7. Financial sustainability

Full webinar transcript

This transcript has been edited for clarity and concision. Names and technical terms have been corrected, and webinar administration, poll mechanics, repetition and false starts have been removed. The substance of the conversation has not been changed.

Introduction

Zoë Lenkiewicz: Thank you, Swetha, and hello, everyone. It’s lovely to see so many of you here. These events are a chance to meet and learn from one another. Across our first five Built to Last sessions, Mayor Talib Bensouda in The Gambia showed how leadership and governance create the conditions for progress. Pushkar Pradhan in India showed how evidence supports better decisions. Lakshmi Menon in India helped us look beyond technology and consider whether a solution fits the wider system. Anna de Chavez in the Philippines showed why people need to be involved early enough for their knowledge to shape a project. And Federico Parra in Colombia showed what changes when waste pickers are recognised as rights-holding citizens and public service providers. Today we’re asking: how will a waste service be paid for, not just during a funded project, but year after year? Vehicles need fuel and repairs. Staff need salaries and supervision. Facilities need maintenance, spare parts and, eventually, replacement. If these costs aren’t understood and covered, a service won’t last, however good the original idea is. Built to Last explores Global Waste Lab’s Seven Foundations of a Resilient Waste System. The framework brings together lessons from the research behind UNEP’s Global Waste Management Outlook 2024, which I authored, more than 20 years of practical experience in waste policy and project delivery, and the knowledge of waste managers working in systems that are developing, under stress or underfunded, or all three. The series is delivered by Global Waste Lab with be Waste Wise, endorsed by the Chartered Institution of Wastes Management (CIWM) for continuing professional development, and forms part of our contribution as a Knowledge Partner for the ISWA World Congress 2026, which takes place in my home city of London in November. It has been important to centre voices and experience from across Africa, Asia and Latin America. These are insights from people leading, financing and delivering the work, not abstract discussions about the Global South. We’ll bring those perspectives together in our concluding panel at the ISWA World Congress. We use a wheel to show the seven foundations because waste services need to keep running reliably, day after day, and each foundation helps keep the whole system moving. Today we’re focusing on financial sustainability. I’ve grouped it into three practical ideas: understand what the service really costs; use the right mix of funding, finance and revenue; and test what happens when assumptions change. The initial equipment or facility is only part of the cost. Planning also needs to account for operations, staffing, maintenance, supervision, residue disposal, replacement parts and adaptation. The right financial mix depends on who benefits, who can afford to pay and which parts of the service remain public responsibilities. A resilient system also needs clearly allocated risks and room to adapt when material prices fall, participation varies or payments arrive late. I’m delighted to welcome Vishwas Vidyaranya, co-founder of Ambire Global and a specialist in sustainable finance and the circular economy. Vish works at the intersection of environmental systems and finance. We met many years ago at an ISWA World Congress. He’ll help us explore the real costs of keeping waste services running, the roles of public and private finance, and what blended finance and public-private partnership models can and can’t achieve. Vishwas, thank you for joining us and helping bring this foundation to life. Over to you.

