- TSAONE SEGAETSHO
In its latest Integrated Financial Report, Absa Bank Botswana has announced that it will not only highlight its immaculate finance book to demonstrate its good standing in the finance sector but also report on sustainable finance.
In its 2023 Integrated Financial Report, Absa acknowledges the risk of greenwashing, where companies give a misleading impression of their environmental impact, which is a concern for investors. Absa states that it is therefore critical for businesses to back up sustainability claims with tangible actions to avoid reputational damage and potential regulatory scrutiny.
When reporting on global and domestic economic issues of 2023 in a report released this week, Absa board chair Cosmas Moapare mentioned what has become synonymous with many economic reports over the past several years as the elephant in the room: “extreme climate events, including the El Niño effect”.
According to Moapare, this is why Absa has made its recently released Integrated Report a high priority on ESG. Moapare said it is of great importance to the Absa Board not only to assess financial performance and strategic achievements but also to evaluate the manner in which these were delivered, as the aim is to be an active force for good.
“The Board was particularly pleased to be the first bank in our market to publish a sustainable finance issuance framework as well as list a sustainable bond on the local bourse. This was an update to the Bank’s P2 billion Medium Note Programme to incorporate Green, Social and Sustainable Bonds and make a meaningful contribution to our nation’s agenda of combatting climate change, while advancing environmentally and socially responsible practices in the financial services industry,” said Moapare.
Absa stated that it is committed to fighting greenwashing, even though ESG regulation and reporting requirements in Botswana are still voluntary. According to the 2023 Annual Report, Absa aims to be a leader in sustainable finance.
A milestone was announced this year as Absa successfully listed the first-ever Sustainable Bond on the Botswana Stock Exchange (BSE), with the groundbreaking bond valued at P47.4 million and falling under Absa’s P2.0 billion Medium Term Note Programme.
“The proceeds of the sustainable bond have been earmarked for green and social projects as outlined in the allocation and impact reporting below. Absa has secured an affordable housing facility worth P86 million where allocated proceeds were earmarked to fund the construction project. Additionally, we refinanced a renewable energy deal valued at P1.5 million,” stated Absa’s 2023 Financial Report.
According to the 2023 Integrated Report, events after the reporting period show that on 20th February 2024, Absa Bank executed a successful tap issuance of P32,600,000 of the Sustainable Bond, bringing the total outstanding amount to P80,000,000.
Absa notes there is a heightened multi-stakeholder focus on climate change, and the pursuit of a just transition is set against a backdrop of escalating natural disasters and a growing emphasis on sustainability considerations. According to the bank’s Integrated Report, the value of global sustainable investing assets amounted to USD 30.3 trillion in 2022. However, the year also witnessed USD 313 billion in global economic losses from climate-related catastrophes, aggravating food and water security issues, said Absa.
“Across Africa, climate change, environmental vulnerabilities, social disparities, and corporate governance issues present significant challenges to growth. These factors critically affect agriculture, water, health, and energy. Despite the urgency, African companies have been slow to adopt data-driven sustainability strategies to reduce emissions and mitigate climate risks. Within this context, stakeholders are intensifying their demands for businesses to integrate sustainability risk management into their operations. This includes embedding effective processes, metrics, and monitoring systems to manage climate risks, clarifying costs and engagement in the just transition, as well as setting green targets for owned assets,” said Absa’s Integrated Report.
