Table of Contents
CASE STUDY 1 v vii 1 4

América Latina Logística







Reclamation Group






IFC is committed to investing in and fi nancing ventures that are fi nancially, environmentally, and socially sustainable. To show the benefits of a triple bottom line approach to investing, we have produced five case studies that show you can make money and thereby meet the demands of the commercial marketplace and still be environmentally and socially responsible. In fact, we show that environmental and social responsibility will support and enhance the achievement of fi nancial imperatives. And what better place to look for success stories than within the private equity industry, whose clear imperative is achieving financial returns for investors in a highly competitive environment? The five case studies come from five private equity managers with whom IFC has invested: GP Investimentos in Brazil, CDH China Fund in China, Quadriga Capital in Russia, Brait Capital in South Africa, and Advent International in Europe. In each case the environmental and sustainability aspects were integral to core business competencies, contributed directly to profits, and were implemented for commercial reasons. We hope these stories will inspire you and provide ideas that both enhance the success of your own investing and contribute to a sustainable future.

Haydeé Celaya Director Private Equity & Investment Funds Department International Finance Corporation



Special thanks to all those involved in the development of this report.
AMÉRICA LATINA LOGÍSTICA Antonio Bonchristiano, GP Investimentos, the PE Fund Alex Behring, Chairman of ALL and former GP partner Melissa Alves Werneck, Manager of Projects, Logistics and Marketing, ALL Bernardo Hees, CEO, ALL Raimundo Pires Martins de Costa, Director of Operations, ALL Pedro Roberto O. Almeida, Director of Human Resources, ALL TERAPIA Emma Popa-Radu, Advent International Eric Haworth, Plant Director, Terapia Dan Petcovici, Site Engineering and Project Manager, Terapia

INTERNATIONAL FINANCE CORPORATION Sustainable Financial Markets Facility: Cecilia Bjerborn Ekaterina Grigoryeva Andrea King Clive Mason Dan Siddy Fayana Willie Private Equity & Investment Funds Department: Simon Andrews (RECLAM) Jean Laprevotte (ALL) Umberto Pisoni Sergio Pombo Peter Tropper David Wilton Rebecca Xu (Mengniu)

MENGNIU Stuart Schoenberger, Managing Director, CDH China Fund Lu Jun, Executive Director and VP, Mengniu Lei Yong Sheng, Secretary of the Board and Chief Administrative Officer, Mengniu Zhang Zen Hua, Manager of Foreign Affairs Department

MORION Reinhard Kohleick, Quadriga Capital Yakov Vorokhovsky, CEO Morion Olga Sidorenko, Mr. Vorokhovsky’s assistant Sergei Olhovsky, Plant Engineer, Morion

RECLAMATION GROUP Chad Smart, Brait Capital Darshan Daya, Brait Capital Dave Kassel, Executive Chairman, Reclamation Group



Executive Summary

Five case studies of companies exhibiting good examples of different aspects of “sustainability” were drawn from the portfolios of private equity funds in which IFC was an investor. The definition of sustainability was the triple bottom line concept, broadly defined. This term refers to the concept of triple bottom line accounting, i.e., that for-profit corporations could consider three levels of accounting, traditional profits as well as environmental and social effect accounting, an idea proposed by John Elkington in 1998.1 Implicit in the concept as applied herein, however, was recognition of one of the criticisms of the triple bottom line theory: that it may potentially be harmful to a business to divert attention from its core competencies. Rather, as will be seen below, the sustainable attributes noted in this study were integral to core competencies and sound business management, contributed directly to profits, and were implemented purely to foster the business case. The five companies selected to be case studies are shown in table 1, next page.

As noted above, the concept of sustainability in this study was based on the triple bottom line approach, with the caveat that aspects of sustainability identified would likely reflect good business management and directly contribute to the bottom line, as would be expected in what were primarily emerging market businesses operating in their host country marketplace (e.g., not exporting or part of multinational supply chains). This concept was confirmed early on in the process of researching IFC’s portfolio for case studies, when it became apparent that positive social and environmental aspects of individual companies were an integral part of good business management, as opposed to a separate or parallel end goal. In all cases
1. Elkington, John, 1998, Cannibals with Forks: the Triple Bottom Line of 21st Century Business, Capstone Publishing, Oxford. 407 pp.



América Latina Logística (ALL) Mengniu Morion

Transportation and logistics Dairy products High technology instruments

Curitiba, Brazil


Investment Fund
GP Investimentos

Inner Mongolia, China St. Petersburg, Russia

Public Privately held

CDH China Fund Quadriga Capital

Reclamation Group (RECLAM) Terapia

Metal and other waste recycling Pharmaceuticals

Johannesburg, South Africa Cluj-Napoca, Romania

Privately held

Brait Capital

Privately held

Advent International

studied, the companies pursued these “sustainable” initiatives because they increased profits and performance. A number of themes were identified that were replicated across the five case studies. The themes and the cases to which they apply are presented in table 2, (page 3). The bottom lines of the table present the five fi rms’ recent fi nancial performance and illustrate that the implementation of the measures identified coincided with strong financial performance. The data are presented as growth percentages as opposed to actual numbers, as three of the five companies are privately held. Highlights of how the themes were manifested in each case are presented below, and the full case studies are presented in the ensuing chapters. ■ At four of the five companies (ALL, Mengniu, Morion, and RECLAM) the CEOs/founders were the source of the drive for excellence that resulted in the identified programs on which the case studies focus. In the case of Terapia, the private equity fund viewed brownfield development as an opportunity 2 THE PROMISE OF PRIVATE EQUIT Y

rather than an obstacle for the transaction. Two companies, Mengniu and RECLAM, were dependent on supply chains for which there was competition, and a key part of their business success was a direct result of their ability to capture a significant market share of an independent supply chain, in both cases consisting at least in part of small entrepreneurs, via fair pricing and programs that fostered the economic growth of microenterprise suppliers. Three of the companies had very strong programs designed to optimize worker commitment and performance. Two companies (ALL and Mengniu) were highly ranked in their respective country’s competitions for most popular places to work. The third, RECLAM, in addition to sponsoring sports teams and other worker extracurricular programs, was extremely effective in designing direct financial reward programs that both benefited the workers and resulted in dramatic improvements in worker performance and revenue generation for the company.

Both ALL and Morion applied programs to reduce waste and energy consumption. ALL, primarily a railroad company, was able to significantly reduce diesel fuel consumption through application of improved logistics management via technology, awareness raising and training, and its annual “Diesel Cup” competition, in which locomotive engineers compete to use the least amount of fuel without any dropoff in on-time performance or decrease in health and safety performance. Morion invested in equipment upgrades and re-engineering of the plant to reduce water and energy consumption, and the subsequent savings in operating costs rapidly paid back the initial investments and improved profitability. All five companies had proactively adopted various international environmental and other international standards, though only Morion was a part of a global supply chain where such certifications were required. The other four companies willingly adopted these standards and the associated costs for

certification and reporting as part of their CEO’s drive to create a world-class company. Three companies were involved in different aspects of recycling. Metal and now other disposable product recycling is RECLAM’s central business (“the aboveground mine” in the words of the founder and CEO). Morion invested in recycling its product water, both to recover heat and save energy and to reduce raw water costs. Terapia is involved in the cleanup and recycling of contaminated industrial site as a sideline to investing in a former state-owned pharmaceutical company. Three of the companies were formerly moribund state-owned enterprises that were completely turned around and reinvented as dynamic and profitable private

sector businesses, in part through the programs described herein. As can be seen in table 2, four of the five companies for which financial data are available have experienced very healthy growth in revenues and EBITDA.

IFC contracted Environmental Resources Management to carry out the identification and preparation of the case studies. As stated above, the goal was to identify cases exhibiting a range of aspects of sustainability. Additional selection parameters were broad geographic and sector diversity. The case studies were identified via interviews with IFC staff in the Private Equity Funds Department. An initially

long list was gradually reduced to a short list of leads, and then to the final five through additional interviews with IFC staff and discussions with the investment funds staff. The companies, and in most cases the investment funds, were visited during 2005.To develop the cases, a variety of materials were used, ranging from investment reports for the two publicly traded companies to news stories and interviews. For three of the companies (ALL, Morion, and RECLAM), the CEOs were the primary sources of information. For the other two, company staff and investment fund staff provided the information. The staff of IFC, of the investment funds, and of the companies were enormously supportive during the process.


CEO leadership Fostering microenterprise development in the supply chain Optimizing workforce commitment Eco-efficiency/energy conservation Proactive adoption of international Environmental, Health, and Safety standards Recycling Privatization Financial performance Revenue growth EBITDA growth
a EBIT data, not EBITDA.


+ +




+ +

+ + +






+ 1997-2004 200% 1560% 1999-2003 1343% 1740%

1997-2005 500% 1660% a 2000-2004 282% 810%

2001-2004 156% 180%




América Latina Logística
Truck from new ALL fleet, next to ALL freight locomotive

América Latina Logística (ALL), the largest rail-based independent logistics operator in Latin America, was an extremely successful investment for GP Investimentos (GP), a highly successful Brazilian private equity fund. ALL began with GP’s winning the concession for one of Brazil’s six formerly state-owned railroad concessions at a public auction in December 1996. In June 2004, less than seven years later, the company was floated on the Bovespa exchange in Brazil, providing a very profitable return for GP. This sustainable business case study focuses on ALL’s strategic investment in its labor force through training and capacity building, and the parallel success achieved in terms of reinvigorating the labor force to create a dynamic and highly profitable company, dramatic improvements in health and safety, and dramatic reductions in fuel consumption and overall operating costs. Highlights of the ALL story include the following points: ■ There has been a rapid reinvention of a formerly state-owned enterprise with poor performance and low staff morale resulting from a long history of low investment, low expectations, and the halving of a bloated labor force (from 12,000 to 6,000).1 ■ Overall performance in terms of on-time delivery of cargo and profitability has been dramatically improved. ■ The company is now considered one of the top 100 companies to work for in Brazil (and the top 25 in the case of its Argentine operations).
1. In the year prior to the privatization, the government had slashed the labor force from 12,000 to 6,000, which destroyed what company morale there had been. After taking over, ALL was forced to reduce the labor force to 3,000 because revenues could not support the larger staffing.



