As one of the Top 20 largest exchanges in the world by market capitalisation ranked by the World Federation of Exchanges, the JSE provides Issuers with access to deep and liquid capital markets in a regulated and secure marketplace for over 130 years.
The JSE’s capital markets enable innovation, raising capital and shared prosperity. As a leading global exchange, the JSE co-creates and unlocks value through innovative products and services that meet the needs of our clients.
In addition to being the first stock exchange globally to introduce a sustainability index and to incorporate a move toward integrated reporting, the JSE once again paves the way towards a sustainable economy by introducing the JSE’s Sustainability Segment, a first for Africa. This segment enables companies to raise debt for green, social and sustainable initiatives on a trusted, global market place.
What is a Green Bond?
Bonds are fixed income investments. Borrowers (usually governments or large corporations) issue bonds in order to gain access to capital, which is used to fund operations, investments or projects.
The bond specifies its maturity date (the date on which bond holders will be repaid the principal of the loan) as well as the interest to be paid (which may be fixed or variable). Once issued, most bonds may be traded. Bonds issued in terms of JSE regulations may be traded on the JSE Debt Market.
Green Bonds are specifically designed to raise money for environmental or climate-related projects.
What does it do?
Green Bonds are ring-fenced for environmentally responsible or climate-related projects. These may range from pollution prevention to improving energy efficiency, developing sustainable agriculture, rolling out green transportation systems, etc.
The bonds provide Bond Issuers with access to capital to match the asset’s intention as well as enhance the Issuer’s visibility and profile to a more diverse investor base.
For investors, Green Bonds provide an opportunity to show commitment to supporting environmentally responsible projects. During this period of uncertainty and market volatility, ESG-geared investment products are proving to be more resilient and therefore have an increased appeal.
Who is it for?
Bonds are generally issued by governments, government agencies and relatively large private corporations (since the bonds are typically backed by the Issuer’s balance sheet). The JSE provides prospective Issuers with easy access to a deep capital pool in a well-regulated, robust market environment.
Investors benefit from easy access to globally-recognized environmentally-friendly investment options, a high level of transparency and exposure to an increasingly important component of economic activity. Green Bonds are appropriate for consideration by institutional, professional and individual investors.
What are the requirements?
Once a bond is listed on the JSE interest rate market, the Issuer can apply to be eligible for the Green Bond Segment. JSE Issuer regulation will assess whether the application complies with the Green Bond Standard. The criteria for the Green Bond Segment are based on the following principles:
- Disclosure of proceeds: The Issuer must provide clear disclosure that the proceeds of the bond will be used for financing or refinancing new or existing eligible green projects (i.e. projects which will have a positive impact on the environment and/or climate).
- Provide an external review: An independent assessment is required with respect to the use of proceeds, the selection process and the management of proceeds. This may take the form of a second opinion, certification, verification or a rating report issued by a qualified third party.
- Commit to regular post-issuance reporting: Reports should cover the actual use of proceeds and the expected and actual impact of the allocated projects against the KPIs/benchmarks disclosed ex-ante. The first post-issuance report is required one year after listing a security.
JSE leading the sustainability agenda
In addition to offering a number of sustainability geared solutions, the JSE drives the sustainability agenda locally and globally, actively contributing to setting benchmarks and standards relating to green finance in South Africa. Our strategic partnerships include:
- Membership of the National Treasury’s Sustainable Finance Strategy working group
- Co-chair of the UN’s Global Investors for Sustainable Development Alliance (GISD)
- Signatory to the United Nations backed Principles for Responsible Investment
- Founding partner of the Sustainable Stock Exchanges Initiative