Demand for billions of rand in sustainable finance does not yet match the urgency of climate change, says Absa’s head of responsible finance, heaping pressure on President Cyril Ramaphosa’s government to push through policies aimed at bridging the gap.
“In SA most of the demand was generated by some of the challenges that we had around load-shedding, and I think people realise that they can’t put a crisis to waste,” Punki Modise, chief sustainability officer at Absa, said in a Business Day Spotlight podcast.
“But I would say it’s not to the extent that you would love to see, particularly given the emergency of climate change.”
Under pressure from investors, regulators and clients, banks across the world have made grandiose announcements about their commitment to align a portion of their loan books to investments with positive outcomes for both the people and the planet. For its part, Absa has set a target of achieving R100bn in sustainable finance in 2025.
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Even so, the reality is that the projects deemed “bankable” often fall short in scale compared with the available capital, Modise said, adding that for the sector to play a bigger role SA and the world needed policy shifts to guide an increasingly curious number of individual clients.
“What will spur demand is how quickly regulation shifts when you look at the sustainability space,” she said.
Policy was needed to lead to a shift to drive “our clients to want to respond”. And when this happened, the bank would respond with the financing, she said.
Modise also said individual clients were increasingly curious about climate change, seeking to understand more and actively participate in creating a sustainable economy.
Listen to this episode of Business Spotlight on our website businesslive.co.za
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