SA Affordable Housing May - June 2020 // ISSUE: 82 | Page 31

FINANCE MATTERS
MINISTRY OF HOUSING AND URBAN DEVELOPMENT.
Finance has often been one of the facilitators of changing behaviour.
building may have more disposable income as the running
costs are lower into the future – but that is still a work in
progress,” says Singh.
“This will require a maturing of the market to provide
a proof of the concept and the data that sits behind it to
support the investment case, perhaps of two to four years.
That is exactly why Nedbank CIB chose to issue this bond
– to prove the concept, that funding can be raised and that
investors can get commercial returns, and that issuers can
consequently meaningfully use their lever of financing to
strategically allocate towards ESG.”
"We have invested USD25-million in IHS which has
been responsible for 6 500 of those 10 000 homes
Edge certified, which is an endorsement of our
investment in IHS, and which has proven the concept."
Complete transparency is vital to building trust in green
issuance, and towards the end of 2018 the JSE introduced
a Green Bond sector which has additional requirements
over and above its normal listing requirements, including
the need for an issue to have an independent adviser. “As
part of the disclosure one needs to transparently list which
projects the funds have been allocated, the impact metrics
and the sustainable development goals. What’s nice about the
market right now is that it’s not very prescriptive. In terms of
impact metrics, one key energy efficiency goal is of reduced
CO 2
emissions, and investors in South Africa are extremely
interested in that impact given the carbon intensity of South
Africa’s grid,” says Singh.
Kritzinger explains that the attraction of doing green
projects in South Africa, compared to other African countries
such as Kenya, was that South Africa was such a polluter
(or ‘brown’) that any green development would have a
proportionately bigger impact compared to the same project
in a relatively green economy.
Edge is an online resource efficiency tool that measures
water, electricity and materials consumption and benchmarks
it against the norm, so a development may be made aware if it
is, say, 20% lower than the norm for its green initiatives. “Are
you creating savings, and what does that mean in terms of a
homeowner or tenant financial savings, and are you unlocking
the benefits behind those green units?”
Four years ago, IHS decided to introduce the Edge
programme to the residential market to make all
developments much more energy efficient and green.
Cruickshank describes what’s happening in the market in
terms of certification of green units: “To compare the launch
of Edge with the previous launch of the Green Star rating
system for commercial buildings, in the first three years
after the latter being implemented there were 13 projects
certified; in the first three years of the Edge programme
which will only in fact be complete at the end of this year we
anticipate between 12 and 15 projects which will translate
to approximately 10 000 homes, which, in 2018 represented
roughly 10% of the total housing construction market – which
is a significant figure.”
Cairncross says that finance has often been one of the
facilitators of changing behaviour and underlined the IFC’s
role in South Africa. “We have invested USD25-million in IHS
which has been responsible for 6 500 of those 10 000 homes
Edge certified, which is an endorsement of our investment
in IHS, and which has proven the concept. We’ve also been
active in the Green Bond space having invested USD7.6-
billion in this market. If an affordable home is Edge certified
it can qualify for the proceeds of those green bond issues,
thereby creating positive linkages.”
Growthpoint issued a Green Bond in 2018 to refinance
some of its green assets.
“Sustainability is part of our mandate and we currently
have in excess of 100 buildings which are green certified.
Metering monitoring is now becoming affordable and relevant
and integral part of the affordable space. We see a number of
affordable developments installing smart meters. Metering
suppliers are now trying to see how they can position their
products in the affordable space given that product was
traditionally pitched at a much more expensive building or
higher end sector. Is metering monitoring demonstrating
savings? The Edge mark is a minimum of 20% improvement
on energy efficiency performance and water consumption,
and metering monitoring is improving on this.”
www.saaffordablehousing.co.za MAY - JUNE 2020 29