Launch of Technical Handbook for Forestry, Fisheries and the Environment

The Department of Forestry, Fisheries and the Environment and the National Treasury (NT), are proud to launch a Technical Handbook about the issuance of sustainable municipal bonds in South Africa.

The application of sustainable bonds might be considered an important financing mechanism for climate mitigation and adaptation. It is particularly important for Sub-Saharan Africa, as it is one of the most susceptible regions to climate change.

The Technical Handbook was jointly developed with the UNDP/UNEP Poverty Environment Action and the International Climate Initiative, (IKI), project Green Economy Transformation. It is implemented by the German Technical Agency and United Nations Environment Programme (UNEP) on behalf the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety and Consumer Protection and the Partnership for Action on Green Economy.

Sustainable Bonds are bonds that have positive environmental or social impacts. They also meet certain green key performance indicators. The Handbook will help South African Municipalities determine whether a Sustainable Bond can be used to finance their climate change or environmental projects. It provides decision-making guidance, and outlines a step by step process for preparing for, issuing, managing and managing a Sustainable Bond.

Rising temperatures, rising sea level, and worsening erratic rain are increasing the frequency of natural disasters. They disrupt agricultural production, damage infrastructure, and threaten the sustainability of urban areas. Climate adaptation financing is required according to the United Nations Economic Commission for Africa (UN) and the International Monetary Fund (IMF).

In the last decade, there has been a significant increase in the global market for Green and Sustainability bond issuances. In 2021 it surpassed 875 Billion in all currencies. The proceeds were tied to green, sustainable and Sustainable Development Goals frameworks. This market is expected surpass the 1 trillion mark in 2022. However, sub-Saharan Africa has not been able to participate in these trends at any international level. South Africa accounts for about two-thirds of global issuances. Only 0.4% of global issuances are African, even if one includes North Africa.

South Africa has shown great interest in strengthening the competencies and commitment of key actors in public institution for a coherent implementation SDGs and Nationally Determined Contributions.

This capacity includes the development of a Technical Handbook on South Africa’s Sustainable Municipal Bonds. The Handbook provides detailed, easy-to-understand, practical information about Sustainable Bonds issuance. It also discusses the tasks, and activities, for South African municipalities. It provides a detailed overview of the entire process for preparing, issuing and managing a Sustainable Bond. It also aims to examine key elements of the instrument and provide balanced information to South African Municipalities (and other stakeholders) in order to determine if a Sustainable Bond is suitable for their organization.

The Handbook was tested in two municipalities, including the City of Tshwane Metropolitan Municipality and eThekwini Metropolitan Municipality. The trial process involved in-depth, demand-driven, and practical capacity building in two municipalities. This was done to increase their readiness for a green bond issue and support decision-making regarding a possible bond. The next steps include the dissemination of the handbook at both the local and national levels in South Africa, as well as at international level, to increase sharing of best practices and lessons learned.

Distributed by APO Group, Republic Of South Africa: Department of Forestry, Fisheries and the Environment