Financial sustainability and the finance sector

Vishwas Vidyaranya: Thanks, Zoë and Swetha, for the introduction. It’s a pleasure to be part of this Global Waste Lab series, which I’ve followed for many years. I’ll give a short presentation and then we can have a discussion. I’ll focus on the challenges in financing waste management and how we might address them. I’m a co-founder and CEO of Ambire Global. We work in the circular economy and sustainable finance, including with financial regulators and financial institutions such as banks, insurers, pension funds and issuers. We see that the circular economy and sustainable finance communities often work in parallel. They don’t always meet, and they can communicate projects and make decisions in different ways. I’m based in Bogotá, Colombia, and work across the world, mainly in Latin America. From a finance perspective, I see four main challenges: definitions, financial viability, risk and complexity. Waste management is complex, and new technologies and innovations bring new names and descriptions. That’s positive, but the financial sector can’t keep up with every term, and the people making financing decisions aren’t necessarily environmental specialists. We need clear ways to describe projects to them. There is also a lot of greenwashing. Many projects are described as innovative, sustainable or efficient, but global climate targets are still far off. We need science-based definitions that can be understood and used across countries, while reflecting local context. Projects also need to be financially viable. If every project were viable on its own, it would already have secured finance. We need to structure projects in ways that help them access finance for both capital expenditure (CapEx) and operating expenditure (OpEx). Risk is another challenge. There is the actual risk of a project and the way that risk is perceived. An investor may find it easier to compare a solar photovoltaic facility with other energy projects than to assess a complex anaerobic digestion project involving source separation, social systems and technology. Waste projects can involve more risks, but they can also be perceived as riskier than they are. We need to identify and mitigate risks before seeking finance. Finally, the projects themselves can be complex, so we need to communicate that complexity clearly. Let me start with definitions and sustainable finance taxonomies. People often use their own definitions of what is green and what isn’t. Take anaerobic digestion or a biogas plant: different technologies don’t necessarily meet the same standards. A large plant could also have methane leakage. From the financial sector’s point of view, how can it tell which technology or project is appropriate to invest in? We need to translate the science and technical knowledge into clear, short, science-based definitions that financial institutions can understand. Financial systems use ISIC codes, the International Standard Industrial Classification system, to describe economic activities. The technology’s name matters less than whether it meets the parameters for an activity. Also, initial project screening is increasingly done by software, not people. That makes precision and clarity especially important. A sustainable finance taxonomy is like a dictionary for sectors such as waste, water, agriculture, energy and transport. It sets out what counts as green or sustainable, drawing on science and the country’s context. It gives banks, insurers, pension funds and investors a shared reference for mobilising capital. There are around 60 taxonomies globally, and the number keeps changing. It’s important that these frameworks are interoperable. They need to recognise differences between countries while making it possible to compare activities, such as composting, across different standards and contexts. Taxonomies can help with this. They are also increasingly used in financial regulation. Taxonomies can support financing, including credit lines and new bank products. Large issuers, such as municipalities, governments and companies, can use them to group projects and approach international markets. If a project meets a recognised taxonomy, it can seek investors focused on those outcomes. Competition among investors may help secure a ‘greenium’, a small reduction in the interest rate. Taxonomies can also help diversify the sources of finance and guide policymakers as they develop subsidies and incentives. The shared definitions help reduce fragmentation in the market. The next challenge is financial viability. Often, a project isn’t financially viable because the true environmental costs of damage are not included in the financial model. The project is assessed on a standalone basis, while the external costs are left out. This is common in many countries and may require policy intervention, which project managers can’t always control. Grants and multilateral finance are useful in the early stages, for feasibility studies and pilots. But to mobilise capital at scale for commercial activities, we need to structure projects differently. Governments can provide subsidies, incentives and tax benefits. Philanthropic and multilateral funding or concessional capital can support early work, but this money often stops at pilot projects and studies. There can be much less funding for implementation. For actual project costs, including CapEx and OpEx, different sources of finance may need to be combined. Blended finance isn’t a financial instrument in itself. It’s a way of bringing philanthropic, multilateral or concessional funding together with commercial capital, such as a bank’s green loan or a green or sustainable bond. Some of the capital may be a grant, with no expectation of a financial return, while the rest is standard financing. We’ve seen this work in several countries, including for organic waste management projects. Risk has a direct effect on the cost of financing. Waste projects may face high costs, limited markets for by-products, legal issues, licensing requirements and more. They involve not just technology but also social systems, logistics and environmental regulation. Before presenting a project to lenders, teams need to evaluate risks across areas such as legal, economic, social, technical and financial, then develop mitigation strategies. Lenders also assess the borrower: who is seeking finance and what is their credit rating? A strong business model is essential. A project can combine income from by-products, tariffs, subsidies, incentives and grants, but it still needs a credible developer and a business model that can offer investors a reasonable return. Long-term contracts can also help. Too often, projects seek finance before securing the contracts they need to operate. Finally, we need to make complex projects easier to understand and show how their risks will be managed. Grants can be helpful, but relying on them indefinitely is not sustainable, and geopolitical conditions can change. Economic incentives may be important to the business model, but they depend on government policy and implementation. Carbon credits may also be part of the financing picture, though their value can change. Many waste projects are small, and smaller requests may receive less favourable terms. One option is aggregation. A city or government can group projects into a portfolio and seek finance for the whole package. That portfolio may include projects with different financial returns. Municipalities in Latin America, for example, have combined cycle routes, wastewater treatment, waste management and other public infrastructure projects. A bond portfolio can meet the financing criteria even when every individual project does not have the same financial return.

