Standard Bank has sold Africa’s largest green bond, raising US$200 million to finance climate-related projects like renewable energies, water efficiency and green buildings.
This is Standard Bank Group’s (SBG) first ever green bond to be listed in the private market and the World Bank’s International Finance Corporation (IFC) invested the entire US$200 million.
The bank said the bond is a 10-year facility and the money raised will help Standard Bank’s Sustainable Finance Business Unit to advance loans with a longer tenor.
“This bond issue reflects SBG’s strategic focus on sustainable finance in line with our social, economic and environmental value drivers and vision to drive Africa’s growth with minimal adverse impact,” said Standard Bank Group CEO, Sim Tshabalala.
The bank’s Sustainable Finance Business Unit finances green infrastructure, Africa trade and investment initiatives and enterprise development among other things. Standard Bank, which is South Africa’s largest commercial bank in terms of assets, is yet to release its 2019 integrated report to show how much it invested in green projects last year. But in 2018, it financed 135 MWs of wind power projects and 300 MWs of solar PV projects in South Africa.
According to the IFC, commercial banks currently provide 45% of South Africa’s financing for renewable energy and energy-efficient projects. The corporation estimated on Monday that South Africa’s climate-smart investment potential, between now and 2030, is US$588 billion.
The IFC’s country manager for South Africa, Adamou Labara said the Standard Bank’s bond is a landmark placement for South Africa since it was the first offshore green bond issuance by a local company.
“We hope it will catalyze interest in green investments from
other actors in the country,” said Labara.
Standard Bank’s executive head of sustainable finance, Nigel Beck said this landmark capital raising comes as investors are increasingly shifting their money towards sustainable businesses. Illustrating the appetite for climate finance among investors, the IFC said it has issued 172 green bonds in 20 currencies, totalling more than US$10 billion.
Standard Bank’s green bond also comes several months after the bank tabled its first ever climate risk-related resolution at its 2019 annual general meeting in May. The resolution, which was shot down by majority of the bank’s shareholders, proposed public disclosure on the extent to which Standard Bank, engaged and invested in activities that expose it to climate change risks.
Beck said when it comes to financing, the bank was of the view that clients should be considering green, social and sustainable products.