In order to contribute to the competitiveness of selected strategic industries in Guatemala, mobilizing investment in sustainable industries and reducing the generation of greenhouse gases, coordinated action between companies, the government and the financial sector is required. Achieving competitiveness requires resource efficiency measures and that companies distinguish themselves due to their cleaner productive processes that significantly reduce their negative externalities on the environment and on people's health. Likewise, studies have shown that in more competitive countries female labor force participation affects competitiveness positively. By providing firms with direct support for clean energy management solutions and better waste management, both through the audits and inclusive cleaner production agreement targets, this project will tackle two of the central resource efficiency dimensions while simultaneously advancing female empowerment among participating firms and in line with SDG 5 (gender equality).

This project simultaneously recognizes climate financing gaps in the local market and therefore seeks to address deficits in the capacity, financing mechanisms and tools available for sustainable industries that will be aligned with the Central American green taxonomy currently in development. By directly supporting Guatemala’s financial sector and select banks, the project will support financial intermediaries in correctly evaluating and preparing targeted credit lines that respond to the technology and process changes adopted by companies engaged in resource efficiency and their engagement in the wider circular economy to develop a green asset class.

The public sector, for its part, also faces challenges to improve public-private decarbonization synergies and establish clear rules designed promote and facilitate private investment in corporate sustainability and circularity. By directly diagnosing and attempting to close existing regulatory gaps and by promoting targeted public tools, this project will likewise tackle the government’s role in sparking demand for corporate resource efficiency and green financing supply, through Cleaner Production Agreements (CPAs, described in more detail below) and complementary tools.

As a consequence of this tripartite intervention model, companies are enticed to demand efficient solutions (water, energy, waste utilization) and greater inclusiveness, and invest in initiatives of this nature; the Guatemalan government facilitates the enabling conditions for such initiatives; and local banks develop the necessary skills to facilitate access to sustainable and circular economy financing. In turn and in line with the activities described in greater detail below, companies must be made aware of the benefits of applying inclusive cleaner production and circular economy measures; they must have a scalable public-private led mechanism and an enabling regulatory framework incentivizing investments in technology and production process; and companies must simultaneously be able to easily access financing from commercial banks that can recognize the opportunity and further develop products for sustainable industrial projects.

Of note, Cleaner Production Agreements are a recognized National Appropriate Mitigation Action (NAMA) designed to systematically implement, audit and report cleaner production measures related to solid waste management and recovery, energy efficiency, water management, worker training in occupational health and safety to improve environmental and social dimension workplace standards, resulting in an increase in production efficiency, climate change mitigation, market recognition and reduction of social and environmental impacts. Popular in Chile (200+ signed), Colombia (60+ signed) and Europe, its merits include its measured return on investment – 5 to 1 for the private sector and 11 to 1 for the public sector – in addition to a series of benefits resulting from improved public-private coordination that, in Chile, resulted in a reduction of nearly 1.5 million tons of CO2e and significant cost savings in water, energy and waste, while increasing signatory firms’ productivity (avg. 1.69%, UNIDO) and triggering US$25+ million in private financing and public financial support.

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The following is a strategic and operational model of the Sustainable Industries in Guatemala program, based on a three-component structure and the activities therein.

The first component Regulatory Support and Implementation, aims at promoting investments in clean technologies and sustainable solutions in the manufacturing industry by bridging strategic regulatory gaps and, in particular, by promoting public-private Cleaner Production Agreements and their underlying policy tools. The main client for the first component will be the Ministry of Economy, although other government agencies, such as the Ministry of Environment and Natural Resources, and private industry associations, will participate in the activities as necessary, in close coordination with Component 2. The first component likewise houses a communications element to enhance the project’s visibility, results and impacts.

The second component, Sector and Firm Support and Implementation, works closely with firms and national partners such as ProPyme Centers to implement cleaner production and circular economy measures, by means of audits that are oriented to concretize investments in green/efficient technologies and process improvements (in coordination with Component 3). This component likewise supports capacity building in the private sector both through the CPAs hosted under Component 1 as well as through the development of training materials and workshops as defined below.  The main clients are private firms as well as partners that serve their increased capacity in sustainable industrial processes and procedures.

The third component, mobilizing finance for sustainable investments, aims to develop the conditions in Guatemala’s banking sector to favor the financing of sustainable industry solutions, by developing or strengthening capacities both in select companies willing to finance clean tech or circular economy present as well as in the banks offering the loans. The main client for the third component will be Guatemala’s commercial banking sector.