Standard Bank. Picture: MARTIN RHODES
Standard Bank. Picture: MARTIN RHODES

The International Finance Corporation (IFC), a development finance institution and World Bank affiliate, has invested $200m in Standard Bank’s green bond placed on the London Stock Exchange on Monday.

The bond, which is Africa’s largest green bond and SA’s first offshore green bond issuance, will increase access to climate finance.

Climate change has affected the global economy and institutions worldwide are either refusing to fund new coal-fired power plants or are cutting back on funding them. The money is now migrating to green bonds, whose proceeds go directly to climate and environmental projects.

The Climate Bonds Initiative and other organisations have been instrumental in helping the private and public sector issue and certify green bonds, as well as determine eligible projects for investment.

The 10-year green bond facility privately placed through the IFC will enable Standard Bank’s sustainable finance business unit to finance “climate-smart” projects in SA  such as renewable energy, energy efficiency, water efficiency and green buildings.

In 2019 Nedbank became the first private sector institution in SA to issue a certified renewable energy bond. The deal attracted bids of R5.4bn. Nedbank also said earlier in 2019 that it would withdraw its funding of two proposed new coal-fired power stations in SA.

Standard Bank is also not funding new coal projects.

“This bond is a landmark placement for SA and will contribute to financing SA’s green economy,”  said IFC SA country manager Adamou Labara. “We hope it will catalyse interest in green investments from other actors in the country.”

IFC estimates that SA’s climate-smart investment potential, between now and 2030, is $588bn. Projects funded by green bonds have the potential to reduce greenhouse gas emissions by 742,000 tonnes a year, or nearly 3.7-million tonnes over five years, IFC estimates.

“When it comes to financing, clients should be considering green, social and sustainable products as investors increasingly shift their mandates to sustainable businesses,” said Standard Bank Group executive head of sustainable finance, Nigel Beck.