Accident and health and safety performance has gone from poor to being the best among Brazilian railroads and on a par with the best North American railroads. Diesel fuel consumption has been reduced by 40 percent since privatization in 1997, thereby improving profitability and reducing greenhouse-gas emissions.

of the locomotives were steam driven, and integration of the regional lines was so poor that long-distance transport was difficult at best. In addition, RFFSA had an extremely poor accident record.

Santa Catarina, and Rio Grande do Sul. The public auction took place in December 1996, and the GP-led consortium emerged with the winning bid of Brazilian Real 217 million (at the time approximately US$195 million). GP had been very successful in prior turnaround situations and brought a wealth of experience and successful techniques to be applied at ALL. These included a general goal of reducing the average age of the staff, an aggressive performance-based bonus system for all employees, and a forced attrition program for underperforming staff. After the auction, there was a three-month waiting period prior to GP’s takeover of operations. During this period GP assembled a management team with expertise in what they determined were the four major functional areas of the company: human resources, operations, sales, and fi nance. In a somewhat unusual move, GP seconded their point person on the transaction, Alex Behring, to the new company to be the CEO. Management identified four goals at the outset: ■ Create an aggressive corporate culture ■ Cut costs ■ Eliminate bottlenecks ■ Increase revenues by expanding services to existing customers. These original goals are still evident in the company’s current corporate mission statement.

Between 1994 and 1998, the Brazilian state-owned, 22,000-plus-kilometer national rail system, Rede Ferroviaria Federal SA (RFFSA), was divided into six regional concessions and auctioned as long-term operating leases. The winning bidders were awarded thirty-year leases renewable for an additional thirty years. Huge layoffs, mandated by the pared-down but still unsustainably large labor force from the government-run era, and low morale and motivation were the most significant liabilities. RFFSA had not been a priority of past administrations, and there had been little investment in the infrastructure or attention to performance. This was due primarily to the government’s decision in the 1960s to prioritize road transport (e.g., trucking) over other forms of transportation, essentially making the once-proud railroads obsolete. A pre-privatization study of RFFSA in 1996 found that 50 percent of the bridges needed repair, with 20 percent near collapse. Some twenty GP was well aware of RFFSA’s service and reliability problems. Some years prior to its investment in ALL, GP had acquired Brahma Breweries, one of the major Brazilian brewers. GP decided to experiment with shipping Brahma’s fi nished product on RFFSA, as the rates were favorable versus trucking for longer distances. GP contracted with RFFSA to ship two rail cars of fi nished product, and not only did neither rail car ever arrive at the destination, but both were permanently lost.3 Prior to the auction, GP had carried out considerable research of the railroad industry in general and RFFSA in particular. They consulted with CEOs and top executives of several U.S. railroads and developed a strategic relationship with one U.S. railroad company, which assisted in its pre-bid due diligence of RFFSA. Fully recognizing the extent of potential problems in the RFFSA concessions, GP decided to bid for one of the six regional concessions, the Ferrovia Sul Atlantica, the “Southern Line,” which served Brazil’s three southern states, Paraná,

2. Based on two primary sources, the ALL- América Latina Logística S.A. offering prospectus and Sull, Donald M., Fernando Martens, and Andre Delben Silva, 2004, “América Latina Logística ,” Harvard Business School Case Study 9-804-139. 3. Related by Alex Behring, former ALL CEO and now chairman, during a February 2005 interview.



This case describes two aspects of ALL’s program that have enhanced the company’s sustainability and profitability, or triple bottom line:

■ ■

■ ■

Its investment in its human resources and reinvention of the corporate culture to achieve its business plan Its efforts to improve operational efficiency and performance, which have resulted in a dramatic reduction in accidents and energy consumption and emissions.

Remove people likely to perpetuate the former culture. Devolve responsibility to the field and simultaneously seek feedback and ideas from the workforce on how to improve all levels of operations, including incidents/accidents, delivery time performance, and fuel economy. Challenge the workforce but also provide incentives through a policy of compensation tied to performance. Invest in the workforce through training to improve capacity and commitment.

was still boated, and the new company urgently needed to cut costs. At the same time, it was critical to keep the company running and serve its customers to avoid losing market share, and therefore ALL had to endeavor to create a postdownsizing workforce with a commitment to the business going forward. ALL minimized the painful and negative repercussions of the downsizing by doing the following: ■ It was made absolutely clear from the first day of the new ownership that dismissals were necessary for the company to survive, and this was in fact the consensus view among most employees. ■ Severance actions were swift and decisive, with the majority carried out in the first month, without mixed signals or misleading statements of intent (without “lies,” as management phrased it). ■ The severance packages were good, exceeding the government requirements. ■ ALL subsequently saw to it that a significant number of the staff let go were hired by firms contracted by ALL to carry out construction and other projects necessary to rehabilitate and upgrade facilities and infrastructure.

Human Resources and Corporate Culture
On day one of its new ownership in April 1997, ALL management faced a daunting task. It had to severely reduce the labor force and simultaneously reinvent and reinvigorate the corporate culture to achieve its business plan, which was based largely on a dedicated, motivated, savvy workforce. ALL management kept the following principles in mind during its efforts to reinvent the company’s culture and reinvigorate the staff: ■ Believe in its agreed business case/model. ■ From a human resources perspective, resuscitate a formerly proud industry (many of the current workers’ grandfathers had worked for the railroad). ■ Create a meritocracy with few barriers between management and staff, organized around subteams with clear and measurable goals.

ALL management moved quickly to implement the “Pillars of Culture Change.” These are described individually below, though they were in essence components of an integrated program.

Reduce the Workforce While Minimizing Impact to Morale
The labor force had been slashed from 12,000 to 6,000 by the government in the year or so before the auction, yet there was a need to reduce the staff by another 3,000 immediately, based on the pre-auction due diligence carried out by GP. The payroll, one of the major operating costs,

When we found someone who had a spark in their eyes, who wanted to do something, and was strong technically, we’d give them space and authority, managerial training, and then a new challenge. Since the new challenge usually represented an upgrade—also financially speaking—that created instant loyalty to the new project. These people really bought into our vision.
Alex Behring, now chairman but formerly CEO in the early years of ALL 4

4. Sull, Donald M., Fernando Martens, and Andre Delben Silva, 2004, “América Latina Logística” Harvard Business School Case Study 9-804-139.



In the course of the downsizing, it was critical to retain the “right” staff to continue operations and to create the new organization. Over the first ten days, the CEO and the operations VP conducted 15-minute interviews with 150 mid-level managers. On the basis of these interviews, 30 managers were selected as the core team who would work with senior management to implement change. The interviews also identified those who were considered unable to make the transition to the new organization, and those individuals were let go or demoted. Over the next two and one-half months, over 100 other employees, including both managers and line staff, were interviewed. The interviews served to get the new management’s message out to the workforce in an effective manner and also revealed the fabric of the staff, differentiating between higher level political appointees with little commitment to the business, a middle tier of skilled engineers and managers who had been demotivated by the destructive internal politics of the government era, and the main workforce of train engineers, technicians, and office workers who were still largely committed to their work.

ALL freight train

Quantitative annual goals (broken into monthly targets during the year) A clear distribution through the company hierarchy and staff organizational structure of performance bonuses.

Establishing Clear, Measurable Goals Tied to Compensation Across Entire Workforce
Under government management, salaries and promotions were based solely on seniority, and there was no structured human resources program (e.g., performance evaluation, career planning, or training). The new program established very clear goals and a transparent system of compensation tied to performance. The elements were: ■ Long-term vision ■ Values/rules of the game

Some 1,000 staff were assigned individual goals, with the remainder parts of teams with team goals. Performance was tracked daily against monthly and annual targets for each team and division. Individual charts illustrating progress against targets for each team were posted on the wall in the individual teams’ office areas as well as in common areas or gathering places (e.g., hallways, and the cafeteria entranceway). Performance against goals was directly tied to compensation, termed variable

compensation. Different programs were developed for different levels of staff. For example, for managers, five quantifiable targets, linked to overall corporate objectives but translated into objectives the manager could directly influence, were agreed on at the start of each year (e.g., margins, operating costs, service indicators). The variable compensation program was based on the percentage achievement of the targets and the staff level, with senior managers who met all targets receiving bonuses from 50 to 75 percent of annual salary. For middle managers, the range was 25 to 40 percent, and for staff from 7 to 24 percent. The performance program also acted as another form of staff selection. Some individuals thrived in this structure, while others didn’t care for it and left. A MÉRIC A L ATINA LO GÍS TIC A 7

Building Trust and Communication with Workers from the Former Railroad
ALL management recognized the extreme importance of gaining the trust and commitment of the former government workers remaining after the reductions. Management broadcast the message that they were sorry about the staff reductions, but that those were a necessary step to keep the company alive, and management spent a lot of time listening to the staff and eliciting feedback and suggestions for improving the company’s performance. In the first year of ownership, ALL management did two things to signal to all employees that a new era had begun. First, office space at headquarters and regional offices was converted to an open plan without walls, symbolically illustrating new management’s intent to eradicate the barriers that had existed between management and staff in the government era. Even more dramatic, ALL senior executives went to school to become certified locomotive engineers, allowing them to operate locomotives. After receiving the licenses, ALL senior staff started a program of

Money for Merit A cultural revolution based on results and self-esteem has transformed ALL from a moribund state-owned firm into a successful company.
Revista Exame—August 6, 2003

spending a week or so each month on the trains, driving locomotives with the crews, wearing the standard ALL uniform, and overnighting with the crews in company dormitories. ALL managers recognized that the field staff understood operational realities and challenges far better than they did, used this field time to learn from the staff, and encouraged the field staff to make suggestions for improving operating efficiencies. This evolved into the company’s “ideas competition” described below. In August 1998, one of the worst accidents in the company’s history occurred, resulting in a 27-car derailment. The ALL CEO and Operations VP were in the field and arrived at the accident site within 4 hours. While the Operations VP spent the next 36 hours supervising construction of a temporary bypass, the CEO visited the train’s operators in their

homes. This marked the first time in the company’s history that a company officer had visited the home of a field worker, and it served to establish a new relationship between management and the train operators that was key to ALL’s subsequent success.

