43173 - SBSA Green Bond

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Summary of Investment Information

Project Number

43173

Company Name

THE STANDARD BANK OF SOUTH AFRICA LTD

Date SPI Disclosed

Mar 4, 2020

Country

South Africa

Region

Africa

Projected Board Date

Feb 21, 2020

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jun 12, 2021

Department

Regional Industry - FIG ME & Africa

Industry

Financial Markets

Previous Events

Approved : Feb 21, 2020
Signed : Feb 26, 2020
Invested : Mar 2, 2020

Sector

Commercial Banking - General

Project Description

The project consists of an investment of up to US$200 million in a green bond with a 10-year maturity, issued by The Standard Bank of South Africa Limited (“SBSA” or the “Project”). The bond has been privately placed with IFC and is listed on the London Stock Exchange. The proceeds will finance eligible green assets under SBSA’s Sustainable Bond Framework.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management	20.0
Guarantee
Loan	200.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Climate (not covered in any category)

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Increased availability of climate finance: IFC's investment will help increase access to climate finance and support the development of a platform to promote renewable energy and energy efficiency projects in corporates and smaller businesses. Sustainability: IFC's investment will promote greater sustainability by catalyzing development of South Africa's climate finance market through demonstration of the first offshore green bond issuance that follows international Green Bond Principles coupled with support for awareness raising among financial institutions and continued support for reforms and capacity building in sustainable banking.

Financing Structure: IFC's investment in the form of a bond will provide long-term US-dollar funding that is currently limited for local financial institutions. Knowledge sharing and capacity building: through IFC's global expertise in climate finance. Standard setting: IFC has provided support and given guidance in developing the green aspects of the SBSA Sustainable Bond Framework, which are consistent with the Green Bond Principles. IFC will also help the bank comply with internationally recognized standards of annual reporting and disclosure.

E&S Category Rationale / Risks and Mitigation

This Project has been classified as category FI-2 in accordance with IFC's Policy on Environmental and Social Sustainability. The proceeds of the bond will support medium-sized renewable energy projects – wind and solar – and other green projects such as such as geothermal, hydro, biomass, energy/water efficiency and green buildings. High-risk projects will be excluded from the IFC portfolio; the Project’s portfolio risk is thus considered medium, with assets supported expected not to have significant environmental and social risks or impacts. The associated risks and impacts are considered limited, largely reversible and can be addressed through mitigation measures. The applicable requirements are the IFC Exclusion List, applicable E&S laws in South Africa and the IFC Performance Standards. The main E&S risks associated with the assets to be supported under the project include occupational health and safety, biodiversity, community safety, labor and working conditions and pollution management. Given the use of proceeds, the project is unlikely to include high-risk activities that may include involuntary resettlement; (b) potential adverse impacts on Indigenous Peoples; (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or (d) significant occupational health and safety risks. In addition, coal-related activities will be excluded from the Project.

The main E&S risks and impacts relate to the ability of SBSA to identify and manage the E&S risks associated with the green bond portfolio in line with IFC’s Performance Standard 1, as well as the bank’s labor standards, in line with Performance Standard 2. SBSA has an E&S team and an E&S risk management system for identifying and assessing the E&S risks and impacts associated with its lending activities. The E&S risk management procedures include screening against the IFC Exclusion List, applicable E&S laws in South Africa and the IFC Performance Standards. In addition, the bank applies the Equator Principles to project-related transactions. For the first four assets to be included in the bond, as required under the bank’s procedures, E&S due diligence assessments were conducted in line with the Equator Principles and the Performance Standards. Key E&S risks and impacts were identified in line with the Performance Standards, E&S actions plans were developed to address identified gaps, and monitoring/reporting measures were put in place for all projects. Based on IFC’s review of the bank’s policies, procedures and the project documents, as well as interviews with SBSA’s E&S staff, the bank’s capacity is considered adequate. The procedures in place are detailed and the E&S team is staffed with E&S specialists with credible E&S experience. In relation to Performance Standard 2, SBSA’s labor and working conditions were found to be in line with the requirements of this Performance Standard.

Contacts

For Inquiries About the Project, Contact

Standard Bank of South Africa Limited
Ann Hunter
Head of Strategic Funding
+27 11 415 4194
Ann.Hunter@standardbank.co.za
PO Box 61344, Gauteng, South Africa
https://www.standardbank.co.za/

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