From October 17 to 20, 2023, developed countries led by the United States of America held their ground, insisting that they must have total control over this fund, which they say is being established for developing countries.

Many experts including Harjeet Singh, the Head of Global and Political Strategy of the Climate Action Network (CAN), saw this resolution as a complete disappointment. This insistence by the U.S and her allies is nothing short of an attempt to exert control over developing countries.

By trying so hard to force developing countries to accept that the Loss and Damage Fund must be domiciled within the World Bank – an institution long seen by developing countries as serving the interests of developed countries – developed countries led by the United States and Switzerland have once again showed that, for them, climate action is not about justice and corrections of the mistakes of the past, but more about them exercising powers over anything and everything in the world.

Historically, emissions by developed countries created the climate crisis. Furthermore, those emissions were used by developed countries to boost their technological progress giving them an advantage when it comes to control and access to finance and technologies needed to cut down emissions. Having exploited the common resources of the entire world to get to this point, it is only a fair that they should support poor countries who are bearing the impact of the climate crisis to grow in a more sustainable way.

Nonetheless, these countries have continuously refused to make the basic compromises required to build trust in the international process and encourage developing countries to pursue low-carbon development. First, they failed to meet the $100 billion annual support agreed to in 2009 to assist developing countries by 2020, next they tried to pass of high interest loans as part of the effort to meet the $100 billion pledge. And now, this bull-headed decision to have control of the Loss and Damage Fund with the usual conditions to make sure that access becomes extremely difficult for those who need adds salt into the wounds of developing countries.

Let us be clear, the funding expected from rich countries either as part of the Green Climate Fund, Adaptation Fund, or the Loss and Damage Fund, should not be viewed as charity.  Instead, they are essentially tokens from massive profits made by developing countries from destroying the earth. It is as simple as that. While the language of compensation is not explicitly used in the UNFCCC texts, that is essentially what it is, and the fact that poor countries agreed to expunge compensation language from the text is already enough demonstration of compromise and good will by the Global South.

Confronted with the stark reality of climate change, and constantly reminded by developed countries that they must take action to address climate change, developing countries have since committed to follow the low-carbon development path hoping that those who destroyed the earth would at least live up to their own words and provide the agreed financial support necessary to encourage mitigation and adaptation efforts, and also support for Loss and Damage.

Yet, all poor countries continue to get is warm words and empty promises.  It is instructive that as soon as the Ukraine-Russian war hit, and energy became a problem in Europe, developing countries that had been told by rich countries to divest from fossil fuel and make net zero transition plans watched as Europe made a dash for gas in Africa and had coal-powered energy industries were reactivated in Germany!

The Loss and Damage Fund therefore presented a clear opportunity for developed countries to, for once, build trust and defer to what works for those whom the fund is being set up for. But as usual, they have re-emphasized that for them, it is only about what benefits them, and not what is best for the long-term good of the world.

By Chukwumerije Okereke and Nnaemeka Oruh

Prof Chukwumerije Okereke is Professor of Global Governance and Public Policy at the University of Bristol

Nnaemeka Oruh is Senior Policy Analysts with the Society for Planet and Prosperity, Nigeria

Original from: https://www.environewsnigeria.com/deadlocked-loss-and-damage-funding-rich-countries-trample-on-equity-and-trust-in-global-climate-agreement/

Established in 2009, AgDevCo’s vision is a thriving commercial African agriculture sector that benefits people, economies, and the environment. The organisation contributes to this goal by providing investment capital and technical assistance to grow sustainable and impactful businesses across the agricultural value chain. In doing so, it aims to promote resilience, gender equality and the production of better-quality, more nutritious food.

This new funding builds on the original endowment funding provided by the UK government which helped establish AgDevCo over the past decade. This endowment has provided capital to agribusinesses that have directly created or sustained more than 15,000 jobs and to work with 750,000 smallholder farmers to help increase their income and improve their resilience to climate change. It has also allowed AgDevCo to build a capability and track record to the point where it can secure external investment capital.

