Sustainable finance has rapidly evolved from a niche concept to a fundamental component of the global financial landscape. As the impact of climate change and the degradation of nature become more pronounced, financial institutions are driving the strategic value in investments that not only promise returns but also contribute to environmental resilience.
This shift isn’t just about managing risks, it’s about unlocking new opportunities to create sustainable value for investors and the planet.
Too often, finance is thought of primarily in terms of numbers on a balance sheet. But what if we flipped that narrative? What if finance can ultimately also be about nurturing life, protecting forests, replenishing soils and restoring wetlands while ensuring sustainable economic returns?
Nedbank Corporate and Investment Banking (CIB) sees nature as an evolving asset class that holds substantial value for the planet and future generations of investors and communities alike. Research and development on the strategic alignment of financial systems with the protection, restoration and sustainable use of nature and biodiversity – i.e. nature finance or natural capital – are well underway.
Discussions on themes such as natural accounting are becoming more mainstream, with one local example being StatsSA’s 10-year Natural Capital Accounting Strategy to inform SA’s sustainable development policy objectives.
Internationally, the new Nature Restoration Regulation in the EU outlines a plan to enhance natural capital, and initiatives such as Science Based Targets for Nature and the Taskforce on Nature-related Financial Disclosures provide guidance to companies so they can better understand and report on nature.
In addition, the recent publication of Sustainable Bonds for Nature: A Practitioner’s Guide by the International Capital Market Association provides direction and recommendations for raising funding for nature-themed projects in the capital markets.
In SA, the stakes are high. The rules of the game are changing with:
- The Climate Change Act, 22 of 2024 in place;
- The SA Green Finance Taxonomy being discussed;
- The Prudential Authority Climate Roadmap set for 2024-2026;
- The consultation on the national biodiversity targets for 2030 taking place as part of the Global Biodiversity Framework targets; and
- The growing relevance of international reporting frameworks such as IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and S2 (Climate-related Disclosures) in aligning reporting standards.
How the financial sector rises to this challenge, and how it supports clients along this journey, will determine whether these frameworks and developments are symbolic or become the bedrock of a new, regenerative economy.
Financiers can help make protecting nature profitable through mainstreaming the conservation of nature as an objective in the financing markets and by structuring and offering commercially viable nature-based solutions
— Johan Malan, principal: Sustainable Finance Solutions at Nedbank CIB
Sustainable finance isn’t just about reducing pollution, waste, nature degradation and emissions; it’s also about building resilience by, for example, leveraging natural ecosystems or deploying new technologies to improve efficiencies.
And resilience means more than just preparing for tomorrow’s storms; it means rethinking the very systems that make us vulnerable in the first place. Resilience in finance stretches beyond traditional boundaries and covers a variety of topics in the green and blue economies.
As an example, nature loss poses significant risks to the global economy; many sectors including tourism, food consumption and energy are deeply dependent on healthy ecosystems. Financiers can help make protecting nature profitable through mainstreaming the conservation of nature as an objective in the financing markets and by structuring and offering commercially viable nature-based solutions.
In SA, we’ve seen firsthand how natural ecosystems can act as a buffer against climate shocks. Among other things, this understanding led Nedbank to publish its inaugural Nature Position Statement in 2024, in which it highlights the role of nature in sustaining not only the environment but also our economic stability.
The conversation around sustainable finance, and specifically climate finance, is often framed in terms of risks and loss. But there’s another side to the coin: opportunity and life. Nature opportunities aren’t just about mitigating harm to nature; they’re about actively restoring the world around us and doing so efficiently, sustainably and in harmony with nature. Doing so will not only benefit the climate and nature, but just as importantly protect our economies by providing critical additional avenues to support livelihoods for current and future generations.
There is growing recognition that nature-based solutions offer a pathway to climate resilience. Nedbank CIB has embraced this idea; the bank understands that natural ecosystems hold the key for sustainable carbon sequestration and biodiversity protection as well as provide critical services underlying many of our basic needs.
Nedbank CIB believes finance can be a force for good — a tool to improve livelihoods while positively impacting the natural systems that underpin life itself
— Daniel Jooste, principal: Sustainable Finance Solutions at Nedbank CIB
Nature has therefore been identified as a strategic theme the bank can actively steward and embed within its sustainable finance activities, whether by mobilising capital towards eligible nature-positive outcomes or by integrating nature-based sustainability-linked performance indicators and objectives into finance structures and advisory frameworks.
It’s clear that the era of sustainable finance is here to stay, but the question remains: what kind of future will it create? Nedbank CIB believes finance can be a force for good — a tool to improve livelihoods while positively impacting the natural systems that underpin life itself and balancing the various objectives at play.
New policies, disclosure standards and assessment methodologies will provide the financial sector with the scaffolding, but it’s up to the sector to build transformative solutions.
• About the authors: Johan Malan and Daniel Jooste are principals: Sustainable Finance Solutions at Nedbank CIB.
This article was sponsored by Nedbank CIB.
