Sasha Cook, head of Sustainable Finance at Standard Bank CIB, explains how domestic banks are helping to close the energy-investment gap and ensure sustainable development across Africa.
Global Finance: What are Standard Bank’s specific targets for reducing its financed emissions, and how is it achieving them?
Sasha Cook: We have committed to achieving net zero for our own operations by 2040 and are three years ahead of schedule; for our portfolio of financed emissions, by 2050. This commitment is integrated into group-wide policies and processes and informs our credit decisions. We continue to engage with clients across all segments and sectors to understand their climate goals and transition plans. And we have set clear parameters that limit our provision of finance to existing power-sector clients generating power from coal, oil, and gas-fired plants.
We will not finance the construction of new coal-fired power plants or expansion of the generating capacity of existing coal-fired plants. We will consider financing oil and gas only when the projects are low-carbon intensity and will result in lowering the average carbon intensity of our portfolio, and where clients provide details of current or expected carbon emissions and have an approved plan to reduce scope 1 and 2 emissions.
GF: Which sustainable finance instruments help mitigate climate change’s impact?
Cook: Various categories contribute positively, namely green-labeled instruments in loan, bond, and guarantee format (specifically, in the subcategories of renewable energy, green buildings, sustainable water, and biodiversity-related), blue-labeled instruments (supporting water-related and marine projects), social-labeled instruments (focusing on financing affordable basic infrastructure), and sustainability-linked instruments where key performance indicators are linked to positive environmental impact and performance.
GF: Why is it important that African banks play a leading role in creating a sustainable future for the continent?
Cook: As allocators of capital, financial institutions play an important role in driving positive impact. African banks also play a key role in facilitating international capital flow to the continent, to support sustainable projects.
Additionally, African banks play a critical role in developing local debt capital markets, ensuring that capital can be raised from local institutional investors to support projects that deliver positive impact, reducing reliance on hard-currency funding sources. Banks also have good governance policies, processes, and structures that lead to successful project implementation and ensure that funds are channelled to impactful outcomes.
GF: How can Africa balance reducing CO2 emissions with plugging energy infrastructure gaps?
Cook: The energy “trilemma,” as it is sometimes referred to in Africa, requires balancing clean energy, energy access, and affordabale energy. The focus cannot therefore solely be on increasing large-scale renewable energy capacity. There is also a need to fund innovative smaller scale solutions like mini-grids and improvements to transmission infrastructure that facilitate increased grid capacity for renewable energy. Funding also needs to be allocated to the South African government’s recent BESS [Battery Energy Storage Solution] program; we have successfully closed financing for several of the first large-scale BESS battery storage projects, which will result in improved access to energy by allowing excess renewable energy to be stored and used when needed.
Africa contributes less than 4% of global greenhouse gas emissions and thus does not face the same level of transition risk as the developed north. Banks can facilitate, promote, and support energy access in all economic segments through renewables and, where required, renewables integrated with thermal power generation.
Standard Bank can boast two key initiatives in this regard: PowerPulse and LookSee, which are aimed at improving energy access using clean energy in the residential and commercial segments of the economy.