From the presentation to discussion

Zoë Lenkiewicz: Thank you, Vish. I’ll recap a few points from your presentation. The four challenges are definitions, viability, risk and complexity. Waste managers and finance professionals often use different language, so we need a bridge that helps the finance sector understand the value of waste management projects. Many waste projects aren’t financially viable without supportive policy. That takes us back to the first foundation, leadership and governance. A waste or recycling enterprise can’t operate in isolation; it needs a wider system and government support. Grants often fund pilots, but many pilots don’t move on to long-term sustainability. This series is about how we can move beyond pilots, so this discussion is important. You also described risk perception. An impact investor seeking to reduce emissions might choose solar because it seems straightforward, while achieving similar reductions through waste management can involve more systems and complexity. That can make waste projects feel riskier to investors, especially when they use unfamiliar language. In my work on risk assessments, the aim is never to eliminate all risk, but to understand it and reduce it where possible so financing terms can improve. An attendee asks: ‘In my experience, many waste management projects are part of a wider transformation towards better service coverage and sustainability. They have to work with changing rules and regulations and are part of changing the existing system. How can we build a business model that accommodates that fluidity? Are there good or bad examples we can learn from?’ Vish, over to you.

Building a business model for changing conditions

Vishwas Vidyaranya: That’s an important question. As I said, policy and economic incentives are crucial. Without them, many waste projects won’t be financially viable. But project developers can’t wait for policy to change before starting work. They need to build a financial model that accounts for uncertainty. Some anaerobic digestion projects include carbon credits as one source of income. In voluntary markets, carbon prices have ranged from zero to around $10 per tonne. There may also be subsidies or incentives for compost or digestate from a biodigester. But these are variable. If a project is planned to operate for 10 or 15 years, it’s difficult to promise an investor that today’s carbon price will still apply in five years. It helps to distinguish between definite income and possible additional income that depends on policy or international markets. These uncertain sources may be valuable, but they should be treated as probabilities. A project may also need additional support from government, philanthropy or multilateral institutions. Ultimately, we need to ask whether the financial model reflects the true environmental costs. Usually it doesn’t. If we fail to manage waste, there are wider environmental costs, but those aren’t included in the project model. The question remains: who pays for them?

The wider costs of poor waste management

Zoë Lenkiewicz: That connects with the external costs of poor waste management: the effects of open burning, dumping and overconsumption on biodiversity, climate and human health. Modelling for UNEP’s Global Waste Management Outlook 2024 suggested that, if current trends continue, the impacts of municipal waste on biodiversity, climate and human health could double between 2020 and 2050. These impacts are called externalities because they aren’t included in the financial cost of the service. In the end, though, they affect all of us. It’s a tragedy of the commons: shared resources can become degraded when no one takes responsibility for protecting them. We need to turn that around and use the expertise shared in this series to make change.

Green finance

An attendee asks how green finance can support waste projects. Banks and companies offer leasing for solar panels, waste treatment plants and wind turbines. Does green finance apply to waste treatment or recycling equipment? Vish, could you explain what green finance means and give us some examples? Vishwas Vidyaranya: Financial institutions often have national or institutional targets for how much finance they mobilise for sustainable projects. Frameworks such as taxonomies help them decide what counts as green, sustainable or social. In Colombia, there are around 75 green loan products across commercial banks. Sometimes a green loan is simply a way to label an investment. In other cases, it offers benefits such as a lower interest rate or access to technical assistance. A bank may gather its existing clients’ projects and expected demand over several years into a portfolio, then raise capital for that portfolio from an international investor or through a bond. The bank can then lend that money to individual users. This lets smaller projects access finance through an intermediary, even if they are too small to approach those markets directly. Multilateral institutions and development banks may help finance these programmes and provide technical assistance. For a waste facility, that assistance could cover feasibility studies, licensing, certification or a market study. Some of those costs are then absorbed by the programme. Green finance can cover a range of activities, depending on the environmental objective and the framework used, including climate mitigation, hazardous and medical waste management, and the circular economy.

