Sustainable finance a catalyst for recovery

Sustainable finance is a catalyst for Namibia’s recovery from the coronavirus pandemic which caused a lot of disruptions in the domestic economy.

According to Marco Triebner, Head of Investment Banking at Standard Bank Namibia, the Covid-19 pandemic has heightened the focus on climate change and financial instruments that promote sustainable economic development.

“The pandemic has impeded Namibia’s growth and demanded new approaches to economic development. It also highlighted the importance of sustainability and environmental, social and corporate governance (ESG) issues. Pressure is building on financial institutions and non-banking financial institutions, asset managers and corporates to give more attention to ESG issues in their day-to-day operations. We believe that Namibia is primed for a sustainable finance boom, given its potential in the renewable energy space and its ongoing developmental challenges,” he said.

Triebner also said the fastest and most cost-effective way to address energy supply is through renewable power projects and further advances in battery storage technologies, coupled with cost declines, mean renewables are becoming increasingly attractive and viable.

Investment

Sustainable finance could help drive Namibia’s recovery from Covid-19 while also incentivising much-needed investments in the green economy and social development.

“Partly owing to the impact of Covid-19, we are already seeing a surge in interest in financial products that promote a more sustainable economy. For instance, the pandemic is boosting demand for bonds that fund social projects and this trend is expected to continue. Social bonds, which are used to finance projects focused on delivering positive social outcomes, have come to the fore during the pandemic as investors and corporates seek to make an impact, while also generating attractive returns,” said Triebner.

The expansion of the sustainable finance market’s growth is being supported by the establishment of ESG-linked funds, sustainable indices and by an evolving regulatory environment. The sustainable finance market is also being driven by investors who are increasingly gravitating towards ESG-linked assets, partly on the premise that they outperform over the long term, added Triebner. – Nampa