Standard Chartered Bank leads the way for sustainable financing

Question: What is the significance of sustainable finance in promoting the socio-economic development of a country?

Answer. By investing in climate mitigation and adaptation or any social development projects, that money will benefit the people through its support for their economic development.

So if we as a bank have our lending capability and we say certain loans will be contingent upon doing certain things that create the nudge to the journey of behaviour change, then we are using the power of our capital to let that happen.

We want to finance green projects and social projects. This, we believe, is going to change things.

What does the bank prioritise or consider when determining whether a certain project qualifies for finance?

Every project has its own unique identity, and the condition or the KPIs that we look to finance will be unique to the project.

However, there are certain areas we consider, for instance, projects in sectors such as energy, transportation, and even manufacturing, and typically, to qualify in terms of sustainable financing, a component of that financing should be targeted to reduce emissions.

But there are other projects that have different characteristics to themselves; perhaps in the chemical industry, a KPI as a prerequisite for financing will be how that company deals with waste manufacturing, so that is a different pre-condition to a loan.

Accessibility is the biggest challenge to climate investing. How is Standard Chartered positioned to provide financing to support climate investment in Africa and Tanzania?

It starts with the fact that we have such a deeper history in these markets in Africa, particularly in Tanzania.

So we understand the local context. We know our banking, we know our markets as we have been working here for years, and Tanzania is well positioned because of our well-established history here.

The world needs to limit global temperature rise to 1.5°C by 2030. Faced with this reality, combating climate change requires both mitigation and adaptation to protect communities and manage risks. In your opinion, do you think there is investor interest in Africa to invest in both mitigation and adaptation? If yes, why is there a low uptake by investors?

There is appetite for both, but I will tell you that 80 percent of climate financing today is towards mitigation.

That is not only realistic because the room was really striving to not meet a tipping point of 1.5°C. The focus was to make sure we didn’t hit it.

Now the reality is that 1.5°C is coming sooner than it was predicted, and we see all the effects that are happening all over the world now, not just over the past 100 years.

So that has given us a sense of urgency because now it’s happening to you and we need to adapt.

Radical change is needed to build a more climate-resilient world. How can the government and private sector play a role in positioning Tanzania to become a more climate-resilient country?

It starts with the vision the government has when setting its targets, and second, it is something that we are actively working on just to create the best practice framework in order to be able to articulate what green transition finance should look like.

We are helping to advise the government based on the lessons we have learned elsewhere and the globally accepted framework that the market extremely recognises.

Of course, we need local finances from local banks, but we also want to invite external capital to invest in Tanzania and Africa.

Having this framework can attract various products that we can bring to help support the government.