Aggregating smaller projects

Zoë Lenkiewicz: Thank you, Vish. There are several more questions, so I’ll go to Kartik next. He asks about aggregation. Each finance transaction requires due diligence, which creates a high transaction cost. It may make more sense for a finance organisation to arrange a $150 million transaction than one for $1 million. Smaller companies can be turned away because they aren’t asking for enough. You described how a city council could raise a larger amount and allocate it to smaller projects. Are there examples of small private companies pooling their needs and approaching a bank together, for example, six companies each seeking $10 million? Vishwas Vidyaranya: Yes. Aggregation through bonds and sustainable bonds has grown globally. More than $5 trillion has been mobilised this way across different areas. The largest share goes to energy and transport, but waste, water, sanitation and utility services are also included. Green and sustainable bonds are now common in many countries. One approach is sovereign or sub-sovereign issuance. Governments, such as Mexico, issue bonds for projects that serve the public good, including projects that may not be financially viable on their own. There are also corporate investors and commercial and development banks. In Colombia, Bancolombia has aggregated smaller investments into a portfolio of more than $50 million and then financed companies individually. The same approach could work for waste management. A city could identify the need for many composting plants, group them into a portfolio and present the whole pipeline to the finance sector. That can make the package more attractive than each small project would be on its own.

Impact reporting and blended finance

Zoë Lenkiewicz: That’s really helpful. The language of finance is quite different from the language of waste management. If you’d like us to run more webinars unpacking these finance issues, please say so in the comments. Many experienced waste managers can feel lost when they haven’t worked with finance, just as finance professionals may not understand waste management. Vish has a useful understanding of both. Suleiman asks about blended finance. It can include conditional payments linked to project milestones, such as environmental or socioeconomic impacts. How do you measure and report those impacts as part of the financial deal? Vishwas Vidyaranya: Impact reporting is a key requirement in sustainable finance. A project, such as an organic waste management plant, may have key performance indicators (KPIs) and a second-party opinion validating its framework. The borrower may be required to report on those indicators until the loan is repaid. For climate finance, a measure could be greenhouse gas emissions; for circular economy finance, it could be the amount of waste diverted. Monitoring can be challenging because bank sustainability teams are small, while they may need to monitor thousands of borrowers for five or six years. Technology can help automate reporting. Blended finance is a way of structuring finance, rather than a financial instrument in itself. It can help reduce perceived risk. A multilateral institution, for example, may guarantee a project so the financial sector sees less risk. IFC and the World Bank have guarantee programmes in Mexico and Central America. Blended finance can also support newer technologies that investors consider unfamiliar, such as black soldier fly projects. A multilateral development fund or another partner may absorb early losses while a project reaches scale. But reducing risk and absorbing first losses don’t remove the need for the project to be financially viable. That is still essential.

Planning for change

Zoë Lenkiewicz: I have a question about planning for change. How can a financial model remain workable when material prices, political priorities, service demand or economic conditions change? Vishwas Vidyaranya: Projects should test different scenarios through sensitivity analysis. They can consider macroeconomic changes, energy prices over the next 10 years, changes in by-product sales and possible risk-mitigation strategies. I’ll use examples from Latin America, where I know the projects well. Four or five years ago, natural gas cost around $6 per million British thermal units (BTU); today it is around $12. Higher fossil fuel prices can make biogas projects more profitable. In Colombia, gas prices have risen as the country has started importing gas. There are also negative examples. Carbon credits were lucrative five or six years ago, but a couple of years ago their prices fell close to zero. These changes are a financial risk for both the project developer and the finance provider. Sensitivity analysis can show what happens under different scenarios, but it can’t remove all uncertainty. This is true of solar and other sectors as well as waste.

Financing smaller municipalities