In welcoming the investment, Keith Palmer, AgDevCo’s founder and Chairman, said: “Securing investment from CDC, Norfund and DFC is a major milestone in AgDevCo’s history. It is a strong endorsement of AgDevCo’s team and our strategy. We are excited that our vision is shared by our new funders, who recognise the important contribution that AgDevCo investments can make to productivity, sustainability, and inclusivity in Africa. Their funding marks the beginning of a partnership in which AgDevCo will use its sector specialism, drawing on our new funders’ networks and resources, to increase the number of impactful investments in African agriculture.”

UK Minister for Africa, Vicky Ford, said: “I am proud to see how AgDevCo’s investing has boosted sustainable agriculture across Sub-Saharan Africa over the past 10 years, including deepening impact on smallholder farmers and SMEs. This new investment will bring continued growth, by enabling agribusiness SMEs to expand, improve farmer incomes, create new jobs and strengthen climate resilience across Africa.”

Tenbite Ermias, CDC’s Managing Director for Africa, said: “This investment reinforces our long-term commitment to investing in key sectors in Africa including agriculture, which is critical for creating jobs, promoting gender equality and supporting people to build a better life for themselves and their families. Furthermore, it reflects our continued focus on climate finance which is central to our new strategy over the next five-year period, to support emerging economies that are most vulnerable to the impacts of the climate emergency.”

Ellen Cathrine Rasmussen, Executive Vice President of Scalable Enterprises in Norfund, said: “Norfund is very pleased to partner with AgDevCo to deliver on our joint mission: to create jobs and improve lives by investing in businesses that drive sustainable development. A thriving commercial African agriculture sector is vital for economic growth and job creation. More than half of Sub-Saharan Africa’s population work in agriculture, yet Africa does not produce enough food to feed the continent. The investment in AgDevCo will create jobs, increase food production, improve climate change resilience, and promote gender equality. The AgDevCo team’s skills, networks and achievements are impressive – and we look forward to working with them.”

Algene Sajery, DFC’s Vice President of External Affairs and Head of Global Gender Equity Initiatives, said: “DFC is thrilled to support AgDevCo with a $20 million loan to bring additional capital to smallholder farmers and agricultural businesses in Africa, promoting food security for lower-income communities across the continent. DFC’s loan, alongside financing from our partner DFIs, will enable AgDevCo to link more farmers to markets and create jobs for underserved populations, with a focus on women farmers.”

Verdane, the European specialist growth equity investor, has announced that it has held a final close on Verdane Idun I (“Idun” or “the Fund”), an impact focused fund investing in technology-enabled businesses based out of Europe. The Fund is classified as “Article 9” under the European Union’s Finance Disclosure Regulation and closed at its hard cap of €300 million, over its target fund size of €225 million. With Idun, Verdane continues to demonstrate its commitment to driving positive impact through investments in ambitious companies whose impact scales with business growth.

The Fund has already made three investments: in Auntie, a digital provider of workplace wellbeing services; in Spond, a digital enabler of grassroot sports and physical health; and in a third business that contributes to a low-carbon society, to be announced in the next few weeks.

Bjarne Kveim Lie, Co-Founder and Managing Partner at Verdane commented: “We are delighted and humbled by the strong support from existing and new investors for Idun and would like to thank them for putting their trust in us. Today more than ever, there is a growing pool of opportunities to combine technology and sustainability, and we believe that investors like Verdane can take a leading role by supporting founders and management teams who can truly integrate sustainability into their business models and create value through impact. The success of the Idun fundraise reflects the continued development of the firm, and we are excited by the unique opportunities available to us on this journey to drive positive impact with our investments.”

The Fund counts leading institutions among its investors, including Nysnø Climate Investments, Norway’s state climate investment fund, AP3, one of Sweden’s main national pension funds, Adams Street Partners, a private markets investment management firm, and clients advised by Mercer.

Building on Verdane’s proven track record of investing in European tech-enabled sustainable businesses, Idun will make investments focused on driving impact in three clusters: energy transition; sustainable consumption; and resilient communities. The Fund will leverage technology to significantly scale portfolio companies’ impact, and Verdane’s background as a growth investor means the firm is uniquely positioned as a leader in this space.

