UNEP FI Latin American Task ForceSession 1

Início de tour du mondeSustainability & Finance

Christopher WellsChairman

Latin American Task ForceUNEP Financial Initiatives

UNEP FI Latin American Task ForceSession 1

Medio ambiente

¿Qué es un ambientalista?

UNEP FI Latin American Task ForceSession 1

Environmental Risk

Why are we more concerned now? Greater environmental damageGreater scientific knowledge and capacity to measureChanges in values regarding quality of life

UNEP FI Latin American Task ForceSession 1

Início de tour du monde

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Dos tipos de riesgo medioambiental:- Financiero- Image

Ubatuba, Brasil, marzo 2002

UNEP FI Latin American Task ForceSession 1

Qué es una externalidad?¿

UNEP FI Latin American Task ForceSession 1

Photos ExternalidadesClean beach

Some externalities

Historical sites

Clean water Clean air

Stable climate on planet

Clean beach

Some externalities

UNEP FI Latin American Task ForceSession 1

Photos ExternalidadesClean beach

Some externalities

Historical sites

Clean water Clean air

Clean beach

Externalities now have prices

$$$Stable climate on planet

UNEP FI Latin American Task ForceSession 1

These costs will riseCost of waterCost of treatment of waterCost of garbage disposalCost of cleaning up contaminated landCost of reducing air pollutionEnvironmental fines of any kindCost of indemnities to employees Number of indemnities to employees and clientsDamage caused by NGO campaign against your companyCost of emitting CO2 gas

UNEP FI Latin American Task ForceSession 1

Environmental risk

Have the externalities been priced in?Who imposes the price?…Formal regulators⌧Federal government ⌧Provincial governments

...Informal regulators⌧NGOs, community associations, labor unions, etc.⌧Press⌧Importers in Europe, North America, Brazil ⌧Competitors

UNEP FI Latin American Task ForceSession 1

Environmental risk

Who are more powerful….…Formal regulators?

...or...

...Informal regulators?

UNEP FI Latin American Task ForceSession 1

Environmental risk

Informal regulators ...Informal regulators are powerful⌧NGOs, labor unions, etc.⌧Press⌧Importers⌧Competitors

UNEP FI Latin American Task ForceSession 1

Início de tour du mondeRiesgos para institución financera

Riesgo de crédito: default

Colateral / Garantias: assets depreciados o zerados

Riesgo de reputación

Riesgo como acionista: depreciación de títulos de la empresa

UNEP FI Latin American Task ForceSession 1

Equator Principles: response by banks to NGOsLaunched June 2003 by ABN AMRO, Barclays, Citigroup, IFC

Any project with capital cost above US$ 50 millionmust follow guidelines of International Finance Corp. (IFC)27 banks have signed so far

HSBC, BBVA,Itaú, Banco do Brasil... Signatories accounted for +80% of PF in 2004

Equator Principles

UNEP FI Latin American Task ForceSession 1

Some of the IFC Safeguard Policies

Social PoliciesInvoluntary ResettlementIndigenous PeoplesCultural PropertyForced Labor and Harmful Child Labor

Environmental PoliciesNatural Habitats ForestryPest ManagementInternational WaterwaysSafety of Dams+ Specific Industry Guidelines

UNEP FI Latin American Task ForceSession 1

HistoryHistory repeats itself

South America: current situation similar to 1980’s in developed countries.⌧Beginning of serious accidents

• (Argentina: night club ; Paraguay: supermarket)⌧Beginning of high fines (US$ 17 million max, up from US$ 10 th)⌧Beginning of big “clean-ups”⌧More consolidated legal framework⌧Press, companies pay more attention to social & environmental issues.

Accelerating pace of changesGrowing awareness due to First World pressure and NGO’sInternet, TV accelerate changes

UNEP FI Latin American Task ForceSession 1

History

History repeats itself Big environmental firms have physical presence in the region⌧ERM, CSD Geoclock, Waterloo⌧PriceWaterhouseCoopers, Ernst & Young, (ex-Arthur Andersen)⌧ISO 14001 certifiers (Bureau Veritas, ABS, DNV, etc.)⌧Waste disposal / water companies (Suez, Lyonnaise, etc.)

Major NGOs also present in the region⌧Greenpeace, WWF, Friends of the Earth ⌧The Nature Conservancy, Conservation International

UNEP FI Latin American Task ForceSession 1

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Oportunidad:Botellas PET recicladas en fibra textil

UNEP FI Latin American Task ForceSession 1

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Oportunidad:Supermercado exclusivamente de productos organicos

Los Angeles, EUA

UNEP FI Latin American Task ForceSession 1

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Azúcar organico brasileñoNative certificado

UNEP FI Latin American Task ForceSession 1

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Papel reciclado para imprimir periodicos

UNEP FI Latin American Task ForceSession 1

Início de tour du mondeSustainability & Finance