Green and Sustainable Finance: How the finance sector can play a role.
* Salma Baduel
Underpinning our purpose of empowering Africa’s tomorrow, together, one story at a time, Absa is determined to set aside targeted finance to aid in Botswana’s just transition to a resilient and sustainable economy.
Over the past decade and more, the finance sector among others has seen a rise in conversations around sustainable practices with heightened considerations for the environment in day-to-day practices. In the aftermath of the 2008 financial crisis, heightened scrutiny of financial institutions birthed a need to generate more sustainable returns in order to boost the financial sector and to sustain economies. This is against the back of increased climate change consciousness, which has resulted in growing awareness and the need to integrate not only ethical considerations into the financial system but social and sustainable practices too. Given that climate change remains one of the prevailing risks to our planet,
Financial Institutions’s can play a role in efforts to mitigate the adverse effects of global warming by directing funding towards initiatives for clean energy sources, reduction of greenhouse gas (GHG) emissions, and in the development of carbon-neutral technologies. This being essential as the far-reaching impacts of global warming have been severely felt in our continent. With shrinking lakes and prolonged droughts, against melting glaciers and heavy rainfalls, our continent is left vulnerable to heightening water stress and subsequent food insecurity. These changes not only affecting prospects of continued sustainable agricultural produce but also leading to the displacement of people and communities. Noting this we begin to ask “What can our contribution be in order to combat the effects of climate change?” The answer quite broadly lies in how we ensure to drive financial initiatives and strategies that look to safeguard our natural environment and support the just transition of various organizations (including ourselves) to low-carbon, climate friendly practices. So, what is a green bond and how does it enable access to green finance?
A green bond as defined by the International Capital Markets Association (ICMA2021) “is a financial instrument that enables capital-raising and investment on new and existing projects with environmental benefits, these seek to support issuers in financing environmentally sound and sustainable projects that foster a net-zero emissions economy and protect the environment.” As such green bonds provide access to capital that can enable the mobilization of necessary resources for investing in initiatives related to climate mitigation and subsequent adaptation to low-carbon economies. This can ensure benefits are realized through requiring various climate related economic indicators (i.e, GHG emission indicators) to be tracked and reported against investment.
Our contribution, Underpinning our purpose of empowering Africa’s tomorrow, together, one story at a time, Absa is determined to set aside targeted finance to aid in Botswana’s just transition to a resilient and sustainable economy. This in line with our aim to be an active force for good in everything we do, we intend to provide lending for initiatives aligned with the following United Nations Sustainable Development Goals (SDGs) through our Sustainable Financing Framework: 1. SGD 5: Achieve gender equality and empower women and girls. 2. SDG 7: Ensure access to affordable, reliable, sustainable, and modern energy for all. 3. SDG 8: Promote sustained inclusive economic growth and productive economic growth, full and productive employment for all. 4. SDG 10: Reduce inequality within and among countries. 5. SDG 13: Take urgent action to combat climate change and its impact. 6. SDG 16: Promote peaceful and inclusive societies for sustainable development, provide access. And finally, Understanding what green financing is, and how it relates to environmental and social aspects of doing business in the world of finance, creates better opportunities to solve for precise problems. It is undisputable that the finance sector has a huge role to play through aligning financial flows with sustainable and climate-resilient activities. With heightened focus and commitment on sustainability, the financial sector plays an integral role in ensuring that Botswana achieves its targets as set by the National Determined Contribution (NDC). *Salma Baduel is Country Treasurer, Absa Bank Botswana
* Salma Baduel
Underpinning our purpose of empowering Africa’s tomorrow, together, one story at a time, Absa is determined to set aside targeted finance to aid in Botswana’s just transition to a resilient and sustainable economy.
Over the past decade and more, the finance sector among others has seen a rise in conversations around sustainable practices with heightened considerations for the environment in day-to-day practices. In the aftermath of the 2008 financial crisis, heightened scrutiny of financial institutions birthed a need to generate more sustainable returns in order to boost the financial sector and to sustain economies. This is against the back of increased climate change consciousness, which has resulted in growing awareness and the need to integrate not only ethical considerations into the financial system but social and sustainable practices too. Given that climate change remains one of the prevailing risks to our planet,
Financial Institutions’s can play a role in efforts to mitigate the adverse effects of global warming by directing funding towards initiatives for clean energy sources, reduction of greenhouse gas (GHG) emissions, and in the development of carbon-neutral technologies. This being essential as the far-reaching impacts of global warming have been severely felt in our continent. With shrinking lakes and prolonged droughts, against melting glaciers and heavy rainfalls, our continent is left vulnerable to heightening water stress and subsequent food insecurity. These changes not only affecting prospects of continued sustainable agricultural produce but also leading to the displacement of people and communities. Noting this we begin to ask “What can our contribution be in order to combat the effects of climate change?” The answer quite broadly lies in how we ensure to drive financial initiatives and strategies that look to safeguard our natural environment and support the just transition of various organizations (including ourselves) to low-carbon, climate friendly practices. So, what is a green bond and how does it enable access to green finance?
A green bond as defined by the International Capital Markets Association (ICMA2021) “is a financial instrument that enables capital-raising and investment on new and existing projects with environmental benefits, these seek to support issuers in financing environmentally sound and sustainable projects that foster a net-zero emissions economy and protect the environment.” As such green bonds provide access to capital that can enable the mobilization of necessary resources for investing in initiatives related to climate mitigation and subsequent adaptation to low-carbon economies. This can ensure benefits are realized through requiring various climate related economic indicators (i.e, GHG emission indicators) to be tracked and reported against investment.
Our contribution, Underpinning our purpose of empowering Africa’s tomorrow, together, one story at a time, Absa is determined to set aside targeted finance to aid in Botswana’s just transition to a resilient and sustainable economy. This in line with our aim to be an active force for good in everything we do, we intend to provide lending for initiatives aligned with the following United Nations Sustainable Development Goals (SDGs) through our Sustainable Financing Framework: 1. SGD 5: Achieve gender equality and empower women and girls. 2. SDG 7: Ensure access to affordable, reliable, sustainable, and modern energy for all. 3. SDG 8: Promote sustained inclusive economic growth and productive economic growth, full and productive employment for all. 4. SDG 10: Reduce inequality within and among countries. 5. SDG 13: Take urgent action to combat climate change and its impact. 6. SDG 16: Promote peaceful and inclusive societies for sustainable development, provide access. And finally, Understanding what green financing is, and how it relates to environmental and social aspects of doing business in the world of finance, creates better opportunities to solve for precise problems. It is undisputable that the finance sector has a huge role to play through aligning financial flows with sustainable and climate-resilient activities. With heightened focus and commitment on sustainability, the financial sector plays an integral role in ensuring that Botswana achieves its targets as set by the National Determined Contribution (NDC). *Salma Baduel is Country Treasurer, Absa Bank Botswana