Every investment that Idun makes will have to meet both financial and elevated impact criteria, with impact defined as addressing at least one of the Sustainable Development Goals (SDGs) and qualifying inside Verdane’s proprietary impact framework, built on the Impact Management Project. At the portfolio level, each Idun portfolio company will regularly report on bespoke sustainability KPIs and both the Fund’s ‘carried interest’ and credit facility are linked to goal attainment. The credit facility is issued by Nordea.

Idun received strong investor support from Verdane’s existing pool of LPs and is made up by a majority of institutional capital, including endowments, family offices and pensions funds.

Idun’s dedicated team combines entrepreneurial and impact investment experience and will be integrated with Verdane’s wider platform of over 90 investment professionals and its team of operational experts, Verdane Elevate, to create value and drive impact in the portfolio. The Fund is headed by partners Christian Jebsen and Erik Osmundsen, who will work alongside directors Reed Snyder and Karin Kans, and Sustainability Lead Axel Elmqvist.

Christian Jebsen, Partner at Verdane commented: “As we enter 2022 and announce the final close of Idun, we are seeing a very strong pipeline of potential investment opportunities across Northwestern Europe, as demonstrated by the Fund’s early deployments into three compelling and ambitious new portfolio companies. We believe that sustainability is an increasingly competitive strategy, especially as the growth and private equity industry is steadily moving towards a more impact-driven mindset. As both a technology and sustainability growth partner, Verdane is strongly positioned to add value and scale its partner businesses, and we look forward to working alongside management teams to drive positive impact.”

Verdane is one of the most active growth equity investors in Northwestern Europe, having completed 17 investments, of which four were portfolio deals, in 2021. Idun will sit alongside Verdane’s existing strategies, Capital and Edda, and represents an important initiative for the firm. The Fund will develop leading-edge, best practice frameworks and toolkits within the impact space that will help Verdane’s teams drive value across all of its strategies.

Pay-As-You-Go solar power

In her thesis, Moncayo notes that harnessing solar energy and converting it to off-grid battery power is not a new idea in Africa. She reports that the United Nations Environment Program claims that off-grid lighting solutions are “a multi-billion-dollar market”. At present, reliable and cost-effective Solar Home Systems (SHS) with 20-50 W solar panels that can power LED bulbs and charge a battery are widely available in the region. How are these affordable to the poor Sub-Saharan African population? Moncayo notes that off-grid energy enterprises have adapted their business models to suit their customers. These include Pay-As-You-Go (PAYG) or rent-to-own schemes that allow flexible access to solar energy for as little as 50 US cents per day. Moncayo reports that one of the best-known providers is BBOXX, a start-up founded in 2010 that has now sold over 85,000 systems, reaching 425,000 people, in over 35 countries. Such access to Solar Home Systems has been welcomed as they enable the poorest to save both time and money. Moncayo states in her paper that before they had access to these systems, the typical customer had to spend more money on kerosene for less lighting quality and travel nearly twice a week to charge their phone.

Lack of initial finance

The problem with the schemes currently in place is that they need initial finance.  Moncayo reports payback periods of about 18 months for each system. For a company to achieve financial stability, they need to sell fast and grow fast. However, even when they are able to expand quickly, they have difficulties to pay back short-term loans with their business proceeds. According to Moncayo, philanthropy, public financing, banks, private equity and venture capital have proven unable or unwilling to match Sub-Saharan Africa’s demands to finance off-grid energy. She investigates how impact investments are stepping up to contribute to fill the gap and help to get off-grid power to the masses. Impact investments are investments made in companies, organizations or funds that intend to create positive social and/or environmental impacts, while also attaining a financial return. Moncayo reports that in 2015, from the $16.1 billion supplied by impact investors in West and East Africa, $4.2 billion were dedicated to energy. She notes that most of these did not invest in off-grid options, but those that did are largely multilateral development banks, Development Financial Institutions (DFIs), impact investing funds and corporate impact investors. The support offered by these actors is now also getting ordinary investors interested in off-grid opportunities.

