JSE-listed Netcare, in partnership with Standard Bank, has launched Africa’s first sustainability-linked bond in South Africa and Lesotho.
The coupon rate of these bonds is linked to the issuer’s achievement of certain pre-agreed sustainability performance targets. The bond will be listed on the interest rate market of the JSE on 19 March.
Netcare raised a R1billion ($67.8million), 3-year, unsecured note priced at 5.4%. If Netcare achieves its climate change mitigation and water efficiency targets linked to the bond, it will benefit from a step down in the coupon rate.
Carl Wiesner, Standard Bank Debt Capital Market Transactor, commented: “The large level of interest the market has expressed for this transaction demonstrates the increasing importance of ESG driven investments in both the international and local capital markets.”
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The Netcare group wants to reduce its energy consumption, procure more renewable energy, reduce total carbon emissions and further improve its water efficiency, partly by increasing its capacity to recycle greywater.
Netcare is also developing systems to ultimately convert all infectious healthcare risk waste (HCRW) produced on-site to inert products and achieve zero waste to landfill for waste, outside the HCRW stream, by 2030.
Dr Richard Friedland, Netcare CEO, said: “Netcare is delighted to be part of a global community of healthcare institutions leading the transformation to climate-smart healthcare, and this innovative sustainability-linked bond will further assist us in achieving our longer term goals”.
Netcare making progress on sustainability front
Netcare has already made significant progress with its sustainability programme. As of 2020, the company has solar installations capable of generating more than 20GWhof renewable energy. The group had also achieved a 24% reduction in energy intensity per bed since 2013 against a goal of 22% by 2023. In 2020, scope 1 and 2 carbon dioxide emissions reduced by 37% from 2013.
The progress that Netcare has made towards being a leader in environmental sustainability within the healthcare sector in South Africa, and the world, was recognised when the company achieved the distinction of being the only healthcare institution globally to have received gold awards – the highest accolade – in each of the four categories in the international 2020 Health Care Climate Challenge Awards organised by Global Green and Healthy Hospitals (GGHH).
The awards were for Greenhouse Gas Reduction [Energy], Renewable Energy, Climate Resilience and Climate Leadership. The company was also awarded the prestigious Association of Energy Engineers (AEE) Sub Sahara African Corporate Company of the Year award in 2019, a global recognition across all industries.
Sustainable finance solutions are growing across Africa
Along with other instruments, such as sustainability-linked loans, green bonds and social bonds, demand for sustainable finance solutions is rising fast in Africa.
Sustainability-linked corporate financing facilities offer clients an opportunity to directly fund ESG improvements, or to refinance existing general corporate funding with a solution that also delivers an indirect socio-economic benefit for the communities and environments in which they operate.
Investor demand is partly being driven by the recognition that companies that operate in a sustainable manner tend to have lower risk profiles and outperform over the long term.
Since the scale of the economic crisis brought about by the COVID-19 began to emerge, the IEA has been leading the calls for governments to make the recovery as sustainable and resilient as possible. The IEA Sustainable Recovery Plan shows governments have a unique opportunity to boost economic growth, create millions of new jobs and put global greenhouse gas emissions into structural decline.