South Africa’s largest bank, the Standard Bank Group, sold its first ever green bond for $200 million to the International Finance Corporation (IFC). This is the largest sale of its kind from the continent yet.
This green bond will be active for ten years and the money raised will be used by Standard Bank to invest in low carbon projects including renewables, energy efficiency, energy storage and water efficiency, plus the development of environmentally friendly buildings. The debt will be listed on the London Stock Exchange, making it South Africa’s first offshore green-bond issuance.
In 2018, alone Standard Bank financed 135 MWs of wind power projects and 300 MWs of solar PV projects in South Africa.
Why this green bond is important
Sim Tshabalala, Standard Bank Group Chief Executive, says, “This bond issue reflects SBG’s strategic focus on sustainable finance in line with our Social, Economic and Environmental (“SEE”) value drivers and vision to drive Africa’s growth with minimal adverse impact. Our strategy aims to embed social, economic and environmental considerations into our borrowing, lending and business practices in a way that helps us to continue supporting our clients, whilst producing value for society at large.”
Already, major banks provide some 45% of South Africa’s of investment in renewable energy and energy-efficient projects, reports the International Finance Corporation. The IFC estimates that South Africa has a “climate-smart investment potential” of $588 billion between now and 2030.
Integrated Resource Plan
But for many investors, the next challenge in their renewables ambitions, is awaiting the final approval by the country’s National Energy Regulator of South Africa (NERSA) of the long delayed so-called Integrated Resource Plan (IRP). The IRP is a government policy plan to increase power generation capacity in the country over the next decade.
But industry experts expert final approval from NERSA could be completed within three to six months.