Standard Bank plans energy fund

• Objective of bank fund is to accelerate the transition away from fossil fuels

Standard Bank plans to launch a renewable energy fund to accelerate the transition away from fossil fuels in the 20 African countries in which the lender has a presence. Kenny Fihla, the CEO of Standard Bank’s Corporate and Investment Banking unit said: “We haven’t finalised the total size of the fund.”

Standard Bank plans to launch a renewable energy fund to accelerate the transition away from fossil fuels in the 20 African countries in which the lender has a presence.

Kenny Fihla, CEO of Standard Bank’s Corporate and Investment Banking (CIB) unit, made the announcement at a media briefing on Tuesday, but he gave scant details on the plan other than to say the lender plans to launch the fund in partnership with its insurance unit Liberty as well as Stanlib, its asset management arm.

“They are part of the conversations,” Fihla said of the planned involvement of Liberty and Stanlib in the proposed fund. “We haven’t finalised the total size of the fund, but we know what the initial size of the funding from Stanlib is ... we have an idea of our own initial commitment. We want to use that as seed funding. We are working hard to accelerate and conclude that.”

Fihla said that the fund would be aimed not only at institutional investors, but also all possible avenues to attract capital to the fund that the bank was exploring.

“The intention is to create a mechanism through which we can leverage as much of our internal capital in order to get external capital to accelerate the transition within the geographies in which we operate,” said Fihla. “Once we have finalised the different instruments that are likely to be targeted by the fund we’ll make the appropriate announcements.”

Africa’s biggest lender said it mobilised R55bn for sustainable finance in 2022 well ahead of its R40bn target and 2.4 times more than it did in 2021. That forms part of a broader plan to mobilise between R250bn and R300bn in sustainable finance solutions by 2026, a target that includes R50bn of financing for renewable energy and underwriting for a further R15bn for renewables by end-2024.

“We exceeded our R40bn 2022 goal by executing 29 sustainable finance transactions with a total value of R55bn as we ramped up our origination efforts to support our clients to achieve their climate and sustainability goals,” said Fihla.

“Our 2023 run rate to date is tracking higher compared to the same period last year, and this — together with our rich project pipeline — bodes well for this year’s R50bn mobilisation targets.”

Standard Bank’s climate policy sets out progressive short-, medium- and long-term targets to reduce its contribution to carbon emissions by setting targets for thermal coal, oil and gas, while it is also in the process of setting targets for commercial and residential property.

The bank also aims to achieve net-zero carbon emissions from its own operations by 2040 and from its portfolio of financed emissions by 2050, in alignment with the Paris Agreement on climate change. Fihla said most of Standard Bank’s renewable energy projects are under construction, the majority of which were awarded during bid window 5 of the Renewable Energy Independent Power Producers Procurement Programme (REIPPP) and the emergency energy round of initiatives in SA. Others relate to self-generation by mining companies and other large corporates.

The total energy output expected from these projects is 900MW, equivalent to about 20% of Eskom’s installed capacity, with Standard Bank supporting almost 30% of these initiatives. The bank will also provide R10bn to Eskom to roll out its transmission network, though the bank says this does not constitute exposure to fossil fuels as the funding will be used to connect to the renewable projects, largely in the Northern Cape.

“Protecting Eskom is key to the continued function of the SA economy,” said Fihla.

Standard Bank also said at its media briefing that its financing of renewable power generation in 2022 exceeded its funding of nonrenewable power generation by a ratio of 4.39 to 1.

The ratio is based on the R26.338bn in funding for renewable power generation in 2022 as per its climate-related financial disclosures report for that year, which compares to the R5.999bn in loans for nonrenewable power generation.

“This means our financing of renewable energy is 439% greater than our financing of nonrenewable energy,” said Fihla. “Put differently, Standard Bank financed R4.39 in renewable energy for every R1 lent to nonrenewable power in 2022.”

WE EXCEEDED OUR R40BN 2022 GOAL BY EXECUTING 29 SUSTAINABLE FINANCE TRANSACTIONS WITH A VALUE OF R55BN

Kenny Fihla CEO of Standard Bank’s CIB