Green financing takes root in SA


A South African entrepreneur has established the country’s first “green” financing company – an institution which finances sustainable projects only and which is backed by investors seeking to help protect the environment and alleviate poverty.

Called Water Financial, the company is led by reputable banker and entrepreneur Chris Loker and is currently involved in sustainable financing projects of around R65-million. Its launch comes amid the ongoing global financial crisis precipitated in part by corporate banking and in the wake of a survey by Ernst & Young which found that nearly half of South Africans no longer trust their banks.

Loker’s initiative, which is also aimed at establishing South Africa’s first “green” or sustainable bank, comes during worldwide protests against corporate greed – particularly within the banking sector – galvanised under the Occupy Wall Street campaign. It also comes ahead of the COP17 conference in Durban in November where the SA government will reportedly unveil plans to the world for a more sustainable local business environment

Loker, former COO of 20/20 banking in South Africa, said there was a groundswell of ordinary citizens wanting to invest in a sustainable future. But, they needed organisations – such as sustainable banks – for this to happen. In this regard, Loker said Water Financial would apply for a bank licence.  Currently, Water Financial was being financed by wholesale funders whose operational models were underpinned by ethical and sustainable concerns but also by reasonable commercial returns, he added.

Loker said Water Financial will channel investment funding into projects such as solar panel financing schemes, timber housing developments  and community-driven sustainable initiatives. The company was finalising the financing of a solar panel project, a  heat pump initiative and will be pitching for a municipal solar water heater project next year – as well as exploring a number of commercial building energy efficiency retrofits.

Loker said sustainable finance was new to Africa but in the rest of the world the 10 best-known sustainable banks had assets of around US$ 30 billion. Triodos Bank, a European sustainable bank, had built assets under management of US$ 5 billion over several years, with annual growth of 25% and consistent profits. Triodos has taken a keen interest in Loker’s SA project, he added.

 

“One of the core principles of sustainable banking is that banks should be basic providers of reasonably priced credit to the economy and especially to small business – particularly in the sectors of renewable energy and sustainable food. Investors are generally forward-thinking savers who want to change the world for the better without forgoing returns,” said Loker, adding that according to a report by the Monitor Institute, “impact investments” – social and environmentally oriented investments – could hit US$ 500 billion within the next 5 to 10 years.

Loker said there were signs of an increased focus on a green economy in SA: “President Jacob Zuma has urged that the country be developed sustainably, and job creation is seen as one of the key potential benefits. The Industrial Development Corporation (IDC) has estimated that 300 000 jobs could be created in the next 10 years in the renewable energy sector alone,” he added.

This is an unedited version of a press statement

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