Standard Bank Group Sustainable Finance executive head Nigel Beck
Sustainable finance could help drive Africa’s recovery from Covid-19 while also incentivising much-needed investments in the green economy and social development.
The pandemic has [impeded] the continent’s growth and demanded new approaches to economic development. It has also highlighted the importance of sustainability and environmental, social and corporate governance (ESG) issues.
Even before Covid-19, the sustainable finance market was flourishing. In 2019, sustainable debt issuances reached a record high of $415-billion globally – up 60% from the prior year. Green bonds still dominate the sustainable finance market, but other products, including green loans, social bonds and sustainability loans, are fast playing catch-up.
We believe that Africa is primed for a sustainable finance boom, given its potential in the renewable energy space and its ongoing developmental challenges.
Standard Bank launched its first ever-green bond, [through] a private placement with the International Finance Corporation, in March this year. The $200-million bond will be used to fund eligible green assets aligned to our Sustainable Bond Framework.
Partly owing to the impact of Covid-19, we are already seeing a surge in interest in financial products that promote a more sustainable economy. For instance, the pandemic is boosting demand for bonds that fund social projects, and this trend is expected to [continue].
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e expect to see a wave of decentralised green energy projects as corporates and municipalities look to secure reliable and affordable supplies while furthering their ESG agendas.
African governments [must] procure more power in the months ahead as demand recovers and the supply shortfall widens. The fastest and most cost-effective way to address the supply gap is through renewable power projects. Further, advances in battery storage technologies, coupled with cost declines, mean renewables are becoming increasingly attractive and viable.
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he sustainable finance market is also being driven by investors who are increasingly gravitating towards ESG-linked assets, partly on the premise that they outperform over the long term.
In this context, we believe that our $200-million bond issuance is a significant step forward for our Sustainable Finance Unit, which is growing in importance to the group.
We expect to conclude more funding deals that unlock green projects, and that enable social projects that reduce inequality.