Helping corporate clients transition to a future low-carbon economy is a major focus for Nedbank Corporate & Investment Banking (Nedbank CIB). The bank was the first South African commercial bank to issue a Green Bond, in 2019, and it financed the first private sector energy wheeling arrangement in the country. Staying with energy, it already has a R50-billion commitment into South Africa’s Renewable Energy Independent Power Producer Procurement Programme.

“One of the key priorities for South Africa right now should be to decarbonise electricity generation,” highlights Nedbank Investment Banking sustainable finance solutions head Arvana Singh, speaking exclusively to Engineering News. “That has to change. The South African power sector is very coal intensive right now and it needs to switch to greener energy sources. Focusing on renewable power allows us and corporates in general to make a big impact in the near term.”

“We need to recognise the importance of the energy transition,” she affirms. “We, as a bank, are doing this by ensuring that we are allocating capital to energy projects that are supportive of transitioning away from coal-intensive technologies.” But the energy transition is not limited to electricity generation. Another area of focus for the lender is the mining sector, essential for the production of the metals, such as lithium and copper, that are essential for the energy transition. Another important industry is the automotive sector, which is transitioning to producing vehicles powered by new energy sources, making use of those green energy metals. And, in turn, corporates who run large fleets will need to start thinking about replacing their current vehicle fleets with new energy vehicles. And the list goes on – property sustainability projects are also of interest to, and supported by, the bank.

“We have to decide how to finance such projects,” she points out. “Our team uses innovative financing approaches which are transparent allowing the project ‘impacts’ to be seen.”

Innovative approaches include coordinating and arranging financing from different sources. These would include bank financing but also funding from impact investors and even, potentially, developmental finance institutions. Her team would structure the sustainability aspects of the deal and work together with other teams in the bank to mobilise funding from external sources and combine them into a financial package for the client. It would have to support economic, social and governance outcomes, but the client would benefit from the scale of the funding and the diversity of its sources.

Nedbank CIB also finances green projects on its own. Of course, the project would also have to meet the bank’s credit appetite and the potential client would have to be able to afford it. The project also has to be good and have merit. For example, the bank supports the United Nations’ Sustainable Development Goals and would be willing to help finance projects that meet these goals.

“The green economy transition underlies everything,” stresses Singh. “There is value there. Being relevant to the demands of the future is what is important. It’s also about building resilience, which is what we need, to preserve value. And the more efficient you are, the lower your operational costs, the greater your cash flow. That’s what sustainability delivers. That’s what we explain to our clients. For sustainability, everyone has to do their part. As a bank, it’s about how we lend money. We see ourselves as responsible stewards of capital. We take the lead at Nedbank in ensuring that there is an overarching sustainability ethos for our operations and the way we do business.”