Nedbank leverages additional tier one instruments to help drive a net-zero economy

14th July 2021 By: Tasneem Bulbulia - Senior Contributing Editor Online

To strategically finance the transition to a net-zero economy, financial services provider Nedbank has once again approached the investment market to raise ‘use-of-proceeds’ green finance, this time through the issuance of the first listed green additional tier one instrument by a financial institution in Africa.

The equivalent notional amount of funding raised through the green additional tier one issuance will be directed strategically to support the financing of new green infrastructure projects in South Africa.

A total of R910-million was raised through the issuance which took place in June, bringing the total green or climate-related funding secured by Nedbank between 2019 and this year to about R8.6-billion.

This has been achieved through a combination of rand-denominated renewable energy bonds, green tier two instruments, climate-related dollar-denominated loan facilities and the new green additional tier one instrument.

“The structured green 'use-of-proceeds' funding mechanism has enabled Nedbank to unlock infrastructure and impact investor funds in addition to traditional investor funds,” Nedbank Corporate and Investment Banking sustainable finance solutions head Arvana Singh says.

She notes that these funds are becoming more conscious of environmental, social and governance issues and are starting to value the need to invest in instruments that support technologies or infrastructure that can meaningfully contribute to change and a more climate resilient future.

“The notional equivalent of this funding unlocked from these additional funds will be channelled to increase our financing to clients looking to develop large scale renewable energy projects.

"We are continuously looking to innovate our funding mix so that we can play our part in delivering a greener economy and supporting the United Nations Sustainable Development Goals. These instruments are another example of this and represent our climate strategy in action,” Singh says.