Building Back Better: ESG + Sustainable Finance in Africa
In October 2020, Africa Banker arranged an ESG and Sustainable Finance Panel, “Building Back Better”. Verdant Capital’s Managing Director, Mr. Edmund Higenbottam highlighted how sustainability issues have filtered into the wider African continent and into capital markets. There has been considerable growth in sustainable finance over the last few years, essentially reaching a record high of about USD 415 billion dollars at the end of last year, said Nigel Beck, Head of Sustainable Finance at Standard Bank.
We are starting to notice a diverse diversification of products into social bonds, sustainable bonds, green loans as well as a kind of evolution into transitional finance solutions, which are probably going to becoming increasingly popular as these are unpacked, added Nigel Beck.
There is considerable opportunity for players on the African continent to innovate and come up with products that are specifically relevant to the continent. Anyone involved in the financial services and capital markets today cannot afford to ignore ESG and Sustainable Finance. Players must actively drive the sustainable finance innovation within the African continent, said Josien Piek, Head of EMEA at GRESB.
During covid-19 pandemic, we have seen some really good performance from sustainable funds and that they have outperformed the market quite considerably. There has been less volatility and interesting to see that investing in portfolios with ESG factors is made easier because there is no trade off but ESG strategies can deliver positive returns in the high teens. Mr. Higenbottam added that Credit Funds in the impact space have performed very well over the last 15 years. We have seen the assets under management for this product grow by 20 percent per year. This is according to the industry survey data which tracks comprehensive market trends and peer group analysis on microfinance off-shore investments.
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