South Africa is severely exposed to climate risk, which in turn amplifies the effects of other environmental and social challenges, including the current COVID-19 pandemic. As a result, we need to embrace and carefully consider transitioning our economy to one that is green, low-carbon, socially inclusive, and more resilient. Doing so will bring its own challenges in terms of ensuring a just transition for all sectors of society. We also face the immediate need of rebuilding the economy post this current COVID-19 pandemic. South Africa’s GDP is expected to contract at least by 4% to 10%, with up to 1 million jobs and 1600 businesses at risk. Rather than adding to Government’s burden, green and sustainable finance offer a way to address South Africa’s social and economic priorities and to create new investment opportunities, attracting local as well as international capital. The time is right to unlock alternative forms of funding and channel these to sustainable projects and sectors that build South Africa’s long-term competitiveness and resilience.
Green Stimulus is the key to fast-tracking job creation, improving liquidity, and to putting South Africa on a path to economic recovery without compromising long-term competitiveness.
It provides four strategic advantages to South Africa:
Leading nations and lending institutions are already voicing the importance and benefits of a ‘Green Recovery’ – multiple countries have indicated that stimulus packages will be ‘Green’ stimulus packages. If South Africa does not invest in a similar way, we risk trade pressure, limited access to ODA and entrenching structural challenges in our economy, threatening long-term competitiveness.
The primary challenge is defining what projects and sectors qualify as green, sustainable, and inclusive. Internationally, a number of leading initiatives have paved the way, including the European Union Taxonomy on Sustainable Activities, the Climate Bonds Taxonomy, the International Capital Markets Association Green Project Mapping, and the Joint MDB (multilateral development banks) Methodology for Climate Finance Tracking. These offer a sound starting point for South Africa to develop its own Green Taxonomy that both supports policy development and asset level investment. Under the leadership of National Treasury, and with support from IFC (part of the World Bank Group), the National Business Initiative (NBI) and the Carbon Trust are working to develop such a taxonomy, building on complementary initiatives and expertise in the South African market.
Join expert speakers from National Treasury, IFC/World Bank, the Climate Bonds Initiative and local financial sector practitioners, to discuss the opportunities and priorities for a green stimulus response to COVID-19, and help inform the development of a South African Green Finance Taxonomy.