IFC Backs Standard Bank of South Africa’s Green Bond Issue with $200 Million Investment

The International Finance Corporation (IFC), the financial arm of the World Bank Group, has announced that it has invested ₹200 million (~₹14.7 billion) in the Standard Bank of South Africa’s green bond placed on the London Stock Exchange.

This latest move is South Africa’s first offshore green bond issuance that will increase access to climate finance. According to the press statement, the main focus of this investment is to help and enable Standard Bank Group’s sustainable business finance unit to finance clean energy projects like renewable energy projects, energy efficiency, water efficiency, and green buildings.

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

Commercial banks are responsible for nearly 45% of renewable energy financing, and according to IFC’s estimates, South Africa will need investments in the clean energy sector of nearly $588 million (~₹43.2 billion) between now and 2030.

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

As per IFC’s estimates, the renewable energy projects funded by green bonds have the potential of reducing greenhouse gas emissions by nearly 742,000 tons per year, which would account for nearly 3.7 million tons over five years.

IFC is one of the world’s leading issuer of green bonds and has green bonds in 20 currencies, with a total of more than $10 billion.

Earlier, IFC, along with HSBC Global Asset Management, had announced its first global green bond fund aimed at “real economy” issuers in developing markets, which in turn would help in improving accessibility to climate finance and enhancing green bond markets.

Previously, the corporation had declared that it would invest $75 million in listed green bonds issued by AC Energy, the power arm of Philippines based Ayala Corporation. Based on information from AC Energy and IFC, these are the first certified green bonds targeting infrastructure. These bonds are listed on the Singapore Exchange.