Seeking Ideas from the Workforce
Building on the positive outcomes from soliciting ideas from the workforce, both in the offices and from the train operators in the field, in 1999 ALL established an annual ideas competition. Ideas were solicited on a quarterly basis, and at the end of each quarter, an ideas competition was held at headquarters and the top three ideas of the quarter were selected by a panel. At the end of the year, a major event was held to select the top three ideas of the year. The winners received significant prizes, sometimes cars. In the event that the idea came from a team, the division of the prize was at the team’s discretion.

≤ 30 years 31 to 40 41 to 50 Over 50

270 2,290 873 16

402 1,792 809 13

476 1,233 705 13

554 874 661 13

677 757 667 15

Reducing the Age of the Workforce
Reducing the age of the workforce had been an effective strategy at other GP turnaround projects, and as under the government no new employees had been hired since 1985, this was also a basic goal. The challenge was how to attract bright, young people to what was widely viewed in Brazil at the time as a decrepit industry.










objectives that the internal training program should impart: ■ Enthusiasm ■ Technical knowledge ■ Managerial knowledge— how to identify problems and fi nd solutions ■ Management capacity (Total Quality Management and the Six-Sigma program were used.) ALL initiated various training programs immediately, and in August 2000 it opened the company university, UNIALL, at company headquarters. Each employee is required to attend at least one week of training a year. Highlights of the training program include: ■ Over 12,000 applications for the trainee programs from less than 3,000 staff in 2003 ■ UNIALL—Corporate university providing training in operations, administration, and management modules; all employees receiving at least one week of training each year ■ MBA in Logistics, Operations, and Services Qualification in partnership with COPPEAD/UFRJ ■ Six-Sigma Black Belt Program. Recognizing that a significant portion of the staff had not received the Brazilian equivalent of high school diplomas, management also introduced ALL on the Tracks of Education, a free high school equivalency program that resulted in the award of a diploma to those staff and prepared them for access to higher education. Some 170 staff members have benefited from this program and received high school equivalency diplomas.

RTK = Revenue ton kilometer, ALL’s “volume” indicator; it represents the amount of net volume transported (load) x distance between origin and destination. CAGR = Compound annual growth rate, an average annual growth rate measure.

ALL moved almost immediately to address the recruitment problem by beginning a program of awareness and hiring campaigns at universities throughout the southern states and the adjacent state of São Paulo. This program, in conjunction with stories of ALL’s successful turnaround, led in 2003 to ALL’s being named one of the 100 best places to work in Brazil by a popular business magazine, Revista Exame, and resulted in a dramatic change in the company’s ability to recruit young, high-caliber staff (see table 1). The results were dramatic: ■ In June 1997, ALL was able to recruit 32 university graduates for 40 trainee openings.5 ■ In 2003, there were over 12,000 applications for 18 trainee openings.

to replace people with information technologies in train operations. These measures would also allow centralized tracking of all trains at all times and serve to boost operational efficiencies and traffic scheduling. ALL had studied the types of systems available during the due diligence phase, and knew that implementation of hightechnology systems would require substantial training to utilize these technologies effectively.6 In addition, ALL management wanted to raise internal awareness of the core business realities, so that workers at all levels would appreciate as much as possible how their actions and those of their immediate colleagues impacted the company’s performance. Last, management wanted to instill a culture of excellence with a commitment to solving problems. ALL identified the following

One of the major labor and cost-cutting decisions had been

5. After 12 months, trainees performing well would be promoted to entry-level supervisor or assistant manager positions. 6. These included a satellite-based system that monitored track conditions and on-board computers on all locomotives, allowing real-time tracking of all equipment 24 hours per day.







ALL’s investment in its workforce has paid huge dividends with a dramatic increase in productivity since 1997 (figure 1).

Improving Operational Performance
Accidents and On-Time Performance
The former state-owned Southern Line had a terrible accident and reliability record. As the company’s business plan was geared to retaining and expanding business with existing clients as well as winning new clients based on performance, it was fundamental that the company drastically reduce accidents and worker lost days in order to

GTK = Gross ton kilometer, or the amount of gross mass (load+railcars) x distance, for loaded and unloaded flows.

We believe that people make the difference, in particular for a service company such as ours. In 2003, we continued to make strong investment in training, with more than 1,000 employees having completed our corporate university program, including more black belts and green belts in the Six-Sigma quality management and problem-solving program. Our culture is based on goal achievement, and aggressive variable pay has helped us to be the only privatized company to rank among the best companies to work for in the annual survey conducted by Exame magazine in Brazil, as well as in the Apertura magazine guide of the 25 best companies to work for in Argentina. The extraordinary commitment of our people to go the extra mile brings many benefits to our company, including higher service quality: over 90 percent of our rail traffic arrives on time. This significantly increases the safety and reliability of our locomotive fleet. We have not only surpassed the safety targets for our concession, we have reached a level of safety that is comparable to that of U.S. rail operators.

▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲

Focus on the customer People make the difference and are compensated for results Integrity and transparency Increasing shareholder value through profitability Simplicity with creativity and austerity Methodology and superior quality standards for constant improvement Teamwork in a fun and safe environment Commitment to the community and the environment



People Who Never Cease To Do More and Better
Over the last seven years, ALL has improved its productivity and enhanced the quality of its services, boasting numerous success cases. These results are mainly due to two factors: the qualification of its employees, who are always ready to develop and implement solutions to maximize the company’s performance; and the control of corporate operations, which, with the assistance of state-of-the-art technology and methodology, ensures ongoing improvement. In 2003, ALL doubled its capacity of tons hauled, from 11 million tons in 1997 to 22 million. Over this same period, it increased car utilization by 67 percent: in 1997 it was 1.98 carloads per month,and in 2003 this figure rose to 3.31. Fuel consumption was reduced by 12 percent, from 6.7 to 5.9 liters/1,000 GTK, which implies a substantial reduction in operating costs. Train times are strictly monitored. In 2001, when the company began a major on-time performance drive, the percentage was 56 percent, whereas in 2003 it ended the year at 90 percent—an improvement of more than 50 percent. During the same period, the average transit time of its cars was reduced by 25 percent. These results were possible thanks to investments in technology such as ACT (traffic control automation) and the Translogic system, which managed to increase operational efficiency. In road operations, the results were also inspiring. The average remunerated kilometer increased from 9,000 km/month per vehicle in 2002 to 11,800 km/month in 2003, an increase of over 30 percent in just one year. ALL’s operations now include a trucking business and railroad operations in Argentina. These are some of ALL’s achievements over recent years that illustrate its operational excellence and show that, being focused on results, it is possible to achieve ever more daring goals without losing the focus on cost reduction.

People Who Do Not Stop Growing
The fuel for ALL to keep moving ahead is the potential and the force of its people: a great team which makes the difference. At ALL, we believe in the potential of our people and value the contributions of each of them—so much so that we have adopted a methodology that establishes clear targets, discloses achievements, and awards outstanding collaborators. This makes ALL one of the most aggressive companies in terms of variable compensation on the market. In 2003, over R$15 million was distributed in the profit sharing program. But this is not all. Through various actions, ALL prepares its collaborators to perform their functions better. UNIALL—ALL’s Corporate University, founded in August 2000, has trained over 7,000 employees, in a total of 650,000 hours of training. In 2003 alone, over 1,100 employees were trained at UNIALL.

ALL on the Tracks of Education
Designed for collaborators who have not concluded their formal school education, the purpose of the “ALL on the Tracks of Education” program is to provide a contribution to professional formation and to the development of society. Initiated in 2001, the program has already trained 170 persons, and the company has invested over R$800,000.

