Netcare and Standard Bank launch Africa’s first sustainability-linked bond

JSE-listed Netcare, which operates a network of hospitals and other healthcare services in South Africa and Lesotho, has launched Africa’s first sustainability-linked bond, in partnership with Standard Bank. 

The coupon rate of these bonds is linked to the issuer’s achievement of certain pre-agreed sustainability performance targets. In Netcare’s case, the group aims to reduce its energy consumption, procure more renewable energy, reduce total carbon emissions, and further improve its water efficiency, partly by increasing its capacity to recycle grey water. In addition, Netcare is developing systems to ultimately convert all infectious healthcare risk waste (HCRW) produced on-site to inert products and achieve zero waste to landfill for waste, outside the HCRW stream, by 2030.  

Dr Richard Friedland, Chief Executive Officer of Netcare says, “Our comprehensive environmental sustainability strategy developed in 2013 is firmly on track to meet our 10-year goals and targets. Netcare is delighted to be part of a global community of healthcare institutions leading the transformation to climate-smart healthcare, and this innovative sustainability-linked bond will further assist us in achieving our longer term goals”. 

On 16 March 2021 Netcare, with Standard Bank acting as Sole Arranger and Sustainability Agent, executed on the continent’s debut sustainability-linked bond (NTCG01). The bond will be listed on the interest rate market of the JSE on the 19 March. Netcare raised a ZAR1 billion, 3-year, unsecured note priced at 5.4% (3 MonthJIBAR +175bps). If Netcare achieves its climate change mitigation and water efficiency targets linked to the bond, it will benefit from a step down in the coupon rate.  

Carl Wiesner, Debt Capital Market Transactor at Standard Bank says, “Through the offering of the sustainability-linked bond, Netcare was able to access a deeper pool of liquidity at a compressed upfront pricing level, with the added incentive of a quantifiable future pricing benefit while investors are able to encourage positive forward-looking sustainable corporate behaviour..” 

Netcare has already made significant progress with its sustainability programme. As of 2020, the company has solar installations capable of generating more than 20GWhof renewable energy, and had achieved a 24% reduction in energy intensity per bed since 2013 against a goal of 22% by 2023. In 2020, scope 1 and 2 carbon dioxide emissions reduced by 37% from 2013.

The progress that Netcare has made towards being a leader in environmental sustainability within the healthcare sector in South Africa, and the world, was recognised when the company achieved the distinction of being the only healthcare institution globally to have received gold awards – the highest accolade – in each of the four categories in the international 2020 Health Care Climate Challenge Awards organised by Global Green and Healthy Hospitals (GGHH). The awards were for Greenhouse Gas Reduction [Energy], Renewable Energy, Climate Resilience and Climate Leadership.  

The company was also awarded the prestigious Association of Energy Engineers (AEE) Sub Sahara African Corporate Company of the Year award in 2019, a global recognition across all industries. 

Nigel Beck, Global Head Sustainable Finance at Standard Bank says, “Over the course of the last 12 months Standard Bank has been working closely with Netcare and institutional investors on a sustainability-linked product offering, advising on meaningful sustainability performance targets aligned to Netcare’s corporate strategy. “We are encouraged by the overwhelming level of interest and demand the market has expressed for sustainable product offerings which was evidenced by the extent to which the bond was oversubscribed.” 

Along with other instruments, such as sustainability-linked loans, green bonds and social bonds, demand for sustainable finance solutions is rising fast in Africa. 

Sustainability-linked corporate financing facilities offer clients an opportunity to directly fund ESG improvements, or to refinance existing general corporate funding with a solution that also delivers an indirect socio-economic benefit for the communities and environments in which they operate. Investor demand is partly being driven by the recognition that companies that operate in a sustainable manner tend to have lower risk profiles and outperform over the long term. 

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Standard Bank OneFarm Share platform targets 30-million meals in 2021

Standard Bank’s OneFarm Share platform provides over 1-million meals for food relief, targets 30 million in 2021

Standard Bank’s OneFarm Share initiative in South Africa, which matches requests for food relief to suppliers with good quality excess fresh produce, has, since November last year, collected and distributed more than 270 tonnes of food to accredited beneficiary organisations, providing over 1-million meals to vulnerable individuals.

In 2021, Standard Bank hopes to increase OneFarm Share’s impact by ten times – delivering 7 400 tonnes of food across all nine provinces, enabling over 30-million meals.

The partnership provides a digital platform where emerging and commercial farmers can sell or donate their produce into new markets. 

 “The need for food relief is greater than ever, with over 12-million South Africans unsure of where their next meal will come from,” says Lungisa Fuzile, Standard Bank South Africa Chief Executive. “Farmers are aware of this need, but feel unable to meet it, without a clear mechanism to manage the requests for donations and an efficient, quick and transparent process to donate food. OneFarm Share brings all the role players together from producers and logistics companies to consumers and beneficiaries under a single digital platform where needs can instantly be identified and addressed.”

Agriculture has been prioritised as being one of the top five ecosystems for the Standard Bank Group. As a result, the OneFarm platform has been launched as a digital business-to-business platform to connect and provide services across the agricultural ecosystem through Lend, Protect, Grow, Trade and Share services. To date this has been piloted in Uganda since August 2019.

In South Africa, the OneFarm Platform was launched through OneFarm Share as a result of the food crisis caused by Covid-19 lockdowns and to increase the sustainability of farming operations in the country.