Impact investments are more than finance

Moncayo is also keen to highlight the main non-monetary contributions of impact investors. The first is their obvious contribution to the development and availability of off-grid energy systems. They attract new investors and connect them with providers, including those that are social-neutral. As impact investing is a cooperative, rather than a competitive sector, capital can be aggregated for co-investment, cutting transaction costs. In addition, impact investors can provide off-grid companies with technical assistance and help them grow their networks. Investors get involved in the governance of companies to help preserve their social objectives. Through the impact assessment of their investments, they have the information at hand to further improve the value proposition of enterprises. Overall, the introduction of impact investor capital and management practices strengthens and endorses the entire off-grid sector.

Energy for all by 2030

To attain access to clean energy for all, globally, by 2030, the OECD and the EIA, Energy For All- Financing Access For The Poor report (2011) stated that $48 billion needs to be invested each year. Moncayo notes that, if Sub-Saharan Africa requires 80% of all off-grid electrification, it would need investments of $5.6 billion a year. Based on figures supplied by Bloomberg New Energy Finance, Moncayo estimated that $188 million in impact investments were made in the Sub-Saharan African off-grid energy sector in 2015. This is just 3.3% of that required by the OECD Energy for All Case for that year. Based on projections for the increase in impact investments in the coming years, she predicts that by 2030, the impact investments dedicated to the off-grid energy sector in Sub-Saharan Africa will have the potential to finance 44% of the OECD Energy For All Case annual budget. Moncayo concludes that this is likely to be less than 1% of the estimated multi trillion-dollar impact investments predicted for 2025 by the Global Impact Investing Network. However, she notes that her analysis highlights the power of impact investors, who are emerging as engine for the global economy and key players in tackling the challenges that the world faces today.

By Mónica Moncayo Escobar – “Role of impact investing in financing access to energy for off-grid populations in Sub-Saharan Africa.

Join His Excellency Dr. Bashir Ifo, President, ECOWAS Bank for Investment & Development, Ben Good, Chief Executive Officer, Energy4Impact and other impact investors to discuss how to deliver affordable, reliable and clean energy to over 600 million Africans, faster, at the 3rd Africa Impact Investing Leaders Forum taking place on 25th – 26th October, 2018 in London. Register interest here

By all accounts, engaging the private sector in climate-smart investments will be a cornerstone to growing climate business. In many sectors they already play a large role, supplying nearly a third of global investment in research and development of new renewable energy technologies, or $2.5 billion in 2016 alone. Scaling these technologies up to meet targets set in the Paris climate agreement, however, will require trillions more in innovative climate-smart investments particularly in emerging markets. And this presents us with opportunities. In fact, IFC estimates that 21 developing countries alone hold over $23 trillion in climate-smart investment opportunities through 2030.

The time to capitalize on these opportunities is now. In the words of Michael Bloomberg and Carl Pope, from their recent book, Climate of Hope: “… We believe that by changing the way we think and talk about climate change, we can lower the temperature of the debate – and accomplish a whole lot more.”

And this captures very well what IFC is all about — creating markets, creating and supporting businesses that are financially and environmentally sustainable, and through that, making a difference. Closing off a successful fiscal year in 2017, IFC committed close to $4.8 billion from its own account and mobilized funds from other investors in climate-smart industries, helping scale up climate investments in 41 emerging markets. While these industries are all showing promise, there are five sectors where, based on our experience, innovative approaches are poised to widen the tent, attracting billions in private sector capital.

Unquestionably, meeting future demand for food will be one of the world’s greatest climate-related challenges. The human population is projected to grow from 7.3 billion as of 2015 to 9.7 billion by 2050. Without robust steps to increase productivity and climate resilience of agricultural practices, business-as-usual is expected to reduce global agriculture yields by up to 50 percent by 2030. Fortunately, businesses are beginning to employ climate-smart agriculture measures that can dramatically increase productivity and resilience while reducing greenhouse gas emissions. IFC is focused on helping scale these practices by providing investment and support for specific agribusiness needs, including increasing productivity of animal protein producers, optimizing inputs through precision agriculture, and reducing food waste through investments in logistics and infrastructure.

