25 October 2017

South Africa: JSE Green Bond to Fund Low Carbon Projects

Johannesburg — THE Johannesburg Stock Exchange (JSE) is celebrating the launch of its Green Bond Segment, which provides a platform for companies to raise funds ring-fenced for low carbon initiatives. It also enables the organisations to invest Socially Responsible Investment (SRI) funds in securities that are "truly green." Donna Nemer, Director of Capital Markets at the JSE, said issuing a green bond could help companies strengthen their credentials as sustainable and responsible organisations. "At the same time green bonds allow investors to mitigate the effects of climate risk as a part of their investment portfolio, while these bonds also satisfy environment, social and governance (ESG) requirements and green investment mandates," she said. Nemer said emerging markets were especially vulnerable to the impact of climate change, hence the JSE viewed combatting this problem as imperative to building a climate resistant future for the African continent in securing future jobs and investments. The global market for green bonds is currently valued at around $895 billion dollars and year-on-year issuance has doubled in size annually over the past two years. Also speaking at the JSE on Wednesday, Cape Town Mayor, Patricia de Lille, said the city's ten-year bond had been oversubscribed since it was issued in July this year. The city has raised R1 billion for green projects. The City of Cape Town green bond, which is already listed on the JSE's bond market, was certified by the Climate Bonds Initiative, while international ratings agency Moody's also awarded it an excellent GB 1 rating. A green bond is a tax-exempt bond issued by federally qualified organizations or by municipalities for the development of brownfield sites. Brownfield sites are areas of land that are underutilized, have abandoned buildings or are underdeveloped, often containing low levels of industrial pollution.

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