Page 30 - Woman to Woman Magazine: Special Edition 2020

THOUGHT LEADERSHIP

Economic & Social Sustainability

Sustainable Finance could help

Drive Africa’s Economic Recovery

By: Nigel Beck, Executive Head of Sustainable Finance at Standard Bank Group

ustainable finance could green bond, via a private placement with the face of the COVID-19 crisis, having
help drive Africa’s recovery the International Finance Corporation allowed national grids to become more
from COVID-19 while also (IFC), in March this year. The US$200 flexible to fluctuations in demand.
Sincentivising much-needed million bond will be used by the group’s
investments in the green economy and Sustainable Finance Business Unit to Meanwhile, the sustainable finance
social development. fund eligible green assets – renewable market is also being driven by investors,
energy, energy efficiency, water who are increasingly gravitating towards
The global pandemic has set back the efficiency and green buildings – aligned ESG-linked assets partly on the premise
continent’s growth and demanded new to our Sustainable Bond Framework. that they outperform over the long term.
approaches to economic development. In this context, we believe that our
It has also highlighted the importance Partly due to the impact of COVID-19, US$200m bond issuance is a significant
of sustainability and raised the focus we are already seeing a surge in client and important step forward for our
on environmental, social and corporate interest in financial products that Sustainable Finance Unit, which is
governance (ESG) issues. promote a more sustainable economy. growing in importance to the group as
For instance, the pandemic is boosting demand for these solutions rises.
Even before COVID-19, the sustainable demand for bonds that fund social
finance market was flourishing. In 2019, projects, and this trend is expected to In September, Standard Bank closed a
sustainable debt issuances reached a last well into the future. Corporates sustainability-linked loan with Equites
record high of US$415 billion globally are increasingly expected to maximise Property Fund, a JSE-listed real estate
– up 60% from the prior year. Green their social impacts and uplift the investment trust (REIT) focused on
bonds still dominate the sustainable communities in which they operate. logistics assets in South Africa and the
finance market, but other products, UK. The interest rate on the loan is
including green loans, social bonds and Given Africa’s immense unmet energy linked to Equites’ achievement of certain
sustainability loans, are fast playing needs, we expect to see a wave of pre-agreed ESG performance targets.
catch-up, with the market becoming decentralised green energy projects as
increasingly diversified to meet growing corporates and municipalities look to Standard Bank was also the lead arranger
demand. secure reliable and affordable power for Acorn Holdings’ green bond issuance
supplies while also furthering their ESG in Kenya. This was East Africa’s first-
For the time being, Africa accounts for a agendas. ever green bond and the proceeds are
negligible share of the global sustainable going towards environmentally friendly
finance market, but the continent African governments will also need to student accommodation in Nairobi.
is starting to play catch-up as more procure more power in the months ahead
corporates and investors recognise the as demand recovers and the supply We expect to conclude more funding
benefits that these funding solutions offer. shortfall widens. The fastest and most deals that unlock green projects aimed
For example, corporates can benefit from cost-effective way to address the supply at mitigating climate change, and
lower funding rates if they achieve various gap is through renewable power projects, that enable social projects that reduce
predetermined ESG outcomes. which are now the most economically economic and social inequality.
viable source of energy in most
We believe that Africa is primed for countries. Further, advances in battery Ultimately, Africa is well placed to
a sustainable finance boom, given its storage technologies, coupled with cost become a major player in the global
immense potential in the renewable declines, mean renewables are becoming sustainable finance market. And
energy space and its ongoing increasingly attractive and viable. given the continent’s massive funding
developmental challenges. needs, sustainable finance will play an
Technologies such as hydro, wind and important role in shoring up global and
Standard Bank launched its first ever- solar have proved their resilience in local capital for high-impact projects.

30 Noble Magazine // 2020 Special Edition