The leading commercial bank, First National Bank Botswana has announced it is positioning itself as a transition financier, which basically means they will be more cautious towards financing sectors which are not Environmental, Social & Governance (ESG) complaint.
In a statement contained in the bank’s 2023 annual report, Chief Executive Officer, Steven Bogatsu, disclosed they "will limit exposure to anti-ESG sectors to 7% of our advance book up to 2025, including the provision of working capital to support the transition to green energy." Furthermore, the listed bank, which is part of First Rand group-South Africa’s biggest bank by value- said from 2026 onwards to 2030, it will reduce exposure to 5%, followed by a progress review. “As a transition financier we are and will be actively engaging with our clients to find suitable financing solutions and where necessary we will also be assisting our clients with short term working capital requirements. I am delighted to report that during the year under review, we concluded our first finance transaction for a solar farm in Selebi Phikwe, which is expected to be completed in 2024,” said Bogatsu.
The bank’s decision to be sensitive towards ESG principles in their funding activities, comes amid growing trend, where major global banks and financiers have restricted or stopped lending to companies who are not ESG complaint, more especially those related to climate change. Meanwhile, the chairman of the Board of Directors, Balisi Bonyongo, explained the Board approved an overarching ESG policy in 2022, which sets out the framework and standards. “During the year under review, the Board approved sub-policies on Climate Risk and Energy and Fossil Fuel Financing,” said Bonyongo. Going forward, as part of FNB Botswana social impact plan, Small Medium Enterprises (SMEs) will be supported. “We continue to evolve and advance our framework to support SMEs through procurement, particularly women and the youth, who are the most vulnerable in society," stated Bogatsu. "During the period under review, 92% of our total procurement spend was allocated to local companies. In addition, as we build traction with this framework, we are exploring opportunities to relax credit metrics while retaining certain safety parameters to enable increased youth and gender inclusion."
For the year to June 2023, the bank’s balance sheet grew 9% year-on- year, driven mainly by growth in advances to customers across all segments. Corporate advances are 11% up, while commercial and retail advances are at 8% and 7% respectively. The growth in corporate advances was driven by working capital support to State Owned Enterprises (SOE) and Fast Moving Consumer Goods (FMCG) sectors, as well as leverage finance deals in the financial services sector. Key deals in the tourism, fuel and agriculture sectors supported growth in the commercial advances book, while personal loans in the retail book grew on the back of extended tenures and ticket size limits to individuals within Group Schemes.
In a statement contained in the bank’s 2023 annual report, Chief Executive Officer, Steven Bogatsu, disclosed they "will limit exposure to anti-ESG sectors to 7% of our advance book up to 2025, including the provision of working capital to support the transition to green energy." Furthermore, the listed bank, which is part of First Rand group-South Africa’s biggest bank by value- said from 2026 onwards to 2030, it will reduce exposure to 5%, followed by a progress review. “As a transition financier we are and will be actively engaging with our clients to find suitable financing solutions and where necessary we will also be assisting our clients with short term working capital requirements. I am delighted to report that during the year under review, we concluded our first finance transaction for a solar farm in Selebi Phikwe, which is expected to be completed in 2024,” said Bogatsu.
The bank’s decision to be sensitive towards ESG principles in their funding activities, comes amid growing trend, where major global banks and financiers have restricted or stopped lending to companies who are not ESG complaint, more especially those related to climate change. Meanwhile, the chairman of the Board of Directors, Balisi Bonyongo, explained the Board approved an overarching ESG policy in 2022, which sets out the framework and standards. “During the year under review, the Board approved sub-policies on Climate Risk and Energy and Fossil Fuel Financing,” said Bonyongo. Going forward, as part of FNB Botswana social impact plan, Small Medium Enterprises (SMEs) will be supported. “We continue to evolve and advance our framework to support SMEs through procurement, particularly women and the youth, who are the most vulnerable in society," stated Bogatsu. "During the period under review, 92% of our total procurement spend was allocated to local companies. In addition, as we build traction with this framework, we are exploring opportunities to relax credit metrics while retaining certain safety parameters to enable increased youth and gender inclusion."
For the year to June 2023, the bank’s balance sheet grew 9% year-on- year, driven mainly by growth in advances to customers across all segments. Corporate advances are 11% up, while commercial and retail advances are at 8% and 7% respectively. The growth in corporate advances was driven by working capital support to State Owned Enterprises (SOE) and Fast Moving Consumer Goods (FMCG) sectors, as well as leverage finance deals in the financial services sector. Key deals in the tourism, fuel and agriculture sectors supported growth in the commercial advances book, while personal loans in the retail book grew on the back of extended tenures and ticket size limits to individuals within Group Schemes.
