JSE-listed Equites Property Fund has closed a R1.6-billion sustainability-linked loan with Standard Bank aimed at promoting the achievement of various environmental, social and corporate governance (ESG) targets.
The funding deal reflects that sustainable finance solutions in the African market are starting to gain traction as corporates and investors increase their focus on ESG considerations, says Equites.
Sustainability-linked loans tie the cost of funding to ESG outcomes to support and incentivise responsible corporate behaviour and the creation of shared value, the real estate investment trust (Reit) says.
The R1.6-billion sustainability-linked facility agreement comprises two R800-million tranches, with the interest rate linked to Equites’ achievement of certain pre-agreed ESG performance targets.
These target areas include ESG integration, product governance, business ethics and human capital.
“Partnering closely with Equites to better understand their business has allowed us to build a seamless, multidisciplined sustainable funding solution,” comments Standard Bank Group executive and sustainable finance global head Nigel Beck.
Equites CFO Laila Razack, meanwhile, notes that “the strong foundation that was created through our established relationship with Standard Bank provided a suitable platform onto which we have jointly built a bespoke funding solution that is mutually beneficial”.
“It remains a priority for us that we continue to conduct business in a sustainable manner and we have therefore placed significant emphasis on the ESG elements of our business,” she elaborates.
Beck further added that Standard Bank is seeing growing demand for sustainable finance solutions, with the bank having issued its first ever green bond in March via a private placement with the International Finance Corporation (IFC).
The ten-year $200-million bond facility will raise capital for on-lending by the group’s Sustainable Finance division, which will fund eligible green assets – renewable energy, energy efficiency, water efficiency and green buildings – aligned to the bank’s Sustainable Bond Framework.
The framework allows the bank to issue sustainable, green and social bonds that support its lending to green projects aimed at mitigating climate change, and to social projects that reduce economic and social inequality.
The bond issuance marked a significant step forward for the sustainable finance division, at a time when interest from clients is growing considerably.