(Source: ALL, 2003 Annual Report)


improve on-time performance. In addition, rail accidents in the government-owned era had caused significant impacts to the environment and the public at large, depending on the location of the accident and the cargo. Operating safety was designated the top “pillar of service.” As described previously, ALL management reduced accidents and improved operational performance through a combination of training and new information technologies. Health and safety training was a basic training requirement for all employees, and accident prevention and reduction became a focus of all teams throughout the company and a key metric to be charted and displayed on the team goal charts posted throughout the company’s offices. The health and safety message became central to the corporate culture. Some of the new technology systems that required staff training for operation are listed below: ■ Satellite Tracking System—Costeffective train-tracking system, using alternative technology that allows for 30 percent communication cost reduction with the same level of safety ■ Translogic—A proprietary railroad operational system that supports service-level requirements control ■ OPTCAP—Asset allocation optimizer that allows for commercial flow prioritization and revenue/yield maximization ■ OPTVAG—Car trip optimizer that allows for a reduction of empty car traffic and maximizes service-level compliance ■ On-Board Computers—Provide real-time data for the engineer related to speed limits, fuel



CAGR = Compound annual growth rate, an average annual growth rate measure.

consumption, and traffic, increasing the safety level and decreasing operational costs ■ Derailment Detectors—Detect derailed cars in traffic, minimizing incident severity ■ Hot Box Detectors—Detect overheated bearings on cars in a train, minimizing the risk of in-service bearing failure. Locations of all trains across the entire rail network can now be monitored and speeds optimized to reduce or avoid track or switching

delays. Incidents and accidents have been significantly reduced and on-time performance dramatically improved. Figures 2 and 3 show how ALL ranks in terms of accidents compared with other Brazilian and North American railroads.

Fuel Consumption
Diesel fuel consumption had formerly been the company’s largest single cost item, as much as 25 percent of net A MÉRIC A L ATINA LO GÍS TIC A 13

One of ALL’s newly acquired reconditioned locomotives.


revenue.7 Investment in newer locomotives, better maintenance, and logistics management and other technologies had helped to reduce fuel consumption, but with the introduction in 2000 of a fuel conservation competition among the locomotive operators, fuel consumption has declined significantly (figure 4). The Diesel Cup is an annual competition in which all the locomotive operators compete to reduce fuel consumption, with the reward being recognition for fulfilling a major corporate initiative and cash bonuses and other prizes. To avoid any possibility of a decline in attention to health and safety performance resulting from the competition, accidents or other significant safety violations automatically disqualify an operator from the competition. As a result of the program, locomotive operators have become far more focused on efficient operation of their machines, with greater attention to maintenance and improvements in fuel economy as well as reduced downtime and better on-time performance. This in turn has put a higher premium on the maintenance shop, which in turn has raised its performance standards. The maintenance shop studied the Caterpillar corporation’s maintenance program and adopted many of their standards, including white uniforms and a “clean room” atmosphere for the maintenance shop. Oil changes and

heavy lubrication operations, which required handling and storage of used oils and solvents, have all been outsourced to licensed operators, leaving the maintenance operation to focus on lengthening service between locomotive overhauls.

ALL’s results have been dramatic, including a very successful public offering in 2004. ALL’s 2003 Annual Review describes the company’s continuing commitment to its employees, to the environment, and to the public at large, and the success resulting from this approach.

ALL management applied four rules to screen and prioritize capital investments: ■ Capital expenditures were limited to those that eliminated bottlenecks preventing the company from growing revenues. ■ The lowest upfront cash alternative was preferred, even if it was not necessarily the largest net present value or the most elegant solution. ■ Options that fi xed a problem faster were preferred to longer-term solutions. ■ Reutilizing existing resources was preferred to acquiring new materials. With these investment management principles in place, ALL has made significant investments in its workforce and its business operations that have clearly contributed to the company’s long-term sustainability. This case illustrates that investments in long-term sustainability are part of sound fiscal management and are absolutely integrated with it. In ALL’s case, financial sustainability is one and the same with commitment to employees, the environment, and the public at large. Figure 5 illustrates ALL’s increase in profitability vs. the Brazilian economy as a whole, and figure 6 shows ALL revenue and EBITDA performance relative to Brazil’s GDP from 1997 to 2003.

Companies often avoid or delay implementing investments in sustainability for budget reasons. This is because, in effect, they are discounting the benefits or positive feedback from such investments. A central aspect of the ALL case is that the company made the investments described in this case within a business plan extremely focused on cost cutting and very carefully controlled investments. Two tenets of the business plan were zero-based budgeting and what was referred to as its “Vietnamese” 8 approach to capital investments.9

7. Alex Behring interview, February 9, 2005. 8. During the Vietnam war, bridges were key to rapidly deploying forces across the many rivers. The Viet Cong, with limited resources, built cheap, wooden bridges, which could be rapidly rebuilt if destroyed and therefore did not require defense. The U.S. military took the opposite approach, building expensive and time-consuming steel bridges, which they then had to defend. 9. Sull, Donald M., Fernando Martens, and Andre Delben Silva, 2004, “América Latina Logística,” Harvard Business School Case Study 9-804-139.




Mrs Zhang’s farmyard, cows, and watchdog.

Founded in 1999, Mengniu Group (Mengniu) has grown rapidly to become the leading dairy product manufacturer in China. Its principal products are liquid milk (UHT milk,1 milk beverages, and yogurt), ice cream, and other dairy products such as milk powder, milk tea powder, and tablets. Mengniu has overtaken its long-established state-owned rivals through dedication to quality and innovation in all aspects of its business, including marketing, governance, and aggressive adoption of international quality and best practice standards. CDH China Fund, an IFC investee private equity fund, invested in Mengniu in 2002. Mengniu went public in 2004 and trades on the Hong Kong exchange. This sustainable business case study focuses on Mengniu’s commitment to: ■ Its supply chain, consisting of independent small farmers ■ Adoption and implementation of internationally accepted management, systems for quality assurance, environmental management, and worker health and safety ■ Its employees and the creation of a safe and desirable workplace (recognized in 2005 as one of the 20 best places to work in China based on the “Happy Workplace” index) ■ Continuing improvement and innovation through joint ventures and use of state-of-the-art equipment.

1. Ultra-high-temperature (UHT) pasteurized milk does not require refrigeration, thereby providing extended nonrefrigerated shelf life of up to nine months and simplifying shipping and storage for the producer and consumer.


Mengniu is a manufacturer of milk products based in Inner Mongolia, famous for its grasslands and one of the traditional dairy regions of China. Mengniu was privately founded in 1999 by a management team with long experience in one of Inner Mongolia’s state-owned milk product companies, Mongolia Yili Industrial Group (Yili). Mr. Niu Gensheng, the founder and chairman of Mengniu, had lost his position as vice-president of sales at Yili after an internal power struggle in 1999. Mr. Niu had worked at Yili for 17 years and his father before him for 38 years. Mr. Niu, and the small but experienced management team he brought with him from Yili, started Mengniu with $12,600 of their own capital.2 Mengniu competes fiercely with Yili and the other big Chinese dairy, Bright Dairy & Food. The three companies collectively controlled approximately 60 percent of the market as of August 2005.3 In only five years, Mengniu has grown explosively, overtaking Yili as the top seller of milk and simultaneously becoming one of China’s best-known brands. According to AC Nielsen, Mengniu was China’s top seller of milk in 2004 with 22 percent of the market and revenues of US$871 million. This represented a revenue increase of 77 percent over the prior year, with an increase in profits of 94 percent or US$38.5 million. In the first half of 2005, sales increased 37

percent to US$578 million and earnings 34 percent to US$30 million, putting Mengniu on track to exceed US$1 billion in sales and US$60 million in profit.4 Mengniu’s success is also a function of its commitment to innovation and quality in the dairy industry which has led it to adopt international best practices and to actively seek technological and operational improvements through joint ventures and demonstration projects with international leaders in the dairy industry.

■ ■ ■

After each milking, the fresh milk is immediately transported by sterilized tank trucks to the Mengniu plant for processing. Milk is processed 24 hours a day. Products are packaged and warehoused. The products are then distributed to the market.

The collection centers, which were established by the government, consist of a central milking barn surrounded by a series of small cow barn and feeding yard complexes with attached residential units for the farmer and family. The milking barn at each collection center is owned and operated by a third party who milks the cows and supplies the milk to a dairy products company. The cow barn and residential units in the complex are owned by the individual farmers, who must purchase them. The farmers must also supply their own cows and forage. The typical collection center/farm complex has 40 farmers and their families, and the average farmer has from two to ten cows. All manure is collected and sold to the farmers for fertilizer, and given the dry climate and relatively flat landscape, there is little runoff. In Mengniu’s case, each farmer has a contract to supply milk to Mengniu through the third-party collection centers, which also are contracted to Mengniu. The farmers are paid in cash after each milking, based on the quantity of milk produced. Mengniu also provides quality control supervisors.

The milk product market in China has grown dramatically in the last decade as a result of increasing levels of disposable income and improved consumer awareness of the need to improve dietary nutrition. The growing market for milk products is due in part to a government program that promotes consumption of dairy products for their health and nutritional benefits. The annual growth rate in dairy product consumption has been estimated to have increased from 5.4 percent to 14.4 percent between 1998 and 2002 nationwide and by as much as 30 percent per year in urban areas. The dairy business in China involves the following process: ■ Dairy farmers bring their cows to milk collection centers for milking.

2. Personal communication with CDH China Fund; Business Week, “China’s Free Range Cash Cow,” October 24, 2005. 3. Business Week, “China’s Free Range Cash Cow,” October 24, 2005. 4. The Standard, China’s Business Newspaper, Top Stories: “Mengniu reaps 34 percent gain in profits as sales climb,” August 24, 2005.



The milk truck transfer operators own their own trucks but are also contracted to Mengniu. The trucks are sterilized after each load at the Mengniu plant’s sterilization center. Mengniu has some 3,000 collection centers under contract in China, with some 1,800 in Inner Mongolia.

