Profiting from Cleaner Production Financial Institutions United Nations Environment Programme / Division of Technology, Industry and Economics

I. Cleaner Production Competitive Advantages for Companies Better Cients Better Investments Definition Parallel Concepts Practices II. Case Study A III. Case Study B IV. Role of Financial Institutions V. For More Information

Cleaner Production Competitive Advantages for Companies Cleaner Production helps companies: Increase productivity Reduce production costs Use resources more efficiently Produce safer and better products and services Reduce levels of pollution and risk Comply with Environmental Management Systems and get ISO 14000 certified

Cleaner Production Better Clients The financial and operating advantages of Cleaner Production make better clients of companies that implement Cleaner Production strategies.

Cleaner Production Better Investments The advantages of Cleaner Production also make companies using Cleaner Production strategies better investment opportunities.

Cleaner Production Definition A preventive environmental strategy applied to processes, products and services to: Increase overall efficiency and productivity Improve business opportunities Reduce human and environmental risk

Cleaner Production Parallel Concepts Pollution Prevention (P2) Eco-efficiency Green Productivity Waste Minimization

Cleaner Production Practices Applying good housekeeping Changing technology or equipment Redesigning products Modifying or controlling processes Substituting input materials Recycling or reusing materials on-site Producing useful by-products

I. Cleaner Production II. Case Study A Background Site Contamination Decontamination Costs Result Prevention Measures III. Case Study B IV. Role of Financial Institutions V. For More Information

Case Study A Background ABC Iron, Inc. manufactures iron casings. To expand operations, the company takes out a $1.2 million mortgage from its bank. A year later, ABC files for bankruptcy.

Case Study A Site Contamination ABC’s bank would like to put the site up for auction. However, further investigation reveals: The ground and a nearby river are contaminated by toxic leakage Large amounts of toxic waste are stored on-site

Case Study A Decontamination Costs Toxic waste disposal $0.7 million Site purification $1.0 million Initial mortgage $1.2 million Total decontamination costs $1.7 million

High decontamination costs make the site worthless. Case Study A Result High decontamination costs make the site worthless. The auction is cancelled and the bank suffers a complete credit loss.

Case Study A Prevention Measures What ABC’s bank could have done: Include environmental risk in overall risk assessment Integrate environmental criteria into loan applications

I. Cleaner Production II. Case Study A III. Case Study B Background Quality Control Results IV. Role of Financial Institutions V. For More Information

Case Study B Background PR Labelmakers & Co. prints packaging labels. During the printing process, ink, plastic film and metal foil are wasted. The process also releases ink and glue emissions into the air.

Case Study B Quality Control PR Labelmakers takes out a $105,000 loan from its bank to improve quality control. It installs a camera system to detect printing errors early in production, resulting in: Fewer printing errors Reduced levels of wasted ink, scrap and emissions

Waste and emissions reduced by 40% Case Study B Results PR Labelmakers quickly recuperates its investment and pays back its loan on time. Waste and emissions reduced by 40% Payback period: 2.7 years Annual savings: $38,463 Initial investment: $105,000

I. Cleaner Production II. Case Study A III. Case Study B IV. Role of Financial Institutions V. For More Information

Role of Financial Institutions Misconceptions Cleaner Production entails high financial risk Cleaner Production only applies to industrial and service companies

Role of Financial Institutions Realities Cleaner Production: Makes companies more attractive as clients and investments Improved cash flow and reduced risk Rapid return on capital or operating investments Improves image of financial institutions Emphasis on environmentally sound investments and sustainable development

Role of Financial Institutions Actions Integrate environmental/Cleaner Production criteria into investment appraisal, credit rating and loan application process Develop new financial products linked to environmental performance

I. Cleaner Production II. Case Study A III. Case Study B IV. Role of Financial Institutions V. For More Information

For More Information UNEP DTIE Cleaner Production www.uneptie.org/cp UNEP DTIE Cleaner Production Financing www.financingcp.org United Nations Industrial Development Organization www.unido.org Sustainable Alternatives Network (SANet) www.SustainableAlternatives.net