GREEN, PROFITABLE & SUSTAINABLE

Given recent international events in the environmental sphere, Ecuador has the potential to become the green capital of Latin America. This roundtable sought to generate discussion on how the Ecuadorian private sector is providing innovative solutions to achieve economic development in harmony with society and the environment. Each panelist, a key figure in their respective fields, brings insights into the trends contributing to Ecuador’s ecological transition.

Valeria Cadena de La Espriella DIRECTOR OF PRODUCTION AND SUSTAINABLE DEVELOPMENT, MINISTRY OF ENVIRONMENT, WATER, AND ECOLOGICAL TRANSITION

The ministry has a directorate for sustainable development and production. Previously, there was no directorate in the private sector, but there are now three directorates in the under-secretariat for climate change: research, adaptation and production, and sustainable development. Decree 59 requested the change of the Ministry of Environment and Water to the Ministry of Environment, Water, and Ecological Transition, thus promoting responsible consumption and sustainable production through the Zero Carbon Ecuador program, which is supported by Nestlé, ProCredit, and Grupo Futuro, among others. The government has mandated that companies must justify, reduce, and offset their carbon footprints in Ecuadorian territory. However, previously there was a limitation in Article 74 of our constitution that did not allow the alienation of environmental services. But the Ecuador Zero Carbon program was designed to respect this article through a repercussion process. Thus, through this program, all private companies are expected to reduce greenhouse gases, achieving sustainability and ecological transition. We have identified great potential in the 145 member companies. We have considered calling this business ecosystem within the framework of the Zero Carbon Ecuador program, and we want to strengthen it so that these exchanges of experiences and capacities are promoted. It is positive to identify the initiatives of each company. Bearing in mind that we contribute 0.18% of global greenhouse gases, it is still important to make an effort to conserve these activities. Regarding production, we are promoting a regulatory framework for deforestation-free production together with the ministry.

Carolina Proaño Castro EXECUTIVE DIRECTOR, FUNDACIÓN FUTURO

Grupo Futuro is a group of companies that has several lines of business: insurance, tourism, health and new investments in renewable energies, high-tech agriculture, and logistics. All our companies share strong ethical values and have sustainability as one of their pillars. We are at a time that requires absolute urgent actions regarding climate change risks. This man-made phenomenon is putting at risk all of humanity’s progress achieved in the last 70 years, including current business models. Therefore, a way of taking bold action is planning to decarbonize our business models a soon as possible. Ecuador is a unique country for several reasons. For example, the amount of light and the intensity of solar radiation it receives, the thousands of unique species living here, three times more bird species than in the US, in a territory that is 35 times smaller. This also means that we have a great responsibility as custodians of biodiversity. So, taking this into account, for us sustainability means creating shared value for all our seven stakeholders within our ecosystem: shareholders, clients, employees, suppliers, community, the environment, and the government. To generate this value, it is necessary to be aware of all existing planetary limits. This is how we live sustainability. In the tourism sector, Metropolitan Touring achieved carbon neutrality in 2017, and since 2019, Fundación Futuro, together with the Ministry of Environment and other entities, have been defining the regulatory framework to enable private companies to decarbonize and finance conservation through carbon sequestration.

Diego Díaz OIL & GAS EXPERT

The government’s initiative to double the country’s production of hydrocarbons is a courageous and indispensable decision. The government's approach to an ecological transition assumes a change in the economic and social model of the economy, and thus the contribution of all sectors is vital to achieve this overarching goal. There are many companies that want to heavily invest in the hydrocarbon sector, but due to bureaucratic pace and lack of effectiveness this has not been possible, and that is where work needs to be done. Also, the comptroller’s office needs to have special training in the oil and gas business to avoid misinterpretations and legal insecurity. Today’s global economy cannot function without an environmental, social, and governance (ESG) approach; it is no longer negotiable, neither can it be postponed. Ecuador’s corporate and public sectors have to move quickly in that direction. With regards to the environmental aspect, the oil industry has always had a bad reputation, but it is indisputable it represents 30% of the state budget. To make sustainable changes in the industry, the whole value chain, from facilities design to operations, need to incorporate carbon neutrality as a mandatory objective. Major companies in the world are incorporating this milestone, and in Ecuador the company I led for several years had net-zero emissions since 2017, which proves that oil can operate with a reduced environmental footprint. It is not an easy task, since there are two main polluting sources: electricity generation and operational residues. Oil comes out in three phases: water, gas, and oil. Then, the oil is extracted, the water is re-injected into the reservoir, and the burners expel the residual gases, after methane that is converted into CO2, which is much less harmful for the environment. But, currently, there are furnaces that can almost evaporate these gases and also gas-powered generators that could use the gas that comes associated with the oil to energize the whole operation. All these translate into a much larger investment but also greater efficiency. So technically, from an environmental perspective, it is possible to prevent pollution in the oil sector and drive the path forward in the country.

Katarina Zdraljevic HEAD OF ENVIRONMENTAL MANAGEMENT UNIT, PROCREDIT BANK

As a bank, our strategies include a focus on social and environmental responsibility. Our whole model focuses on small and medium-sized enterprises, which we encourage to save and obtain loans that are related to sustainability. We have a program that consists of giving opportunities to recent graduates who share our values so that we are all moving toward the same goal. We are currently implementing all internal initiatives using renewable energy, solar panels, and electric vehicles because by setting an example, we can explain to our customers how this has worked for us. As a financial sector, our main role is to collect deposits and measure risks. Then, by understanding the climate risks, we started to offer green credits with appropriate terms and guarantees that motivate customers to make a more environmentally friendly decision through financial incentives and advice. In this way, we have been able to increase our green loans to 20%. We also have a training process for new employees in which we instill the values of environmental and social responsibility, because we want all our actions to go in that direction. In our criteria for granting green credits, we look for energy efficiency of more than 20%, we make a personalized analysis to check the client’s investment and we consider a technical implementation plan. Also, within the environmental measures there must be recycling and organic production processes, thus having sustainable environmental responsibility on the part of the producer.

Pedro Ospina VICE-PRESIDENT OF SUSTAINABILITY, NESTLÉ ECUADOR

Nestlé has been working under a concept of shared value. This means being aware that as an industry, we have a social, environmental, and economic impact by generating profit. Therefore, our business strategy is aligned with sustainability, which in turn is based on four pillars: responsible packaging; understanding how we can positively impact the labor insertion of young people; responsible sourcing, taking into account the value chain of workers; and reducing emissions and caring for water. In 2021, we were the first company in Ecuador to collect the same amount of plastic from the market as we produce. Our motto is “join the change,” so the ministry’s policies are welcome. We want the private sector, the authorities, and the media to join in, as this is a joint effort. Within Nestlé Ecuador, we have an initiative called RE: rethink, reduce, and recycle. Rethink is looking at the impact a product will have following the guidelines and objectives for 2025, reduce means offering the same value for money, but with less plastic in the packaging, and finally, recycle focuses on plastic neutrality and recyclable packaging design. In this way, we have met 90% of our 2025 targets.