Equally important, going public raised the company’s profi le and reputation and increased access to market intelligence. 5) Board-level Activity: CDH’s Managing Partner, Mr. Jiao Zhen, was appointed Chairman of the Board and continues to be an active member, providing invaluable advice to Mr. Niu and the management team on business strategy and corporate finance issues. CDH did not, however, have a specific role in the sustainable business aspects discussed in this case study.

■ ■

Commitment to and technical and financial support for the small farmers in the supply chain, which has fostered entrepreneurial growth in this sector Commitment to its workers, resulting in the company’s top-20 ranking among places to work in China Implementation of international quality standards and certifications Continual improvement and innovation.

CDH China Fund took a very active role with Mengniu in the following areas: 1) Restructuring of the company’s ownership and shareholding, which incentivized management to build long-term shareholder value as opposed to short-term personal wealth. 2) Improved internal corporate governance, which provided the foundation for the company to manage rapid growth (at times greater than 100 percent year to year) and create a sustainable platform to effectively compete in a highly competitive market. 3) Development of a stock option plan, which further supported and emphasized long-term, sustainable profitability. 4) Execution of an IPO: CDH was a key advisor to management throughout the IPO process, which was a huge success. Mengniu’s going public was a critical part of the company’s long-term viability, given the need for capital to expand. 18 THE PROMISE OF PRIVATE EQUIT Y

Commitment to Supply Chain
One of Mengniu’s key competitive strengths is its ability to obtain a steady supply of high-quality raw milk. Its supply chain consists of some 500,000 dairy cows owned by 300,000 small, independent farmers in Inner Mongolia and adjacent provinces, with an average of 1.67 cows per farmer. Prior to the creation of Mengniu, the state-owned dairy company, Yili, effectively had a monopoly as the only buyer of raw milk in the region. Yili was able to set prices and keep them

This case describes four aspects of Mengniu’s business model that have enhanced the company’s sustainability and profitability, or triple bottom line:

The Zhangs—Part of the Mengniu Supply Chain
Zhang Xiu Fang and her husband were traditional dairy cow herders from the western reaches of Inner Mongolia. Seeking a better quality of life, they heard about Mengniu’s rapid growth and decided to explore opportunities in the Mengniu supply chain. In 2003, they moved to a collection farm where the dairy farmers were contracted to Mengniu. The company helped them to get bank loans to purchase a house and farm unit. In the last two years, they have been able to increase their herd from 10 to 50 cows by leveraging their earnings with the bank to buy additional cows. They have also increased their per animal production via the technical support they have received from Mengniu. The Zhangs have profited from the arrangement but have concerns, because milk prices are steady but forage prices have been rising. They also miss their children who remained in their home town, but they are now participants in China’s economic growth and own a truck, have a television with a satellite feed, and have achieved a higher quality of life than would have been possible in their former village.

low, in part because the supply then exceeded the demand.5 Mengniu was able to capture supply by offering a “fair” price and establishing contracts with farmers guaranteeing to purchase their milk at fair market value. The more entrepreneurial farmers saw this as a market opportunity to increase production by investing in more cows. Mengniu also assisted the farmers in obtaining loans from local banks, which allowed them to purchase farmettes at collection centers, as well as more cows. Mengniu established the following principles for dealing with the supply chain: ■ The farmers must supply milk to the collection center. ■ Mengniu will pay the established market value for the milk. ■ Mengniu will not pay more than other companies, but neither will it purchase milk for less than the established market value or contrive to pay less. Mengniu’s pro-farmer program has been extremely successful, as evidenced by its milk collection performance. At the end of its first year, Mengniu was collecting 19 tons a day, whereas in 2005 they were averaging 5,000 tons a day, an increase of 263 times over six years. Through its supply chain program, Mengniu has in effect served as an incubator for small business development, helping its small suppliers to access fi nance and fee-based technical support, and training in animal husbandry to

optimize their production. This has in turn improved the well-being and economic situation for the small farmers in their supply chain and the local economy (see box on previous page). The modern animal husbandry techniques have been drawn from best international practice, thereby improving the environmental sustainability of the small dairy farmers in Mengniu’s supply chain.

Commitment to Workers
Mengniu’s extraordinary growth and expansion would not have been possible without a dedicated workforce. Since its founding, the company has taken measures to create an esprit de corps and worker dedication to the company’s mission. In addition to financial performance incentives, the company has created an elaborate campus environment at its headquarters, including apartment complexes with gardens, fountains, shopping centers including grocery stores, and recreation centers complete with pools and other sports facilities. There is also a large U.S. suburban style neighborhood development for those with families, featuring individual houses with grass lawns and winding streets with newly planted trees. The company developed these facilities for those workers who can rent or purchase. For purchasers, the company arranges financing for employees to purchase the housing of their choice. Mengniu was selected in 2005 as one of the 20 best companies to work for in China by the annual China “Happy Workplace” index competi-

Mrs. Zhang in front of her new truck and farmyard.

tion conducted by CCTV and based on research conducted by Beijing University’s Social Investigation Research Center.

Implementation of International Quality Standards and Certifications
As a part of Mengniu’s focus on quality and innovation in the dairy industry, the company has aggressively adopted and implemented international best practices and standards encompassing food safety and quality, worker health and safety standards, and environmental management. Mengniu is certified for and reportedly rigorously compliant with: ■ ISO 14001, the international standard for environmental management. ■ OHSAS6 18001, the international occupational health and safety management system specification.

5. Dairy product consumption in China has increased dramatically in the last decade due to government programs that have advertised the health benefits of dairy products, and because of more effective marketing and distribution by companies such as Mengniu. 6. Occupational Health and Safety Assessment Series.



One of Mengniu’s seven state-of-the-art milk processing plants headquarters.


It is comprised of two parts, 18001 and 18002 and embraces BS8800 and a number of other publications. HAACP, or Hazard Analysis and Critical Control Point certification, the U.S. Food and Drug Administration’s standard for food safety and quality control during production.

educate workers in the operation and maintenance of the equipment. Tetra Pak has a strong commitment to the environment and sustainability as well, and its equipment is designed to minimize environmental impacts and energy and water consumption. Tetra Pak works closely with Mengniu to optimize performance and minimize impacts.

machines that allow the cows to milk themselves; hay from 12 species of grasses; piped-in music; foam sleeping mats; and selfgrooming rotary brushes.

The sustainability aspects of Mengniu can be attributed at least in part to its many associations with international leaders in the dairy industry. But the paramount reason for the company’s commitment to and successful implementation of these measures is the vision of its founder and the management team. Second, while these initiatives identified have been presented as specific aspects or initiatives, they are actually fully integrated within Mengniu’s business plan. Last, in the conventional business sense, at least part of Mengniu’s success would be attributed to brilliant marketing and strong policies and programs to build worker satisfaction and dedication. But from a sustainability perspective, these could be considered elements of a strong stakeholder engagement program. Mengniu has demonstrated a great knack for understanding the marketplace, and for using this understanding to develop products and advertising campaigns that have been extremely successful in a short time. Similarly, the extremely high worker satisfaction rating is evidence of a management team that is fully engaged with its workers, understands what they want, and is delivering.

Mengniu is also certified under the Chinese Department of Agriculture’s “Green Food Net” program. This rating system examines agricultural sector companies against certain set standards, including compliance with national environmental standards and technical product standards established by the Department of Agriculture.

Strategic Liaisons with International Companies
Mengniu has sought out a number of strategic relations with leading international firms to improve its own business as well as to raise the bar in the Chinese dairy industry as a whole. In 2005 alone, these included: ■ An alliance with the Danish biotechnology firm Chr. Hansen, which provides ingredients to the food, dairy, human health and nutrition, and animal health industries. Chr. Hansen and Mengniu are teaming up to promote “probiotic” cultures for yogurt in China. Probiotic culture yogurt is extremely popular in Europe for its enhanced nutritional benefits. ■ A joint venture with the Scandinavian food firm Arla Foods for the production of milk powder packs. China is the world’s largest consumer of milk powder packs. ■ A joint venture with the Australian company Autasia, a specialist in dairy cow breeding and husbandry and part of the Japfa Group and the Indonesian-based Salim Group, in the state-of-the-art Inner Mongolia Mengniu Autasia Model Dairy Farm. The 600-hectare farm has a planned capacity of 10,000 breeding cows and features a host of innovations to promote contented cows, including robotic milking

Continual Improvement and Innovation
One of the major factors in Mengniu’s success has been its dedication to improvement and innovation, both in the dairy industry and companywide. This is reflected in its aggressive adoption and certification program for quality standards described above, as well as its purchase of state-of-the-art equipment and business liaisons with leading international companies in the dairy industry.

State-of-the-Art Equipment
Mengniu’s seven enormous production plants at company headquarters use the latest Tetra Pak machinery and equipment. The entire system, from fi lling and packaging to palletizing and warehousing, is computer controlled. In the modern warehouses at the rear of each modular production plant, robotic forklifts automatically carry and stack pallets of packaged products. Mengniu also has a sophisticated training program to




Morion final crystal quality testing facility. Equipment banks contain crystals being subjected to continuous tests to weed out substandard performers.

Morion is a St. Petersburg, Russia–based developer and manufacturer of high-end quartz frequency-control devices. These devices provide the precise time and frequency on which modern electronics depends. Applications range from watches and cell phones to navigation (GPS) and space and satellite technology. Morion’s customers include the International Space Station, Nokia, Motorola, and Alcatel. Quadriga Capital, a private equity fund in which IFC has invested, invested in Morion in 2000 along with the EBRD. Morion remains privately held, and detailed financial data were not disclosed. This sustainable business case study focuses on Morion’s successful efforts to improve operational efficiencies and profitability by reducing energy consumption and reducing water consumption and wastewater generation.

