services (ESCOs).
Large portion of housing renovations.




Energy Efficiency Financing

Financing for renewable energy projects
Financial product offered for financing energy efficiency projects.

Energy efficiency project aims at
Reducing energy consumption for the same level of production or services.
increasing productivity and creating more products/services output with
the same level of energy consumption.

YES Bank Finances Sustainable Energy in India
Industrial Bank Extends Cleaner Production Financing in SMEs in China
Bank of the Philippine Islands (BPI) Finances Energy Efficiency Projects
ANZ Offers Loans for energy efficient households
Tatfondbank Launches Energy Efficiency Financing
OTP Bank Profits on Energy Efficiency Projects
Turkish Leasing Company Enters Energy Efficiency Financing
Axxess Capital invests in Energy Efficiency


large pipeline of energy
efficiency projects
awaiting financing
unsure as to how to
evaluate the risks
associated with them
Energy Efficiency Financing-Dillema
It is capital investment in technology to cut manufacturing costs, by reducing consumption of resources
such as energy, water or raw materials and by reducing waste.

Cleaner Production initiatives increase profitability by reducing both direct input costs and clean-up expenses.

Compared to the conventional "end-of-pipe" approach to pollution-abatement investments which increase
both capital and running costs, cleaner production initiatives yield payback of 3 to 24 months usually because
process re-engineering cuts ongoing operating costs as well as pollution.

Cleaner production also has the potential to improve quality, resulting in higher value-added products and
improved competitiveness.
What is Cleaner Production Financing?
What is sustainable supply chain finance?


It is capital investments by growers to improve farming techniques and raise the quality
of their produce to meet the growing demand for organic, certified and sustainably-produced goods
in global markets.

Local financial institutions can partner with global buyers to provide access to finance at competitive terms
and tenors for micro- and small and medium enterprises (MSMEs) that lack the necessary finance
and technical skills to improve environmental and social management and operating performance.


The Role of Financial Institutions


Many suppliers, especially micro, small and medium size enterprises, rely on traders that make funding available
to support short-term and pre-export cash flow needs as they do not have access to the formal financial sector.
Re-shaping the financing flows in supply chains by involving financial institutions and allow them
to play a more significant role would have a huge development impact at the level of the micro, small and medium
Size producers.
What is Carbon Finance?

Common Carbon Finance project types include cleaner production projects and projects that increase
energy efficiency or generate power from renewable resources. FIs could participate actively in carbon markets in various ways:



Offering advisory services to clients entering or active in carbon markets, including marketing,
structuring, transacting, and sales of carbon (i.e., over-the-counter and auctioning),



Offering targeted financing to companies with GHG emission reductions projects and programs
that generate a stream of carbon finance income,



Selling emission reductions in the carbon market which they aggregate and purchase
from portfolios of clients with smaller-scale GHG emission reductions projects,



Making equity investments in companies that originate and transact GHG emission reduction projects
and programs that earn carbon finance payments, and



Receiving emission reductions in addition to interest payments as part of upside-sharing agreed
with clients that generate carbon credits.

Westpac & AGL Partner on Carbon Trading

Westpac announced another first for the bank and for Australia recently, by taking part in a carbon trade with energy company AGL.

The trade is the first to be conducted under the forthcoming Australian Emissions Trading Scheme (AETS), which for the first time
establishes a price for carbon allowances to be traded.

Under the deal, Westpac purchased 10,000 tonnes of Carbon Dioxide equivalent (CO2-e) from AGL for delivery in February 2012
at a price of $19 per ton. At the end of a year, companies that have generated more emissions than their permits allow will have
to enter the market and buy additional permits to match their emissions, or face stiff financial penalties. Companies which have
generated fewer emissions can sell their remaining permits to generate additional revenue.
Caisse des Dpts and Fortis Bank Pioneer European Carbon Fund
JPMorgan Chase Subsidizes Stoves in Africa to Earn Carbon Credits

Ita Unibanco Launches Carbon Investment Funds

Environmental business opportunities
IFC is providing FI clients advisory support to build a profitable Sustainable Energy Finance business
(financing energy efficient systems (EE), renewable energy (RE) and cleaner production (CP) technologies.)



IFC can help with the following:



Market analysis and product development
Training for loan officers, credit risk managers, marketing personnel
Tools and resources to add value with low transaction cost
Work with contractors/energy service companies /vendors



IFC offers financial products tailored to the needs of diverse markets including:



Credit lines and senior loans
Risk sharing products and guarantees
Trade guarantees
Mezzanine financing and subordinated debt
Risk capital

FT/IFC Sustainable Finance Awards

Each year, the Financial Times and IFC sponsor the FT/IFC Sustainable
Finance Awards.

The awards recognize banks and other financial institutions that have shown
leadership and innovation in integrating social, environmental and
corporate governance considerations into their operations.

Sustainable Bank of the Year.

The Sustainable Bank of the Year award recognizes the bank

that has shown excellence in creating environmental, social and financial value across its operations.

In this category, which is open to banking institutions in both developed and emerging economies,

there is one overall winner and also prizes for regional leadership in Africa/Middle East; Asia Pacific;
Europe; and the Americas.

There will also be a prize for Global Sustainable Bank of the Year, for institutions active in three regions
or more.
Sustainable Asset Manager of the Year.
Sustainable Asset Owner of the Year
Involvement of Sustainability in Project Life Cycle
(Infrastructure)
Time Line
Site
Allocation
Site
Acquisition
Concept
Master-
Planning
Planning Tender Construction
Process Inputs:
Deliverables:
The Project Life Cycle
The Time Line is not evenly spread between these different stages of a
Projects development
Site
Allocation
Site
Acquisition
Concept
Master-
Planning
Planning Tender Construction
Early stage project development and planning can take years for a complex
project
The Project Life Cycle









Concept
Master-
Planning
Planning Tender Construction
Design Policy & Objectives
Sustainability Appraisal
Strategic Environmental Assessment
Early Stage Consultation
Site
Allocation
Site
Acquisition
The Project Life Cycle









Tender Construction
Concept Designs
Waste Management/Energy/ Resource Appraisal
EIA Scoping Study
EIA/ES/Social Impact
Site
Allocation
Site
Acquisition
Concept
Master-
Planning
Planning
The Project Life Cycle









Concept
Master-
Planning
Tender Construction
Planning Application
Planning Inquiry/ Support
Construction Phase:
Environmental Management
Site
Allocation
Site
Acquisition
Planning
The Project Life Cycle









Concept
Master-
Planning
Planning
Construction Phase:
Monitoring, Reporting, Environmental
Management, Public consultation
Operation Phase:
Environmental Management, ongoing community
engagement, through to de-commissioning
Site
Allocation
Site
Acquisition
Tender Construction
Thank You