Changing the outcome with green bonds.

By Pascal Shuro

 

Climate change according to Bloomberg (2021) is linked to over five million deaths per year, this is shocking and unbelievable. But I challenge you to do the math, sum all deaths in a year caused by climate-related disasters across the globe. The crisis it's so overwhelming and requires a lot, but it is necessary to attend to it. Governments, Quasi-governments, and corporations know what you think concerning green bonds and climate-related projects financing in Africa, it’s unrealistic. With IPCC sixth assessment report accentuating that, a four-degree Celsius increase can cause a heatwave that used to occur once in 10 years to occur nine times in a decade, and once every 50 years would translate to 39.2 times occurrences in ten years. Let's all agree that the climate crisis is the biggest global threat after Novel diseases and terrorism. Tools set up to combat climate change is not good enough. There is a strong need for new complementing strategies. Hypothetically if we go with the current strategies, will we reach the net-zero, manage to meet the 1.5 degrees Celsius Limit?

Climate data experts unanimously harmonize with me, that we need those strategies that your fear might not work. Desperate times require desperate measures! It's unequivocal that human activities have contributed to the crisis and also unequivocal that we have to change our ways to save the planet and come up with solutions that help economies to transition to low-carbon intensive. Green bonds they are here, let’s embrace them. The issuance of green bonds has tremendously changed; from 2008 the World Bank has issued bonds over 25 billion worth of bonds targeted at climate-related projects. And in 2020 combined bonds (social, sustainable and green) issued run to over four hundred billion. But 2021, there is an expectation by industry experts that they will soar by 32%. There is a growing segment of investors that wants to change the world, and be associated with the change in three areas which are environmental, social and governance (ESG); bonding authorities should take note of their requirements and come up with Strategies that have triple benefits. To the environment, investor and to you. Climate Bonds Initiative, highlights that green bond financing is over-subscribed meaning, it is lucrative and investors are willing to invest.

Green bonds were first offered by European Investment banks in 2007, and have advantages over other methods. They are earmarked meaning funding goes straight to the project, cannot be diverted to any other unrelated projects. They have a long lifeline maturity date and there is accountability on the side of the borrower. Furthermore, large sums of investments can be generated and green bonds similar to traditional bonds can be traded on the stock exchange. Green bonds unlike traditional bonds require more transparency in the use of proceeds, reporting of the project, evaluating and selection of potential projects to fund. They are guided by frameworks hence more accountability for project managers is expected. This is an efficient tool; the benefits outweigh the risks. South Africa, Namibia, Kenya, Kingdom of Morocco, Nigeria and Seychelles have issued green bonds targeting land use, eco-friendly university accommodation, energy sector, water and waste management. This has made Morocco’s economy move closer towards 52% reliance on renewable energy. Kenya Acorn Holdings issued USD 40 million worth of green bonds targeting 5000 eco-friendly university accommodations. Quasi-government\"s in Africa need to see this as an initiative that can be used to meet the SDGs; Johannesburg in southern Africa is the only city that has issued green bonds.

The City of Johannesburg, Ned-bank, Access Bank PLC, Acorn Holdings and other participants have issued their green bonds, the sad truth is this is not enough to protect and save the earth. This shows clearly that the idea is not far-fetched and can be implemented in our contemporary societies. 

In these perilous times, there is a need for bold moves in terms of investment, and policy change.