Morion means black quartz in Russian, and the conversion of synthetic quartz crystals into extremely precise oscillators is Morion’s business. Vibrating quartz crystals are the heart of nearly all frequency-control devices, which provide the basis for electronic clocks and the control of electromagnetic waves in virtually all modern electronic products. The use of quartz crystals began with military applications in the late 1930s and has expanded 22 THE PROMISE OF PRIVATE EQUIT Y

Military and Aerospace
Communications Navigation GPS IFF Radar Sensors Guidance systems Fuses Electronic warfare Sonar buoys

Research and Metrology
Atomic clocks Instruments Astronomy and geodesy Space tracking Celestial navigation GPS

Communications Telecommunications Mobile/cellular/portable radios, telephones and pager GPS Aviation Marine navigation Instrumentation Computers Digital systems CRT displays Disk drives Modems Tagging/identification Utilities

Watches and clocks Cellular and cordless phones Pagers Radios Stereos Color TV Cable TV systems Home computers VCRs and video cameras CB and amateur radio Toys and games Pacemakers GPS

Engine control Car stereo Clock Trip computer GPS

to virtually all modern electronic technology (see table 1.) Morion traces its history back to the establishment of the Siemens and Halske telegraph company in St. Petersburg in 1855. The company subsequently became involved in the early days of the quartz frequencycontrol business in the 1930s. In 1994, after the company had been state-owned for 70 years, Dr. Yakov Vorokhovsky, head of the research and development department, initiated a management-led buyout and conversion of the company into a private joint stock company. Dr. Vorokhovsky soon began to reinvent the company. In 1990, the company had 1,500 employees and sales of US$1.7 million. The staff was bloated, as in most Soviet-era stateowned enterprises, and the staff was gradually cut, but Dr. Vorokhovsky

and the management team endeavored to retain the best employees and improve company morale. The process was not as difficult as it might have been in other settings, because as a state-owned company, salaries were very low and payment irregular. In the end, the workforce was reduced to 500, but average salaries increased from US$17/month to US$500/month. Dr. Vorokhovsky implemented a number of other initiatives to make Morion a desirable place to work, including cleaning up and modernizing the bathrooms and bringing in an outside contractor to operate a cafeteria for the workers. Morion has experienced steady growth since privatization. Sales were US$2.4 million in 1997 and were projected to be US$15 million in 2005. The company has continually improved its internal quality control and production

efficiencies, and this has helped it overcome the former market perception that Russian companies were incapable of providing consistent quality and on-time delivery. As a result, the company has both penetrated and in recent years increased its share of the international supply chain to the cellular telephone market and space industry and plans to continue to penetrate these markets and develop new ones.

In the Soviet era the emphasis was on production versus efficient use of resources, as the state controlled MORION 23

prices, and market forces were irrelevant. Heating costs, substantial given the long and cold winters, were paid by the state, and conservation measures such as insulation, doubleglazed windows, etc. were not considered. Morion’s building, a sprawling, multistory labyrinth typical of Soviet-era architecture, was quite inefficient in all aspects of building services, including winterization measures, heating and cooling, and boiler efficiency. Quadriga was very familiar with the state of affairs in former Soviet enterprises, and specifically aware of how these costs impacted Morion’s financial situation. The initial environmental due diligence screening of Morion had identified that the company was paying an annual US$50,000 charge for raw water and wastewater discharged (in the Russian system, only the incoming raw water is metered, and wastewater volume is calculated on the basis of raw water consumption).

Given the company’s tenuous financial condition in the early years of Quadriga’s involvement, the $50,000 charge was significant. While aware of these opportunities, Morion was focused on survival and did not have the time or capital to invest in developing solutions. Quadriga urged Morion to pursue remedies and agreed to finance the necessary investments. This led to the three programs described herein being implemented and the development of a corporate culture focused on optimizing manufacturing performance and reducing waste and pollution. To ensure success, Morion hired Sergei Olhovsky, a civil engineer, whose sole role would be to manage the development and implementation of the program. Mr. Olhovsky has been creative in his approach, using abandoned equipment in one application to save capital costs. In addition, broader sustainability and technical demands were pushed down the supply chain by the multinational firms considering purchase of Morion

products. For example, Nokia, which has subsequently become a major purchaser of Morion products, had stringent material requirements for suppliers, including a prohibition on the presence of lead and cadmium in soldering of circuits. Nokia would not agree to purchase Morion’s products until these standards were met, resulting in adoption of these standards for all its products. Second, Nokia also required that Morion be ISO 14001 certified, which the company subsequently achieved. Morion would likely have had a very difficult time achieving these higher performance standards without Quadriga’s financial support. Last, achievement of these international standards has allowed Morion to access other international markets where these same standards are applied. Hence, Quadriga was able to significantly influence Morion’s environmental sustainability, which has contributed to the company’s overall financial sustainability.

This case describes three Morion programs that have enhanced the company’s sustainability and profitability, or triple bottom line: ■ Measures implemented to reduce natural gas consumption ■ Measures implemented to reduce water consumption ■ Measures implemented to reduce electricity consumption.

Dr. Vorokhovsky in a Morion control room.


These measures are described below, preceded by a description of the context for the measures.


Natural Gas Use Reduction
Morion began its program for reducing natural gas consumption in 2000. The first and most significant measure was to redesign and retrofit the boiler to make it more efficient. Morion was able to realize considerable cost savings in this project by obtaining an abandoned boiler from another plant, rehabilitating it, and using it to replace the previous boiler, which was oversized and inefficient. In addition, as Morion’s primary use of water is for cooling production machinery, hot water was recycled from the cooling line back into the boiler feed stream to take advantage of the already elevated temperatures. The total investment was approximately US$5,000, and the investment was paid back within six months. In Year 2 (2001) Morion focused on improving the thermal efficiency of its building. The major effort, and cost, was installing double-glazed windows throughout the building. The company also improved the seals around the doors and cut off other leaks to the outside, generally improving the building’s performance. In Year 3 (2002), Morion made a series of additional incremental improvements to the heating system to improve performance. The net result is that Morion has reduced absolute gas consumption by more than 55 percent, from approximately 700,000 m3/year to approximately 300,000 m3/year. The reduction versus an output metric (e.g., versus each $1,000 of production) is even more impressive (see figure 1). Morion has reduced gas consumption from approximately 140 m3/$1,000 of production to 22 m3/$1,000 of product, or approximately 85 percent.


Water Use Reduction
In 2000, Morion implemented a parallel program to reduce water consumption. Morion obtains water from the municipality of St. Petersburg. Enterprises are MORION 25

charged Ruble 22/m3 (approximately US$0.78/m3), and the charge covers both water and wastewater, though only the incoming fresh water is metered. Morion used to discharge all its heated water. As part of the gas reduction program described above, Morion now recycles the hot water, thereby saving both energy and raw water costs. In addition, Morion purchased a system of electrical coolers that allows them to recycle water used for cooling multiple times. Absolute consumption of water decreased approximately 10 percent from 2000 to 2004, from over 70,000 m3/year to approximately 63,000 m3/ year. In terms of product output in dollars, Morion reduced consumption in that period by approximately 65 percent, from 14 m3/$1,000 of production to 5 m3/$1,000 of product (see figure 2).


was installing an air conditioning system to improve “clean room” standards and working conditions for staff. As shown in figure 3, Morion’s net consumption of electricity from 2001 to 2004 actually increased by 150,000 kW/hr with increased production, but consumption relative to production decreased from 380 kW/hr to approximately 300 kW/hr per US$1,000 of production, a 21-percent decrease in electricity consumption per US$1,000 of product.

Electricity Use Reduction
Morion began its program to reduce electricity use in 2001. There were four primary programs under this initiative:1 ■ Replacement of older equipment with more modern and efficient equipment ■ Replacement of boiling/evaporation unit for distilled water with a reverse osmosis unit ■ Monitoring of consumption to determine use patterns and processes with heaviest usage to then reexamine for possible efficiency improvement ■ Parallel improvement programs throughout the plant to improve production quality, one of which

environmental supply chain requirements. Further, the investments helped Morion overcome a major negative market perception: that Russian companies utilize dated technology and are incapable of meeting stringent Western quality standards and on-time delivery of products. Morion’s efforts to reinvent the company and optimize its production efficiency and consumption of resources are helping it overcome this stigma as well as contributing directly to the triple bottom line. All of the investments made have had rapid payback, with the longest payback being the reverse osmosis system (14-month payback), and the shortest being the boiler upgrade, which had a 6-month payback.

Morion’s investments in energy and water efficiency have reduced its production costs, improved working conditions and worker productivity, and allowed the company to meet

1. This initiative was financed by an EBRD credit for modernizing production, and Quadriga managed the process.



Reclamation Group
View of main plant, with truck driving onto one of the two weighbridges.

Reclamation Group (RECLAM) is the largest recycler of ferrous and nonferrous scrap metal in South Africa. The company is privately held and was founded in 1998 with a business plan to purchase and consolidate small, family-owned steel scrap recycling businesses into a larger company. The company’s vision was that waste and scrap steel represented an “aboveground mine,” and that by consolidating a number of smaller, established steel recyclers, improving operations, and raising standards, it could reinvent a formerly “dirty” industry into an important business sector contributing to sustainable development. Since 2000, having assembled a base infrastructure of steel scrap recycling centers throughout South Africa, the company expanded into other recyclable commodities, including glass, paper, cardboard, rubber, and integrated waste management services to become the one-stop waste management/recycling solution. Brait Capital, a South African private equity fund, invested in RECLAM in 2000.