Another significant impact of global population growth will be the rapid growth of urban environments which will exert pressure on existing building stocks. Buildings are estimated to be responsible for about one third of global greenhouse gas emissions.

This challenge also creates an opportunity for climate-smart investment in green buildings. To help private lenders understand and engage in this opportunity, IFC is helping promote a universal and accessible green performance standard to identify areas for cost savings in buildings. The IFC EDGE program offers developers and investors a free tool to choose options to reduce consumption of energy, water, and extracted materials in new and existing building stock.

As global population and incomes rise, 70 percent of developing country populations are expected to live in cities by 2050. This opens doors for opportunities to build “smart” cities, capable of sustainably meeting demand for infrastructure in urban environments, and private sector interventions are now dramatically changing urban landscapes. In the United States, ride sharing services such as Uber and Lyft are reducing car ownership in cities, which can subsequently reduce congestion and greenhouse gas emissions. IFC is investing in public-private partnerships in Turkey to expand metro rail services and in India to upgrade street lighting networks.

In some of the emerging economies, solar and wind energy technologies are often underutilized because they suffer from variable supply, known as “intermittency.” Energy storage solutions can help reduce these impacts by providing a back-up generation option. New research from IFC suggests that over the coming decade, energy storage technologies will grow 40 percent annually in emerging markets. This growth is likely to unlock significant environmental, social, and economic benefits. IFC is growing this market through early-stage venture capital investments in energy storage markets, ranging from lithium-ion battery technologies to photovoltaic (PV) storage systems.

A critical challenge remains the ability to scale up climate-smart investments bringing new financiers into the climate-smart investment space. For example, institutional investors, comprised of pension funds, insurance companies, and sovereign wealth funds, manage $71.4 trillion in assets but currently play a limited role in global climate finance. To attract these investors, climate-smart projects must offer scale, safety, and simplicity. IFC’s Green Bonds Program has been very successful in engaging these investors, issuing over $5.7 billion in 13 currencies through 74 green bonds on its own balance sheet over the last decade.

Looking Forward

Together, these sectors represent the frontier of climate-smart investment. Innovation in climate-smart agribusiness, green buildings, smart cities, and finance can transform the way global economies function to align with a sustainable future where green growth is a norm, not an exception. By investing its resources in these emerging opportunities, IFC is helping to build the foundations for companies in emerging markets to invest and rapidly grow climate business.

By  ALZBETA KLEIN

One of the stamps of approval to this framing of important social and environmental issues has come from the investment world, including major institutional investors such as Dutch pension funds now proclaiming that a major portion of their assets will require investment returns as well as a direct link to specific SDGs.

Mainstreaming ESG and impact investing

This endorsement by major global investors is laudable. In our view it represents another clear example of the mainstreaming of ESG (environmental, social and governance factors) and impact investing. However, it also presents a direct risk for cynicism by the beneficiaries of their assets if investors dilute the SDGs too much in their approach in order to link their investments to specific outcomes.

Therefore, we applaud and at the same time remain cautious as we look across asset classes and how to best link them to the specific goals identified by the UN. The most tangible asset classes to achieve demonstrable social and environmental outcomes thus far have been in alternatives as evidenced by green real assets or social impact investing in private equity.

Growing investor demand further driven by the SDGs

While impact investing and SDGs are still new on the horizon, investor demand is quickly growing and moving into larger, more liquid asset classes. For example, green bonds have provided larger tickets and liquidity for the measurement of SDGs such as Clean Water (6), Clean Energy (7) and Climate Action (13). The direction of travel is clear and the next phase of responsible investment evolution is impact investing.

The traditional area for ESG investors has been in public equities. For impact investing, it has been in alternatives. The demand for SDGs in public equities is now starting to emerge and will bridge these two worlds. In order to maintain integrity, products and services should be considered that go beyond a simple analysis of a carbon footprint compared to a benchmark. This will become the standard for client expectations, but will not necessarily meet the needs of sincerity around SDG outcomes.

