The real estate sector is estimated to generation around 40% of the world’s CO2 emissions. Of this, about 80% is produced by building operations, while the rest comes from the actual construction of the buildings.
South Africa’s second largest Real Estate Investment Trust (REIT) has issued and already oversubscribed green bond to fund decarbonization of its commercial buildings.
This bond will be used exclusively to refinance green buildings with a Green Star 4 category certification. Green Star certification is a tool used to rate the environmental impact of buildings, as defined by the Green Building Council of South Africa or the equivalent.
The green bond aligns with the International Capital Market Association Green Bond Principles. It was listed on the Johannesburg Stock Exchange (JSE) in the Sustainability Segment, a platform for companies to raise debt for green, social, and sustainable initiatives.
Partnership with the REIT is in line with their strategy to support climate-smart infrastructure projects in the South African real estate sector.
The green bond demonstrates the critical role that capital markets can play in crowding-in more investors for climate-focused financing. This will ultimately support South Africa’s aspirations to transition to a low-carbon economy.