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Standard Bank buys IFC green bond to invest $200mn in renewables
SOUTH AFRICA
THE IFC has invested $200mn in Standard Bank of South Africa’s green bond, which was placed on the London Stock Exchange on March 2.
It is Africa’s largest green bond and South Africa’s first offshore green bond issuance, which will increase access to climate finance.
The 10-year green bond facility privately placed by IFC, an arm of the World Bank Group, is compliant with the International Green Bond Principles.
Standard Bank’s Sustainable Finance Busi- ness Unit is to use the money to on-lend to and finance climate-smart projects in South Africa. These include renewable energy, energy effi- ciency, water efficiency and green buildings.
The bond sale comes as there is more and more interest in sustainable, green debt. Since the start of the year, major investors from BlackRock downwards have declared that climate risk is investment risk, and are directing more attention to investment in renewables and sustainability.
“This bond is a landmark placement for South Africa and will contribute to financing South Africa’s green economy. We hope it will catalyse interest in green investments from other actors in the country,” said Adamou Labara, IFC’s coun- try manager for South Africa.
Institutional and multilateral lenders such as the IFC are also under pressure to divest away from fossil fuels and to concentrate on renewa- bles projects.
Commercial banks such as Standard Bank currently provide 45% of South Africa’s financ- ing for renewable energy and energy-efficient projects.
Gaining access to institutional bonds, with their lower interest, should enable Standard Bank to continue to lend to climate-smart pro- jects. The IFC estimates that South Africa’s cli- mate-smart investment potential, between now and 2030, is $588bn.
“When it comes to financing, clients should be considering green, social and sustainable products as investors increasingly shift their mandates to sustainable businesses,” said Nigel Beck, Standard Bank Group’s executive head of Sustainable Finance.
Projects funded by the green bond have the potential to reduce greenhouse gas (GHG) emissions by 742,000 tonnes per year (tpy), or nearly 3.7mn tonnes over a five-year period, IFC estimates.
The IFC is one of the world’s largest green bond issuers, with 172 issues in 20 currencies, totalling more than $10bn.
The IFC is a member of the Green Bond Principles and is part of its Executive Commit- tee, which, combined with its experience as an issuer and investor in green bonds, has allowed it to support several countries globally to shape the standards and guidelines of green bond issues.
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w w w . N E W S B A S E . c o m Week 09 05•March•2020
