MOBILISING INSTITUTIONAL INVESTOR FLOWS TO FINANCE JUST TRANSITION ACTIVITIES

SA-EU JUST TRANSITION FINANCING ROADMAP:
TECHNICAL PEER-TO-PEER COUNTERPART KNOWLEDGE SHARING
A series of 3 webinars
WEBINAR 2
MOBILISING INSTITUTIONAL INVESTOR FLOWS TO FINANCE JUST TRANSITION ACTIVITIES
07 OCTOBER 2021

Introduction

The EU and Germany BMU has supported TIPS in undertaking research which will contribute to a first iteration of a South African Just Transition Finance Roadmap. The research aims to move the “financing a just transition” discourse forward by proposing a framework that considers a spectrum of just transition ambitions and project-funding characteristics. Using place-based, action research, a project sample of 26 self-identified projects in Mpumalanga’s coal dependent regions are analysed based on their procedural, distributive and restorative impacts; their ticket size; and their funding requirements.

About Webinar 2

Institutional investors in South Africa account for nearly 50% of all South African assets under management: collective investment schemes (R2 175-billion); life offices (R2 816-billion) and retirement savings (R1 224-billion). Mobilising such funding in support of a just transition to net zero is fundamental to ensuring an appropriate quantity of funding is available, but also an appropriate quality of investment.
In 2011, Regulation 28 came into effect in South Africa. The regulation requires retirement funds to consider Environmental, Social and Corporate Governance (ESG) issues in assessing factors that materially affect the sustainable long term performance of their assets. This has led to the adoption of key practice guidelines including: using ESG insights to manage risks and returns; engaging investee companies on ESG issues; exercising voting rights conferred by share ownership and being transparent and accountable. While guidelines have been adopted on the ground meaningful progress in terms of behaviour change is less apparent. Like their counterparts overseas the challenges of mobilising funding in support of a just transition is challenging. Key challenges include:
●Reputational risk of labelling actions as just transition only to be publicly criticized for being ‘insufficiently just’ and hence just transition washing.
●Difficulty in finding appropriate sustainable finance and just transition investment vehicles.
●Difficulty in dealing with the lack of track record on returns of such vehicles when they are identified.
●A lack of sustainable finance and just transition investment opportunities of the right scale
●A lack of Fund of Funds opportunities.
●A need to include some categories of infrastructure development as sustainable finance or just transition finance.
●A lack of understanding of ESG risks by the Board of Directors, decision making committees and fund managers.
●A lack of capacity, knowledge, mechanisms and tools to meaningfully engage with sustainable and just transition investments and vehicles.
●A lack of detailed requirements and benchmarks for disclosure.
●Uncertainty about what constitutes a sustainable or just investmen.t
●The requirement to ensure short term returns despite long term ESG risks for some investments.
The webinar will explore the approaches and activities of European institutional investors to such challenges and explore how barriers can be removed in order to enable South African (and foreign) institutional investors to mobilise finance towards a just, decarbonised pathway to net zero.

Speakers

Welcome by Facilitator, Steve Nicholls, Head of Environment, NBI
Sharing of mutual experiences by South African and European peers:
Dr Crispian Olver, CEO, Presidential Climate Commission
Nazmeera Moola Deputy MD, Head of SA Investments 91
Sean Kidney, CEO Climate Bond initiative
Mr. Johan Florén – Head Of Communication and Corporate Governance at the Swedish state pension fund AP7
Ms. Sari Tasa, Senior adviser, Finland Ministry of Economic Affairs and Employment

Link for Post Event Report