New Perspectives on Climate Finance for Cities report: Case Study

Investing in Johannesburg’s critical infrastructure

The issuance of Johannesburg’s green bond follows the city’s previous bond issuance of R850 million in March 2011. With a total of seven long dated bonds issued prior to their green bond, the City of Johannesburg has been a consistent issuer in the debt capital markets having issued a total of R8.5 billion in bonds and commercial paper totaling R6.1 billion. In June 2014, Johannesburg successfully issued a green bond, becoming the first C40 city to do so. The bond, with a value of US$143 million, was 1.5 times oversubscribed and will finance a wide range of green infrastructure projects across the energy, water, waste and transport sectors, including:

  • 42,000 smart meters
  • 22.5GW of solar water geysers
  • Biogas to energy
  • Energy efficiency
  • Upgrading the water network
  • Landfill gas to energy
  • Separation at source recycling
  • 150 new dual fuel buses
  • 30 buses converted to biogas / diesel

Many of the projects to be financed by the green bond will help the city to reduce its emissions. As part of the process of labeling the bond ‘green’, the city has undertaken to report to investors on the emissions reduced as a result of the projects financed.

As well as raising new finance for sustainable projects within the city, the project has had the co-benefits of increasing the investor base in the city, giving a significant boost to the media profile of the city’s efforts to reduce emissions. The bond also provides critical investment into four key areas of city infrastructure power, water, parks and transport. The investment supports wider benefits such as the provision of energy efficiency lighting and solar heating to low income households in the City. The investor prospectus for the green bond differed from a regular city-issued bond. Whilst it contained similar financial information as other bonds the city has issued, it had a specific section focused on the green strategy of the city, the importance to the city of reducing its emissions, project selection criteria and a list of key green projects to be supported by the proceeds of the bond.