RECLAM’s business is the purchase, processing, and sale of ferrous and nonferrous scrap metal. The company has 60 facilities and 2,300 employees. RECLAM is an industry-leading concern and the largest such operation in Africa. The company was founded and is still largely based in South Africa, though branches have been opened RECL A M ATION GROUP 27

in Mozambique, Swaziland, Malawi, Kenya, Zambia, and Botswana. RECLAM’s primary business is the recycling of ferrous metal (e.g., steel), though the company also handles smaller quantities of nonferrous metals (e.g., aluminum, copper, brass). The plants receive all manner of metal scrap, from steel fabricator scrap to decrepit vehicles and other metal trash. The metal recycling business involves the following stages: ■ Receipt/collection: Metal scrap is sourced from a variety of suppliers in South Africa and neighboring countries, and the scrap metal is transported to the closest processing facility. RECLAM receives metals directly from manufacturers; collects metals from manufacturers via waste collection contracts using the RECLAM truck fleet; and buys metals from the informal sector (e.g., individual collectors/haulers). ■ Separation: Metal is separated from nonmetal waste. ■ Weighing/grading: This enables the company to determine load value and payment. ■ Processing: This step involves separating all waste, including hazardous wastes disposed of properly); cutting; fragmentizing (cars, trucks); and compressing. ■ Final product: Storage and delivery constitute the final stages. There are three tiers in RECLAM’s supply chain of metal scrap: ■ Contracts with major metal working companies that deliver scrap with their own trucks

RECLAM’s collection truck fleet, which picks up scrap from larger clients The informal or microenterprise sector—individuals or small groups who earn a full-time or part-time livelihood by collecting and hauling metal waste for sale to recyclers such as RECLAM.1

■ ■

Recruiting management Helping design an incentivization program for officers and major shareholders.

Brait did not, however, have a specific role in the sustainable business aspects discussed in this case study.

RECLAM has recently expanded into glass, paper, and cardboard recycling. The company’s concept is that on the back of its existing infrastructure, recycling of other waste products should be both an economically and environmentally sound business. RECLAM was also motivated by the opportunity to become a vertically integrated waste management company that can provide comprehensive waste management services to its clients.

This case describes three aspects of RECLAM’s business model that have enhanced the company’s sustainability and profitability, or triple bottom line: This sustainable business case study focuses on RECLAM’s commitment to: ■ Its corporate mission of recycling as an environmentally sustainable and profitable enterprise ■ Its “People First” (e.g., employee) program and related health and safety emphasis, which has incentivized the workforce and improved company profitability ■ The microenterprise scrap metal collection supply chain, where RECLAM has helped to foster microenterprises for unemployed South Africans via accurate weighbridges and fair pricing for the scrap metal collected and delivered. While these commitments apply to all RECLAM operations, the case study examples cited herein are drawn

Brait Capital played a significant role in RECLAM’s growth over the last six years, specifically by: ■ Investing early in RECLAM, thereby making possible the series of acquisitions that resulted in the company’s current dominant position as South Africa’s leading recycling enterprise ■ Playing a major role in arranging and negotiating the acquisitions ■ Providing advice in the strengthening of RECLAM’s corporate governance policies and practices

1. By providing a fair value market, RECLAM has indirectly helped to create microenterprises engaged in scrap metal collection and resale to RECLAM.


from RECLAM’s scrap metal recycling business.

Recycling as an Environmentally Sustainable Enterprise
RECLAM’s vision is that waste metal represents an “aboveground mine,” and that the impacts of recycling are far less than those associated with mining and smelting. The company’s mission statement is: RECLAM management espouses a strong and sincere commitment to the people and the environment of South Africa. RECLAM fully recognized the traditional image of steel recycling, and solid waste management in general, as a low-technology, dirty, and marginal business that cut corners to make a profit (e.g., sloppy housekeeping, dust and emission generating, dilapidated trucks and equipment, poor working conditions). RECLAM has worked to alter that perception and change the reality, the goal being to raise the profile of recycling as a technically savvy and sustainable business sector. The company has instituted a number of programs to achieve this goal: ■ There is a continuous exploration of new technologies to increase processing efficiencies, and worker incentive programs to extract more reusable materials. ■ The company cleans up the sites it has acquired and properly disposes of accumulated debris and other waste. ■ The ground is paved in order to reduce dust generation. ■ Environmental management systems have been implemented. (Many of the plants are ISO 14001 certified, and all will be in due course; the main plant is ISO 4 star certified.)

Hazardous and other wastes from the recycling process and equipment maintenance are collected, stored, and disposed of properly: ▼ Processing vehicles requires the removal of all fluids (e.g., fuel and oils) as well as tires and batteries; RECLAM stores drained fluids and disposes of them via licensed collectors. ▼ RECLAM monitors for radioactivity; it is required to issue a non-radioactive certificate when shipping processed metal internationally. All plants have health and safety programs and designated safety

health and environment officers throughout each plant during working hours. All RECLAM trucks are new or recent models and are rigorously maintained (always washed and clean, truck beds covered during hauling, and very high levels of mechanical maintenance to prevent accidents). All on-site equipment is rigorously maintained and kept in top condition (e.g., all trackhoes and other heavy equipment are painted frequently and kept in top working condition, with special attention paid to

“To recover 100 percent of collected wastes while making full use of our resources. To recycle this waste for the benefit of the environment and future generations, leaving no negative impact on our planet.”

Roadside sign outside RECLAM’s main plant in Johannesburg.



level position was found for him. Over several years, the young man worked his way up through the ranks, and he was recently made the manager of a RECLAM plant.

Make Workers Agents Program
RECLAM has endeavored to have all staff incentivized in some manner beyond basic employment and pay, so that the workers become “agents for the company.” At the time of the site visit, RECLAM was in the process of systematically documenting all the incentive programs throughout its 60 plants so as to facilitate dissemination of best practice across all operations. Three examples of RECLAM’s implementation of this program are described below.

Solution to Theft of Nonferrous Metals
At the main plant it was noticed that nonferrous metal recovery was extremely low, and upon investigation it was learned that the workers were stealing nonferrous metal and reselling it to other scrap buyers. To solve this problem, RECLAM devised a two-pronged strategy: ■ Several blatantly guilty workers were reported to the police, arraigned, and subsequently terminated. ■ The company offered the following arrangement to the other workers: one-third of the nonferrous metal receipts would be given to the workers on a monthly basis, and it would be up to the workers to decide how to divide up the proceeds. RECLAM would receive the other two-thirds of revenues generated. The result was that nonferrous metal recovery went from near 0 to 2,000 tons/month and has continued at this level since.

Worker at RECLAM facility.

hydraulic hoses to prevent leaks and failures. RECLAM has made great progress in these endeavors, but is not yet fi nished and is continuing to make incremental improvements.

mobility. The program has two main tenets: ■ Look within for all position openings ■ Make workers agents through mutual benefit sharing.

The Look Within Program

People First
Another guiding tenet of RECLAM’s vision of sustainability is to put “people first,” meaning primarily its employees. RECLAM implements this philosophy through its Worker Transformation Program, designed to foster upward 30 THE PROMISE OF PRIVATE EQUIT Y

RECLAM’s “Look Within Program” seeks to fi ll position openings from within the workforce whenever possible. For example, one of the office maids had a son who was unable to find employment. She made this known to management, and eventually an entry-


RECLAM produces a considerable amount of ground metal from its 34-ton car fragmentizer machines, which reduce cars to ground metal. To prevent excess volatilization during remelting, the ground metal must be reprocessed to convert it into dense metal briquettes with a specific density. This is done via a machine that compresses the ground metal into briquettes. At the main plant, RECLAM was experiencing very poor productivity at the briquette machine. The machine’s factory production specification was 1,600 tons/month, but actual production was 1,200 tons/ month. In an effort to achieve the specified productivity from an expensive piece of equipment, RECLAM instituted a productivitybased compensation system in addition to regular wages. Achievement of the briquette machine’s stated productivity of 1,600 tons a month would result in a Rand 500/ monthly bonus to the 14 workers operating the machine. For each additional ton of productivity over 1,600 a month, the workers would receive an additional Rand 100/month. The machine is now regularly producing 2,000 tons a month, and the workers are enjoying the extra income.

In the basic scheme, RECLAM buys the truck and pays the insurance. The driver leases the truck from RECLAM and pays for maintenance and fuel. The driver is reimbursed by RECLAM on the basis of tons of material delivered to the plants. In a typical case under this scheme, one driver’s earnings increased from approximately US$330 per month to US$2,500 per month. One of the drivers is sending a child to law school. Another now owns two trucks; he drives one himself and has an employee driving the other. RECLAM also holds a monthly driver/ collector competition, with cash prizes for the winning drivers. However, violations of RECLAM’s health and safety program result in

disqualification for the competition in any given month.

RECLAM offers a fair price (calculated daily based on the commodity markets) to all suppliers, large or small. RECLAM also frequently calibrates its weighbridges to keep them accurate and allows the deliverer to be present when the load is inspected and graded. This fairness and transparency have made RECLAM the buyer of choice for at least a part of the informal sector supply chain (see box). As metal recyclers are competing for product, their reputation for fair dealing with the microenterprise collectors has given RECLAM a competitive advantage.

