Johannesburg - Green Bond

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Challenges

The Green Bond provided and will continue to provide funding for green projects that did not have any funding and could not be implemented, thus providing a solution to ensure that environmental solutions for the City are expedited. Activities targeted include reducing unaccounted for water (e.g. through smart meters etc), separation at source of waste, promotion of water harvesting and re-use, reducing congestions on public roads through better public transport, and energy conservation measures in low-income neighbourhoods such as Solar water heaters, Solar PV’s and insulated ceilings.

Actions

As the first-ever listed green bond in South Africa and within the C40 Cities Network, the issue of this bond has given the City of Johannesburg an opportunity to showcase itself as forward thinking, innovative and sustainable.

This bond has helped the City in diversifying its funding instrument portfolio but also attracting new types of investors thereby providing potential market for future issuances. It cements the City's commitment to responding to climate change and providing an opportunity to accelerate the advancement of new technologies and environmental solutions.

The Green Bond aims to contributing to the GHG reduction targets set by the City of Johannesburg in line with the National Climate Change Policy Framework of a national target to reduce emissions by 34% by 2020 and 42% by 2025. The green capital investments are expected to expedite the City’s mitigation and adaptation initiatives and provide the citizens with a resilient, sustainable and liveable Johannesburg. More specifically tapping of the green bond will finance programmes such as the Eco Mobility, City’s Integrated Waste Management system in ensuring at least 70% of the waste goes to landfills, encourage the re-use of water, thus reducing demands on strained water resources in the City, and implement renewable sources of energy thus reducing demands on strained energy resources in the City. 

Projected Outcomes

The City is in the process of developing a comprehensive greenhouse gas emission inventory to understand better its carbon foot print. This will enable the City to have a proper measure of the outcomes. 

The City is a pioneer in this approach. No other city in South Africa, nor within C40, had previously issued a green bond. As the first listed green bond in the Johannesburg Stock Exchange, the green bond index did not exist and this will probably assist in the establishment of the index for future issuers. The city believes that, by creating this index, new investors will become interested and create a potential market for future issuances.  

The co-benefits of this project are predominantly economic and environmental:

  • Investors were involved and proved their commitment to environmental stewardship and climate action, while receiving a positive financial return. This will also increase opportunities for innovative funding ranging from financing in the debt capital markets together with financing of CDM projects.