SDGs create a doorway to impact investing in public equities

Two illustrations come to mind in how to make public equities relevant around SDGs and in line with an impact investing philosophy. If we take quantitative equity, one can imagine a portfolio construction process which focuses on holdings that can demonstrate how they are contributing to a lower carbon future through their products and services and business operations. Metrics such as carbon emissions saved and green share of portfolios can be used for this analysis. These are steps to demonstrate that it’s not just business-as-usual portfolio construction, and not just about following a low carbon index. This is active portfolio management towards an SDG outcome while ensuring financial returns.

Kathryn McDonald, Head of Sustainable Investing at AXA IM Rosenberg Equities, commented:  “We believe that publically traded equity investing can act as complement to traditional impact investing. The breadth of the publically traded market, and the capacity offered by quantitative equity investing in particular, allows asset owners to put significant AUM to work to really move the needle on impact goals.

“Looking carefully at several of the SDGs, we believe that we can build targeted, listed equity portfolios that speak directly to specific investor goals. Importantly, compelling financial returns are a must – without those investors will not stick with ‘listed impact’ approaches for long.”

So too, in a more conviction based approach, we can imagine a portfolio that has high active share and engagement as a key basis. A focus on both environmental and social impact with metrics and information provided by companies around access to improved livelihoods, clean water and improved healthcare allows to build a concentrated portfolio in public equities, particularly with a focus on the underserved and the developing world.

Ian Smith, Portfolio Manager at AXA IM Framlington Equities, added: “At Framlington Equities, we have developed the know-how to be able to adhere to what we believe will be the common requirements of a public equity impact fund in relation to monitoring impact metrics, promoting better disclosures and aligning to the UN SDGs.

“For many companies, there can be a strong symbiotic relationship between generating tangible positive societal change and meaningful long term shareholder value – we are looking to identify the companies that have business models and strategies that extol this. We need to be thoughtful when it comes to the many grey areas in impact investment decision making and this is where our deep understanding of and relationships with businesses are critical. We like to focus on who the end beneficiaries of a company’s impact approach are and how their lives are truly being changed. This framework helps us determine which companies fit into our impact portfolios.”

All of this shows that the arrival of SDGs has created a built-in framework for investors to connect the worlds of responsible investment and traditional investment in a meaningful and measurable way.

In order to ensure SDGs, impact investing and traditional asset management prosper, integrity, care and humility are needed. The ultimate goal is for asset management to bring more colour into the equation of money and done right, SDGs can be a tool across asset classes ranging from illiquid alternatives to highly liquid public equities to truly mainstream impact investing.

By Matt Christensen, Global Head of Responsible Investment at AXA Investment Managers (AXA IM)

Nine years since its inception, Yazhari reports that Beyond Capital is impacting 2.3 million people–1.6 million of which are women–with eight investments that are helping to provide healthcare, clean water, sanitation, energy access, and agriculture tools. We asked her for a closer look at impact investing, the risks vs. the rewards, tips for success, as well as her forecast for where it’s headed.

A Q&A with Eva Yazhari

The Main Objectives

Among other goals, such projects aim to achieve biodiversity conservation, sustainable water management, and clean transportation. The market reached a turning point in 2013 as the first corporate green bonds were issued, increasing the market size to $11bn. In 2016, over $81bn in green bonds were issued, driven in part by an increase in issuers, issue types, structures and investment vehicles.

Moody’s suggested that the global green bond issuance may rise to approximately $208bn in 2017.

This is indeed a very likely outcome as the expansion of green bond types and structures continues to attract multiple potential issuers, including China. The country is expected to contribute around $60bn in green bonds issued in 2017.

Other Players

In recent months, France and Poland became the first countries to issue sovereign green bonds. Countries likely to follow suit in 2017 include Bangladesh, China, Luxembourg, Morocco, Sweden, and Nigeria. Africa’s powerhouse, Nigeria, plans to be one of the first African states to float sovereign green bonds to fund sustainable projects in the economy.

