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Bronwyn Nielsen spoke to Arvana Singh, head of Sustainable Finance Solutions at Nedbank CIB, about Nedbank’s move towards the prioritisation of climate and sustainability. These are key on its agenda and recognising the need to move forward with sustainability through mainstream finance is where the bank is setting its resources, focus and expertise.
Singh on Nedbank’s approach to climate finance and transitioning to climate friendly, responsible news
Climate and sustainability is key to our agenda and it has been given high priority and is definitely an area where we have been making fantastic strides with recognising the need to move forward. Sustainability through mainstream finance is really where we are setting our resources, our focus and our expertise to deliver the transition and deliver sustainable development objectives, as well as shared value for key players in this ecosystem.
On the recognition received by the Global Finance magazine and what gives them the competitive edge
I’d put that down to probably three things: firstly, our pioneering leadership and technical expertise in the space. If we go back to 2019, we were the first arrangers of green renewable energy bonds in this market, which is well oversubscribed. And subsequently in 2020, we issued the first green tier to capital. And following on from that, in 2021, we were the first bank on the African continent to issue a green additional tier one instrument. And later the same year we issued a green residential development fund, which actually employs blend finance characteristics as well. So I think it is about going above and beyond that has been differentiating us. Second would be our approach to sustainable finance solutions, whereby we move from a point of departure, looking to unlock systems value and reduce systemic risks and effectively ensure that this remains profitable for all stakeholders in the ecosystem. And thirdly, I would say it is our ability to collaborate with our investors, as well as our clients on their sustainability journeys which enables us to then understand quite intimately the bridges and the gaps that they are faced with, and then to be able to propose solutions to effectively bridge those gaps.
On what Sustainability Linked Finance is
Sustainability Linked Finance is effectively an instrument where the proceeds raised can be used by borrowers for general corporate purposes, but attached to the financing outcome referred to as sustainability key performance indicators, as well as associated sustainability performance targets alongside those indicators. And by attaching these indicators and targets to the financing, it aims to incentivise borrowers to meet these targets over the life of the financing. And if met, there’s potentially a small incentive or penalty that may apply if the targets are not met.
On what can be done to accelerate the growth of sustainability linked financial products in emerging markets
The observation is quite right. We’ve seen the trend grow exponentially in the offshore markets and then come back home. South Africa has now caught on to that trend and the market is growing. I think we’re seeing north of 20 billion rand in this market alone and we’re definitely seeing a higher level of activity. But I think the point of stimulating this market is probably twofold. One, is it is reflective of three types of sustainability journeys, as we have borrowers at varying phases of their sustainability journeys right now who may, or may not, be ready to actually partake in these types of financing instruments. And then secondly, I think it’s about actually building awareness of this type of product within the Treasury teams of borrowers on the African continent and building them the technical capacity to be able to actually structure these instruments and deliver into it.
On the legacy she wants to leave in the corporate finance space
The legacy for me is that if we are all in this together, we end up in a win-win situation. I think the proof will be in the pudding as to whether we see progress from various indicators and metrics and the fact that we will be able to measure our progress on this looking back. That, for me, will be a good indicator of whether we’ve been successful or not.
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