Investec has reaffirmed its commitment to funding a sustainable future, with the issue of the group’s first green bond. The bond is backed by a number of Investec’s flagship renewable energy projects, all of which are helping to create a cleaner future for South Africa.
The bonds raised R1bn under Investec’s DMTN bond programme. The issue, which was 3.8 times oversubscribed, highlighted a healthy appetite among institutional investors looking to make a positive impact in terms of their environmental, social and governance (ESG) commitments.
The bonds have been issued in line with the Green Bond Principles of the International Capital Markets Association (ICMA), a global association of debt securities issuers as well as the Investec Sustainable Finance Framework. The principles seek to support the financing of environmentally sound and sustainable projects that foster a net-zero emissions economy and protect the environment. KPMG undertook a limited assurance engagement pre-issuance of the Investec green bond, including monitoring of continued conformance of the green bond and ongoing reporting to bond holders to ensure compliance with these principles.
In issuing the green bonds, Investec joins the growing number of countries, corporates and financial institutions that are raising capital to have a positive environmental impact and support the green energy transition.
According to the World Economic Forum (WEF), annual issuance of green bonds is expected to exceed US$1 trillion in 2023, double the amount issued last year. Considering that the global bond market is worth some US$130 trillion, there’s significant room for green bonds to grow within the fixed income asset class.
Investec’s green bonds reference five of South Africa’s leading wind and solar projects, namely:
- Bokpoort CSP Power Plant (50MW)
- Aurora Wind Power project (94MW)
- Karoshoek Solar One Project (100MW)
- Kathu Solar Park (100MW)
- Windfall 59 Solar project (74MW)
“Investec’s green bond issue references existing, return-generating projects, rather than future projects. These are all accredited renewable projects currently delivering clean power into the grid,” notes Louis Dirker, Head of Debt Capital Markets at Investec Bank Ltd. “In many cases, the projects also have concurrent programmes helping to create jobs and uplifting communities.”
Leanne Large, Head of Loan Distribution and Syndication at Investec Bank Ltd says that institutional investors are becoming more aware of the risks of climate change to their portfolios and are having to disclose these. “There’s also greater pressure being brought to bear from their stakeholders to make a positive contribution through their environmental, social, and governance (ESG) policies and related financing. Green bonds thus fulfil an important role within the fixed-income component of an institution’s portfolio, especially where there is a reference to bankable, cash-generative projects,” she says.
The bond also fits into Investec’s commitment to create enduring worth for all its stakeholders. “Investec is committed to the UN’s Sustainable Development Goals and to net-zero emissions, including in our Scope 3 financed emissions. Green bonds are the most well-developed of the sustainable finance markets and align well with our aspiration as a group to fund a clean and energy-efficient world,” adds Tanya dos Santos, global head of sustainability at Investec.
The world’s first green bond was issued in 2007 by the European Investment Bank, followed a year later by the World Bank. Today apart from governments and government-backed agencies, some of the world’s leading companies have also issued green bonds and with this bond, Investec joins the prestigious list of issuers.
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