At the Green Bonds Capital Market & Investors Conference, the acting President of Nigeria, Professor Yemi Asinbajo, stated that arrangements were being made for the inauguration of the first African Sovereign Green Bond, worth some 20 billion nairas, to address climate change and environmental projects.

Some of the projects to be financed include a solar unit distribution program for 20 states of the federation and a reforestation program for 26 states. With solar power becoming the world’s cheapest source of energy for electricity, this presents opportunities for investments and diversification, which could cut significant costs for organisations as the nation works towards bouncing back from recession. Whether or not the green bonds will be oversubscribed may depend largely on incentives and regulation of the bonds.

Putting the Money to Good Use

In November, Masen (Morocco’s Agency for Sustainable Energy) issued Morocco’s first ever green bond of €106m. The proceeds from the bond issue will be used to finance the development of 170 MW in the NOOR PV1 project, providing solar power through three plants.

Other African states, including Kenya, are gearing up to take be active in the green bond markets as they work towards supporting the 2015 pledge by world leaders to limit global warming to below 2 degrees Celsius this century.

A Positive Outcome

Apart from potential tax incentives, African states may be able to achieve more sustainable growth in relatively early stages of development in contrast to more developed states. The introduction of the issuance of green bonds increases the priority for sustainable development on the continent, thus encouraging African countries to avoid the mistakes (in sustainable development) that developed economies made in their infancy.

A potential challenge for African states hoping to attain finance for funds through green bonds is the size of the projects and their financing needs. The size of the projects may need to be increased in order to ensure that they are more attractive.

Although the issuance of green bonds is growing fast, it is still less than $1trn, a tiny fraction of the $90trn global bond market. OECD studies suggest that the global annual green bond issuance will need to rise by between $620bn and $720bn for the G20 to meet its climate change targets.

Other Considerations

The standards set for issuers of green bonds should also be considered. Higher standards may direct the efforts made by countries and organisations that hope to become issuers in the green bond market. They will encourage accountability and transparency that will promote more suitable allocation of capital to funding projects.

Critics cite the relatively weak reporting in the green bond market. Coupled with uncertainty on what constitutes a green bond, this may be a deterrent to investors.

Nevertheless, progress is being made in this regard. China and India have already led the way with unique guidelines to support the issuance of green bonds. Similarly, African states will benefit greatly from policy frameworks based on their distinct markets.

Conclusion

Sentiments regarding the sustainable development of economies continue to set the pace for organisations and policy makers in various countries across the globe who hope to remain competitive for investors and other stakeholders.

The numbers do not lie and a shift of winds has already taken place. Individuals and groups must adjust with urgency. Recently, the S&P Dow Jones Indices, the world’s leading provider of index-based concepts, data and research, announced the launch of the S&P Green Bond Select Index. It will measure the performance of green-labelled bonds issued globally.

The wave of change is here, but the real question to consider in the midst of this change is: who will ride it with grace?

By Calvin Ebun-Amu, Sector Specialist

“I am pleased to inform this distinguished assembly that the federal government will be launching the first African sovereign green bond in December 2017.

“The bond will be used to finance renewable energy projects. We are very excited about this development as it will go a long way in solving many of our energy challenges, especially in the hinterland,’’ Buhari said.

According to the Premium Times, the President said this in Abuja on Tuesday while presenting the 2018 budget proposal to the National Assembly.

This development follows  Vice President, Prof. Yemi Osinbajo, announcement in February stating that the government was making arrangements to inaugurate the first African sovereign green bonds.

Osinbajo had also indicated that the federal government was planning to allocate $63 million under the green bonds initiative.

Green bond evolution in Africa

Green bonds are gaining traction across the continent, last month the South African stock exchange (JSE), also celebrated the launch of its Green Bond Segment, which provides a platform for companies and other institutions to raise funds ring-fenced for low carbon initiatives.

Donna Nemer, Director of Capital Markets at the JSE said the introduction of the green bond provides companies with an effective tool to raise capital for investments into sustainable projects that would have been funded internally.

“Issuing a green bond can help companies to 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 requirements and green investment mandates,” Nemer said.