As Standard Bank firmly believes that co-creation is the key to acceleration, it partnered with HelloChoice, a South African AgriTech with a digital fresh produce marketplace, as well as FoodForward SA, the largest food distribution non-profit organisation in South Africa. FoodForward SA focuses on the recovery and redistribution of edible surplus food from the supply chain (including retailers, manufacturers, and farmers). By partnering with organisations with existing capabilities, the initiative was up and running within just four months.

Pidelta Potatoes – Greytown
Hillview cabbages

“By joining forces and working closely with Standard Bank to drive the OneFarm Share initiative, we can make a genuine, sustainable impact to reducing hunger and improving food security through ground-breaking online technology,” says Grant Jacobs, CEO & Co-Founder of HelloChoice.

The OneFarm Share platform aims to collate food requests from registered charity organisations and aggregates them onto an online marketplace. The requests are then matched to available produce listed by farmers and food producers. The food is made accessible to beneficiary organisations at a reduced cost or as a donation and the platform facilitates the smooth delivery of the right produce, to the right place, at the lowest possible cost.

To accelerate the launch, some of the bank’s Covid-relief funding was allocated to food and logistics procurement, which ensured that OneFarm Share’s beneficiary partner, FoodForward SA, could distribute this bulk nutritious food to various registered and vetted community feeding programmes, early childhood development centres, facilities that care for the frail and aged, centres that provide at-risk youth with skills, among others. This includes produce with high nutritional value such as cabbages, potatoes, spinach, butternut, beetroot and dried beans.

“The partnership with Standard Bank enables us greater access to a far larger network of farmers who donate into our network,” comments Andy Du Plessis, MD of FoodForward SA. “Through regular donations of fresh produce, we can provide food donations to beneficiary organisations that is more nutritious.”

Standard Bank plans to grow the platform funds by approaching corporates with CSI funds earmarked for food relief as well as the bank’s retail base and high net worth clients. It has also launched a SnapScan account and code for members of the public that wish to donate.

“Innovative technology has the potential to transform agriculture on the continent.”

Lungisa Fuzile, Standard Bank South Africa Chief Executive

“It will also enable us to create solutions for the most vulnerable members of our society. Therefore, Standard Bank is focused on creating platform solutions that can connect and provide services to multiple players across the agricultural ecosystem.”

A unique offering with scalable potential

Fuzile explains that OneFarm Share is a unique offering that has not been attempted at scale in South Africa.

“A crisis like Covid-19 requires a more intensive focus on innovation as it provides challenges that may not normally exist. OneFarm Share is our response”.

“The OneFarm Share initiative is not simply about providing hunger relief and reducing food wastage. It is also about restimulating the economy and helping to recreate markets for farmers who may have lost their traditional markets due to the impact of lockdown measures or beyond. Many have been unable to recover. The platform gives them an opportunity to sell produce in a way that they may have not had access to previously: to a structure that supports the vulnerable in our society. We are excited about the enormous potential that OneFarm Share has to ensure the sustainability of agriculture and reduce the problem of hunger on the continent,” Fuzile concludes.

Donations can be made on Snapscan or through an EFT. For more information on OneFarm Share and how you can get involved visit www.onefarmshare.co.za

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Standard Bank committed to a change in energy supply

As Africa’s largest bank by assets, Standard Bank has claimed that it is committed to its role in the growing shift towards a low-carbon economy. Standard Bank Group’s Head for Corporate Citizenship, Wendy Dobson, explained that the Covid-19 pandemic has presented new opportunities for businesses and governments to fast-track their plans to move to a low-carbon economy that could benefit future generations. 

Dobson added that recently investors have become concerned about climate change. This led to investment mandates to focus more on environmental, social and corporate governance issues. This meant that corporates have the official authorisation to ensure that they create value for stakeholders as well as shareholders. 

“In this regard, Standard Bank recognises that climate change is a material risk to our ability to generate value for all our stakeholders over time, and to our purpose of uplifting and safeguarding African societies, environments and economies,” Dobson said

During an annual general meeting (AGM), the group became the first South African company to table a climate-related resolution proposed by shareholder activists. The shareholders voted in favour of developing policies that would in future provide stringent parameters for lending to coal-fired power projects and to coal mining operations. 

“This year, Standard Bank received a new set of proposed resolutions aimed at requiring the bank to adopt a policy on lending to carbon-intensive, fossil fuels activities, and to commit to a hard deadline for enhanced disclosures related to climate risk,” Dobson said.

However, requests to table these resolutions were declined since according to the Companies Act the shareholders did not have a legal right to vote. Dobson explained that the resolutions would “effectively usurp the role and function of the board.” 

She also added that the resolutions would ignore “the substantial progress that Standard Bank has already made in these areas.”

“We are also funding natural gas projects in Mozambique, given the importance of natural gas in the transition to clean energy and the hugely transformative impact that these projects will have on the country and its people,” Dobson said

Standard Bank has supported the Paris Agreement and was a founding signatory for the UN Principles for Responsible Banking. 

“It continues to make progress on improving its climate-related disclosures in line with the principles of the global Task Force on Climate-related Financial Disclosures (TCFD). It is adopting stringent and comprehensive policies and frameworks to enable the transition to a more sustainable economy,” Dobson said

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