Johannes had lost his job some 5 years ago in the economic recession and had been unable to find another. Having a family, and with no other prospects for employment, in 1997 Johannes turned to collecting scrap metal for sale to metal recyclers. Johannes has been able to make a living doing this over the last 8 years, and as a result of his success, he has been able to purchase his own small truck to conduct his new business. Johannes has dealt with several other recyclers in Johannesburg, but he says he would “drive an extra 50 km” to sell to RECLAM because he was confident his loads would be accurately weighed, he would get a fair price, and he would be treated with respect. In RECLAM’s view, this is yet another example of how its business is built on loyalty, a competitive advantage of its business model.

RECLAM has a number of programs for incentivizing the drivers of its various collection truck fleets. The intent of these programs is to get the best productivity out of the assets and the workers by allowing the workers to share in the benefits of the increased productivity. RECL A M ATION GROUP 31


View of Terapia site, circa fall 2004, with buildings to be demolished in foreground. In the middle background is the Terapia pharmaceutical facility, located in one corner of the property, which was retained and continues to operate. In the distance are the suburbs of Cluj-Napoca.

Terapia is a formerly state-owned pharmaceutical manufacturing company located in Cluj-Napoca in northwestern Romania. Terapia was acquired by Advent International in 2003 in a US$49.5 million leveraged public-to-private transaction. Advent International is an IFC investee private equity fund focused on Eastern Europe. Prior to the acquisition, Terapia was the third largest pharmaceutical company in Romania, with projected 2003 annual sales of US$35 million and market share of about 4.5 percent. This sustainable business case study focuses on the “brownfield” investment concept of the Terapia case. A brownfield can be defined as: “Real property, the expansion, redevelopment or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant or contaminant,”1 and which has the potential to be successfully cleaned up and reused. For example, Cherokee Partners, a U.S.-based pioneer brownfield investment fund operating in the U.S., Canada, and Europe, has been enormously successful in exploiting this niche real estate market and now has assets in excess of US$1 billion.

Terapia, as typical of many pre-1991 Eastern European and Soviet enterprises, did not have proper handling, storage, and spill response management systems for solvents and
1. Cherokee Partners, 2004 Sustainability Report.


other toxic materials and waste used in its previous chemical manufacturing processes. As a result, there was significant ground and groundwater contamination both at the Terapia plant site and at a nonsecured disposal site outside of town and adjacent to the Cluj municipal dump site. Advent and its investment partners were aware of the potential environmental liabilities at the Terapia site. At the time of the acquisition, the site had a dozen or more separate buildings and facilities constructed over the years as Terapia grew and expanded. The core pharmaceutical facility was located in one corner, and the remainder of the site was occupied by dilapidated or obsolete buildings that had formerly been used in the manufacture of chemicals, many as feedstock for the pharmaceutical plant, as well as non-core businesses. Advent determined that Terapia’s core manufacturing operations could be contained in the occupied and modern building at the corner of the site along with a new warehouse and administrative building. The rest of the site, if it could be remediated or cleaned of the pollutants, could potentially represent valuable real estate. Advent and its co-investors required Terapia to commission detailed environmental liability investigations to determine the extent of the contamination and develop detailed capital cost estimates for cleanup prior to investing. As has been successfully demonstrated in the United States and Europe, this case suggests that with proper risk management measures, brownfield sites can represent good investment opportunities. However, as the project

Similar view, following demolition.

is still in its early days, there are not yet any financial data to demonstrate the returns on the brownfield aspects. Nevertheless, the pharmaceutical company is performing well. The details of the operation are described more fully below.

The thorough due diligence carried out to ascertain the extent of the risk and the costs of cleaning up the site to both Romanian and European Union standards.

Advent’s Identification of the Brownfield Opportunity
At the outset of their due diligence of Terapia, Advent was aware of the contamination at the Terapia site. But as opposed to viewing this as a deal breaker, Advent saw it as an opportunity. Advent reasoned that the existing and future pharmaceutical operations could be contained in the modern building currently housing operations at the corner of the site along with a new warehouse and administration building. The rest of the buildings would be demolished and the site cleared, and the excess land eventually TER APIA 33

This case focuses illustrates two main points: ■ Advent’s recognition and appreciation of a second opportunity (e.g., the brownfield upside)

sold or leased for commercial use or used for expansion. Hence, Advent viewed Terapia as a two-stage play, given the excess 12 or so hectares of property in a prime industrial zone on the edge of the city of Cluj-Napoca. ■ The central play was to grow the pharmaceutical business through investment in new equipment, new product lines, and improved management, marketing, and governance. ■ The second opportunity was to clean up the site contamination and associated landfill contamination, thereby reducing risks and meeting both the Romanian environmental requirements and those of Advent and its co-investors EBRD and the Netherlands finance development company FMO, followed by an eventual real estate sale/development play with the excess property.

Old Terapia dump site, less than 0.5 hectare in area.

Advent’s Environmental Due Diligence
Underestimation of the extent of environmental liabilities can result in severe financial impacts, but overestimation can result in missed opportunities. Advent was thorough and methodical in its investigations, and this gave it the confidence to proceed with the investment in Terapia. The due diligence program is described below. Since there was site contamination from the many years of pharmaceutical manufacturing by Terapia as a state-owned enterprise, one of the conditions of the transaction was that Terapia would engage a qualified environmental consultancy to carry out detailed site investigations to determine the nature and extent of contamination. 34 THE PROMISE OF PRIVATE EQUIT Y

Longitudinal view of construction of new Terapia secure waste disposal site.

Terapia commissioned a respected European environmental firm with the proper credentials and expertise to carry out the initial site investigation, and a report was produced in October 2002. The site investigation involved a detailed surface and subsurface investigation of the site via the drilling of monitoring wells and the regular collection and laboratory analysis of groundwater samples. It was determined that there were areas of soil and groundwater contamination at the 15hectare site, and eight specific “hot spots” or areas of definite contamination were identified. In addition, contamination emanating from the company’s former noncontained dump site located on the outskirts of Cluj was also identified. An underground plume was detected which flowed downgradient from the dump site to a small stream, a tributary of the River Some. The dump site, located on the crest of a hill in porous soil, lacked even simple measures to prevent further contamination (e.g., coverage with waterproof or semiwaterproof materials such as clay, to prevent the infi ltration of precipitation and subsequent transmission of contaminated leachate). Hence, the key environmental issues identified by the study were: ■ Contamination of soil and groundwater at the Terapia manufacturing site from chemicals used in prior operations ■ Contamination of soil and groundwater at the (former) landfi ll site. Subsequent to the initial report, Terapia commissioned the same

consultant to prepare a quantitative risk assessment report.2 The primary objective of the second report was to quantify the extent of the problem and produce a detailed cost estimate for cleaning up the contamination. The second report, published in June 2003, estimated the cost of cleanup to be as much as US$4.5 million. Advent then commissioned a second environmental consultancy to carry out a due diligence review of the October 2003 and June 2004 studies. The second study corroborated the findings but increased the estimated costs of cleanup costs up to US$5 million. On the basis of this double due diligence procedure, Advent decided to undertake the transaction. At the time of the site visit for this case study in July 2005, the demolition of the nondesirable buildings was nearly complete, and construction of a new, engineered landfi ll for Terapia’s pharmaceutical waste was underway. Cleanup of the manufacturing site and the old landfi ll was scheduled to begin in the fall of 2005. The black material is an effectively impervious geotextile membrane that prevents landfi ll leachate from infi ltrating into the ground. The leachate will drain to the far end of the graded, bottom sump and be pumped out and treated. The landfi ll will also be capped to reduce infi ltration of precipitation.

Advent’s Terapia project is in its third year. The pharmaceutical company is performing well, but it is too early to determine the success of the brownfield project. However, the project does constitute a good example of a brownfield investment project as a second play in a private equity transaction as well as a good practice example of the environmental due diligence process. The brownfield sector has been extremely profitable in the United States and Europe. As an example, Cherokee Investment Partners, a U.S.based private equity fund specializing exclusively in brownfield investment and redevelopment since 1990, has been extremely successful. Cherokee now has three funds and over $1 billion in assets. Cherokee calculates that in the U.S. market, an acre of brownfield redevelopment saves 4.5 acres of undeveloped greenspace, making brownfield reuse an inherently sustainable investment as well as cleaning up the impacts of past and ongoing pollution of water resources. The Terapia case is an early example of a brownfield redevelopment in Eastern Europe, a region where there is extensive site contamination and brownfield opportunities. Because of the necessary investment, East European governments are unlikely to have the financial capacity to carry out the cleanups. But this is a sector where the private sector may be able to make money and clean up past damage to the environment.

2 One of Advent’s conditions was that it (and its independent expert consultants) would be able to review the scope of work for both studies before Terapia commissioned them.




Lateral view of new Terapia secure landfill construction showing fine grading of clay liner to the right and installation of geotextile membrane to the left. The cylindrical roller to the right is a compactor, which is rolled over the clay using the crane to compact the clay to an engineering design specification.



COVER Courtesy of ALL, Reed Huppman, Libby Schroen AMÉRICA LATINA LOGÍSTICA page 4, 7, 14: Courtesy of ALL MENGNIU page 16, 19, 20: Reed Huppman MORION page 22, 24: Reed Huppman RECLAMATION GROUP page 27, 29, 30: Libby Schroen TERAPIA page 32, 33: Courtesy of Terapia page 34, 36, 37: Reed Huppman


Since 1997, IFC has been delivering strategic capacity building and technical assistance on the environmental and social aspects of finance and investment in the emerging markets. Undertaken through IFC’s Sustainable Financial Markets Facility, this assistance has included training workshops to managers from many financial institutions around the world. These activities have been made possible by the support of the governments of Italy, Luxembourg, the Netherlands, Switzerland, and the United Kingdom.

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