Financial services firm Standard Bank has issued its first local Tier 2 capital qualifying green bond to finance renewable energy projects in South Africa and increased its social bond issued in August to finance mortgage loans in the affordable housing target market, with a focus on women borrowers.

The new ten-year, R1.4-billion bond is listed on the JSE Sustainability segment and proceeds will be used to finance renewable energy projects in South Africa.

The bank also listed a R1.5-billion tap, or increase, of its R2-billion social bond, which was its first tap of a sustainability bond issue.

Renewable energy is key to closing South Africa’s electricity supply gap and modernising its energy sector. The country’s electricity crisis continues to weigh on the economy, heavily impacting consumers and businesses. As a result of the declining costs of renewable energy and advancements in battery storage technologies, renewable energy solutions are now a viable alternative and key to climate change mitigation efforts, the bank said.

The R1.4-billion bond is the third bond issue under Standard Bank’s Sustainable Bond Framework established in February 2020.

The proceeds of bonds issued under the Sustainable Bond Framework are directed towards impact areas, which reflect Standard Bank’s social, economic and environmental (SEE) strategy and are aligned with achieving the objectives of the United Nations’ Sustainable Development Goals.

“These are landmark transactions for the group, as they represent further firsts for us from a bond issue perspective in our sustainable finance journey. We are consistently leveraging work done and broadening our issue base under the Sustainable Bond Framework.

"Sustainable finance markets and products are evolving quickly and, as an issuer, we recognise the urgency, opportunities and responsibilities,” says Standard Bank head of group strategic funding Ann Hunter.

These bond issues follow the Standard Bank's first green bond listed on the LSE in March 2020 and placed via private placement with development finance institution IFC. The $200-million bond, a ten-year facility, funds eligible green assets in South Africa.

“Sustainability has taken centre-stage in the market’s investment and capital allocation decisions, leading to exponential growth in the sustainable finance market. This issuance is part of our strategic focus on delivering positive SEE impact in the communities in which we operate,” says Standard Bank Group CE of corporate and investment banking Kenny Fihla.

Standard Bank is focused, primarily through its Sustainable Finance division, on providing financial products and services that support positive SEE outcomes, including green and social bonds, sustainability-linked loans, sustainable trade solutions and impact investing.

“When it comes to their capital and funding requirements, clients should be considering green, social and sustainable products as investors increasingly shift their mandates toward investment in sustainable businesses. Standard Bank has an innovative and dedicated sustainable finance business offering that benefits our clients, the communities in which we operate and the environment in Africa,” Standard Bank head of sustainable finance Greg Fyfe said.