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The benefits of sustainable investments

The benefits of sustainable investments

By Claire Hobbs
Capricon Chief Treasurer

In many first world economies, the effects of global warming continues to manifest as a business reality. In response to this crisis, the local banking sector, in support of the Millennium Development Goals, is mandated to play a vital role in accelerating the local market’s transition to a lower-carbon energy future.

Bank Windhoek and the Capricorn Group’s commitment to sustainability means taking a long-term, holistic view that considers the perspectives of all stakeholders. Our sustainability framework provides the structure and processes through which we create enterprise-wide awareness and ensure aligned thinking and practices. In other words, our sustainability strategy is based on addressing sustainability holistically, encompassing environmental, social and economic issues.

The local economy is confronted with key sustainability challenges, namely; climate change, poverty, health issues and resource shortages such as water, energy and food. In addressing these global and local concerns, Bank Windhoek plans to utilise its business lines, such as banking, investment and asset management, micro and property finance to address these key sustainability challenges.

To assist in alleviating such challenges, Bank Windhoek have in their past financial year financed in excess of N$200 million worth of sustainability projects in the form of solar PV plants, thereby reducing the country’s dependence on fossil fuels to generate electricity. Projects such as these also go a long way to enhancing the effectiveness and efficiency of production using alternative, more sustainable energy sources, reducing our carbon footprint and mitigating climate change, all while contributing to the economy and employment creation.

A formal definition of sustainable banking is still being developed. At this stage, it is widely understood that sustainable banking involves carrying out banking operations and business activities with mindful consideration toward environmental and social impacts. While this is currently the accepted definition, banking and financial services in Namibia are poised to become invaluable enablers in the value chain of sustainable projects that reduce our dependence on the finite supply of fossil fuels as we look toward cleaner, more natural and infinite supply of alternative sources of energy.

This move is critical since inadequate financing solutions have been identified as one of the major setbacks hampering the robust development of the sustainable energy sector in Namibia. This is due to both limited access to and the high cost of credit.

The Sustainable Use of Natural Resources and Energy Finance (Sunref) a Agence Française de Développement’s (AFD) green finance label, recently made funds available to Bank Windhoek and two other local commercial banks.

This initiative was a great learning journey for the Bank’s staff and clients involved in related renewable energy projects, and this experience encourages Bank Windhoek to continue to expand its green lending activities. For this reason, Bank Windhoek aims to obtain additional sources of funding for its green lending activities where the proceeds will be used solely to finance eligible green projects and assets throughout Namibia.

The local economy has many potential projects that are technically viable. Nevertheless, the financial feasibility of many projects falter in the face of enhanced due diligence and project preparation requirements, which are a crucial part of the evaluation process. These are just some of the risk factors involved with financing sustainability projects.

Despite these challenges experienced by both the investor and lender, there are major benefits associated with sustainability investments within Namibia. The resources in Namibia are boundless, and most sustainability projects create much needed job opportunities while retaining investments within the country. Furthermore, due to the rapid technological advancement, many renewable energy generation and storage projects will become more affordable and attractive to investors.


 

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