BASA’s Kunene on what COP26 means for South Africa, sustainable finance

The Banking Association of South Africa recently hosted a conference on sustainable finance, following the culmination of COP26 where South Africa secured approximately R130 billion in commitments for its Just Energy Transition. Managing Director at the Banking Association of South Africa, Bongiwe Kunene, joined CNBC Africa to delve deeper into the significance of the conference and what it means for the country's financial landscape. The conference, held over two days on Wednesday and Thursday, aimed to continue the financing discussions that transpired during COP26. South Africa is now focusing on sustainable finance, understanding various financial products, and recognizing the importance of social sustainability. Kunene emphasized the need to incorporate the environmental, social, and governance lens into investment decisions to pave the way for a sustainable future. When asked how the Banking Association views sustainable finance, Kunene highlighted the societal impact of investments, stressing the importance of not just doing business but "intentionally doing good." This approach involves aligning investments with a low carbon future and ensuring that credit allocations support environmentally friendly initiatives. The conversation then shifted to funding fossil fuels, with many banks outlining plans to steer clear of financing projects related to fossil fuels. Kunene acknowledged that many financial institutions, including banks, have existing investments in assets like coal due to South Africa's historical reliance on coal for energy. The challenge lies in gradually phasing out these assets while increasing investments in green finance and other sustainable alternatives. In terms of timelines, Kunene emphasized the urgency of transitioning towards a net-zero future by 2050, requiring immediate action in redirecting financial resources. She emphasized the need for a strategic approach to wind down fossil fuel investments while ramping up support for cleaner, renewable assets. Furthermore, Kunene addressed the issue of sustainability in finance, particularly in relation to gender and racial equality. She acknowledged that the financial sector often exhibits bias, with women and minority-owned businesses facing challenges in securing funding. Kunene highlighted the Banking Association's commitment to funding initiatives led by women, youth, and individuals with disabilities, in alignment with the financial sector codes. Moreover, sustainability in finance extends to considering the environmental impact of investment decisions. Kunene posed critical questions about water usage in production processes, especially in water-scarce regions like South Africa. The Banking Association is actively aligning with international reporting standards to ensure transparent and accountable investment practices. As the conference concluded, Kunene reinforced the importance of conscious sustainability measures in shaping the future of finance, urging the banking industry to adopt responsible and ethical investment practices for the benefit of society and the environment.