The National Treasury is set to start formal talks with institutional investors in a bid to unlock at least R2 trillion in sustainable finance, towards building a more climate resilient and lower carbon economy.
The SA Treasury on Friday published an updated version of its draft technical paper titled, “Financing a Sustainable Economy”, which aims to mobilize investment in sustainable development.
It said that addressing climate-related risks and transitioning towards low carbon economy will require significant new resources, blending state and private capital, and access to financial markets through additional instruments.
The paper serves as a foundational step towards encouraging more long-term investment in sustainable economic assets by the banking industry, retirement funds, insurance, asset management and capital markets.
The SA Treasury said the Prudential Authority and the Financial Service Conduct Authority will engage with banks on a set of minimum requirements for sustainable finance, including long-term climate and biodiversity-related strategies.
For pension funds, Treasury said regulators should issue guidance or instruments on sustainable finance, including amending requirements for annual financial statements to ensure the disclosure, monitoring and reporting of responsible finance investments.
Treasury’s focus on sustainable finance encourages financial institutions to also be cognisant of how their investment decisions impact the environment.
It noted that addressing environmental and social development issues, such as access to and protection of water resources, wetlands and biodiversity, and increasing access to sanitation and infrastructure, will also require additional resources.
As a result, Treasury will make climate change planning a part of the budget process and fiscal risks monitoring, working towards climate classification and tagging in the budget to enable tracking of climate-related expenditure.
