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Financial Planning

Banking sector has key role in realising government’s low carbon growth trajectory

By: Vikas Khandelwal, CEO of BNP Paribas Group South Africa

In his budget speech last week, Finance Minister Tito Mboweni confirmed Treasury’s commitment to achieving a green economy and focused measures to support climate change mitigation. This comes in the wake of the recent SONA address, where President Ramaphosa highlighted the need to move towards a low carbon growth trajectory as well as finalise the Climate Change Bill. He also emphasized the role corporate SA has in helping to achieve these goals.

Vikas Khandelwal, CEO of BNP Paribas Group South Africa– one of the leading banks for sustainable finance, believes that banks incentivising Corporates to achieve their Sustainability targets is one way to promote the necessary implementation of Sustainability Development Goals (SDGs). Referring, as an example, to the recent signing of an innovative sustainability-linked financing structure with JSE-listed automotive holding company Motus, where preferential interest rates will be linked to Sustainability targets aimed at reducing fuel and water consumption.

In addition to sustainable financing options, Khandelwal speaks of the need for conscious capitalism in combatting climate change. “Companies need to put their money where their mouths are and support work that directly addresses the biggest risks facing the global economy, namely global warming.” He refers to the cutting-edge research by UCT and funded by the BNP Paribas Foundation to quantify the long-term effects of humans on global warming.

“This type of work is relevant in many ways as it can inform investment in adaptation and risk reduction, support new climate finance mechanisms and insurance instruments, and help African countries benefit from global financial flows and investment in low-carbon, climate-resilient development.

“For example, the research found that the Western Cape’s 2015 to 2017 drought (the worst in a century) will happen again and is likely to happen every 15 years. This type of data is imperative for long term investments allocation and planning,” says Khandelwal.

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