tonnes of CO2 to be reduced over five years by green projects funded by the bond
"This is a growth area and sustainable finance is a key part of the group’s funding strategy"
Standard Bank of South Africa’s $200 million green bond was not only the bank’s first, but it was also the country’s first offshore green bond issue and the largest yet from an African issuer. The 10-year bond, placed in March 2020 with the International Finance Corporation (IFC), will be used to finance projects in renewable energy, energy efficiency, water efficiency, and the development of environmentally friendly buildings.
“This bond reflects Standard Bank Group’s strategic focus on sustainable finance in line with our social, economic and environmental value drivers and vision to drive Africa’s growth with minimal adverse impact,” Standard Bank Group’s Chief Executive Sim Tshabalala said at the time.
The bond, which was listed on London Stock Exchange’s Sustainable Bond Market, will finance projects that the IFC estimates will reduce 3.7 million tonnes of carbon dioxide over five years.
Putting the framework in place
“We carefully considered this opportunity, given the added complexity and ongoing reporting requirements involved. We wanted to ensure the project was done correctly and in line with our sustainable finance strategy,” says Nigel Beck, the head of the Sustainable Finance Business unit. “Once we’d put together the sustainable bond framework and agreed the second-party opinion, we were clear this was a viable business opportunity.”
That framework sets the parameters for the bank’s green bond issuance, identifying qualifying activities – including social and sustainable investments as well as environmentally focused ones – and setting out how the bank will report on the impact of its green bonds.
It identifies seven areas of focus: financial inclusion; job creation; infrastructure; African trade and investment; education; climate change and sustainable finance; and health. “Our strategy aims to embed social, economic and environmental considerations into our borrowing, lending and business practices in a way that helps us to continue supporting our clients, whilst producing value for society at large,” added Tshabalala.
Plans to return to London Stock Exchange
Given the bank’s positive experience with issuing and listing the bond – “the optics were great,” says Ann Hunter, the bank’s Head of Strategic Funding – Standard Bank would look to come back to the market, as it identifies qualifying projects.
“This is a growth area and sustainable finance is a key part of the group’s funding strategy,” Hunter continues. “Having made a start with listing on London Stock Exchange, it makes sense for us to continue to do so.”
“The intention is to use the framework for programmatic issuance of green and social bonds on an ongoing basis,” adds Beck. “The bond was successful, it was well-received and there is potential for pricing benefits.”