Finance

Nedbank launches SDG-linked capital instrument

Nedbank launches SDG-linked capital instrument

6TH JULY 2020

BY: MARLENY ARNOLDI
CREAMER MEDIA ONLINE WRITER

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Nedbank has launched a new “green” tier two capital instrument that is linked with the Sustainable Development Goals (SDG), which is the first of its kind in South Africa.

The instrument is linked on the green bonds segment of the JSE.

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The launch of this bond builds on Nedbank's established leadership in the sustainable development finance space, having previously offered two highly successful renewable energy green bonds, which were significantly oversubscribed.

The proceeds of these bonds are being used to fund a number of high-potential solar and wind renewable energy projects.

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Nedbank balance sheet management group executive Mike Davis says this R2-billion SDG bond underscores Nedbank's commitment to driving sustainable development in Africa through the deployment of innovative funding mechanisms, to ensure that capital flows are oriented towards responsible investing.

"Our renewable energy bonds clearly demonstrate Nedbank's commitment to facilitating asset finance with a focus on moving South Africa's renewable energy agenda forward, but we have always recognised that maximising sustainable development funding requires capital or debt commitment as well.

“This sustainable capital instrument, with its green use-of-proceeds commitment, is our way of meaningfully delivering on this responsibility.”

Davis points out that the launch of this sustainable capital instrument, which was designed and created in partnership with the African Development Bank, allows Nedbank to give even greater effect to its stated purpose to use its financial expertise to do good.

"The use-of-proceeds commitment that underpins this capital instrument not only provides evidence that Nedbank is providing significant financial support to the SDGs, but also serves as a significant drawcard for foreign investment in South Africa, which is sorely needed at this point, if for no other reason than to help the country build fiscal and monetary resilience and to see it through the challenging economic times that lie ahead."

The capital instrument launch follows after Nedbank’s shareholders unanimously voted in support of two new sustainable development resolutions.

These commit the bank to adopting and publicly disclosing an energy policy and reporting fully on its approach to measuring, disclosing and assessing its exposure to climate-related risks.

The instrument is effectively the bank’s commitment to funding the origination of impact-based assets that will not only promote immediate proactive sustainable development, but also ensure the long-term sustainability and positive impact of the bank's balance sheet into the future.  

"With the imminent launch of the JSE Sustainability Segment later in July, it is imperative that banks fully embrace the absolutely vital role they must play in enabling and driving sustainable socioeconomic development for the benefit of all.

“Not only by facilitating third-party investment, but also through the appropriate application of capital into where it is needed most,” says Davis.

Nedbank further states that the successful launch of this instrument demonstrates the growing appetite in South Africa for sustainable and renewable investment on both sides of the balance sheet.

This will not only help to underpin and drive the development of South Africa's green economy, but also send a very powerful message that it is time for both borrowers and investors to get fully behind the green agenda. 

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