IFC And Absa Partner To Expand Financing For Green Buildings In South Africa
IFC And Absa Partner To Expand Financing For Green Buildings In South Africa. To support the development of certified green buildings in South Africa, IFC has announced a partnership with Absa Bank Limited to help the bank expand its residential and commercial loans and mortgage finance program for buildings that are environmentally responsible and resource efficient.
IFC will provide a loan of up to 4.5 billion South African rand (about $236 million) to support Absa’s strategy to expand its green buildings finance portfolio which will include new certified green buildings and mortgages. This will enable Absa to increase access to green building finance for developers and individual home buyers.
In line with its climate strategy, Absa will use the investment to finance environmentally friendly green buildings certified under IFC’s Excellence in Design for Greater Efficiencies (EDGE) program as well as similar green building certifications, which helps standardize the design and the certification for resource efficient and climate friendly buildings.
Green buildings represent a significant low-carbon investment opportunity because they can save electricity and reduce water consumption. An IFC study estimates that South Africa’s green building demand presents a $7 billion investment opportunity between 2016 and 2030. Although the supply of green buildings in the country is growing, the green building market is still at a nascent stage.
IFC estimates that the project will help reduce over 12,000 tons of emissions annually. The investment will also contribute to South Africa’s Nationally Determined Contribution (NDC) targets under the Paris Agreement to reduce GHG emissions by 42 percent by 2025.
“As a responsible corporate citizen, one of our strategic imperatives is to be an active force for good in everything we do, which is key to delivering true long-term value linked to our purpose,” said Punki Modise, Absa Group Chief Strategy and Sustainability Officer. “The loan, which includes a performance-based incentive for clients, significantly enhances the resources we have available to support clients in making environmentally responsible and resource-efficient investments in commercial and residential developments, mainly focused on affordable housing.”
The investment builds on IFC’s 2 billion South African rand (approximately $124 million) loan in 2022, used to support Absa’s growth in affordable housing finance in South Africa. It aligns with IFC’s strategy to enhance climate change resilience in South Africa by investing in inclusive and sustainable projects.
