By Andrew Johnstone, Director and CEO of Sanlam Infraworks
In the current global context, where environmental, social and governance efforts (ESG) are monopolised by the ‘E’, we have seen strong outperformance and social impact from our Climate Investor Funds. These funds use a pioneering blended finance engine to drive capital to where it’s needed most. As we move into an era where funds will focus on renewables, mobility and natural assets, we urge others to adopt this model to make maximal impact.
The recent Sanlam ESG Barometer is a very positive step forward in fostering intentional ESG practices, while providing a benchmark for corporate SA. The barometer shows that we are making progress as a nation in the ESG space, but it is much too slow. Often ESG becomes more tick-boxing than tactical, and we lose sight of the bigger picture – creating a sustainable world . Our world is reliant on the small circle of gas that sustains us, and the soil that covers our planet’s surface. We’re utterly dependent on these two thin bands, and we do not appreciate just how fragile they are.
Recognising this, we wanted to make real impact, fast. At Sanlam Infraworks, we designed our fund with blended finance principles in mind, just as the term was being coined. The results have been groundbreaking, with close to 8 000 jobs created, 228 770 tCO2eq/year emissions avoided and 1 148 224 people having improved access to renewable energy, in 2020 alone.
Our Climate Investor Funds are evidence that blended finance works. We urge others to employ it, to generate impact, at scale. Crucially, the success of our funds demonstrates what can be achieved through powerful partnerships grounded in respect and shared purpose.
Using blended finance to foster ESG excellence
Climate Fund Managers is a joint venture between Sanlam Infraworks and FMO, the Dutch Development Bank, two long-dated institutions with a shared vision for the future and a passion for climate impact. The partnership has launched four funds, all rooted in blended finance.
Blended finance is the tactical use of public sector capital to mobilise private sector capital, at scale. We wanted to create funds that worked faster than their historical counterparts to quickly close the gap between need and response. Blended finance enables us to do just that.
Funds for the future
The partnership focuses on key pillars to secure a better future for all. While Climate Investor One focuses on renewables, and Climate Investor Two on the oceans, waste and water scarcity, Climate Investor Three will be all about hydrogen as our future energy source. Climate Investor Four will focus on how we can live in megacities in a climate positive way.
As the world shifts towards a just transition and sustainable practices, investment flows will be directed towards sustainability areas such as renewable energy, mobility solutions, and biodiversity conservation. We’re heading in the right direction; we just need to accelerate our efforts.
The Covid-19 pandemic showed us what’s possible in terms of mobilising a response at scale, fast. Every day, we poured over the news to view the infection curve rate. I believe that we need a similar graph showing greenhouse gas concentrations and the need to stop the upward trajectory. We must find a narrative that resonates enough with people to change behaviour.
Our philosophy at Sanlam Infraworks is to get out there and put action to that narrative, because we believe there’s no alternative. The numbers will prove up. Society will shift, and business and commerce will shift around it. We have to lead sustainable change.
The Sanlam ESG Barometer in partnership with Business Day was launched on 23 March. It is the first barometer in South Africa that assesses how JSE-listed companies are actively improving environmental and social outcomes in society through their activities. To view the results www.sanlamesgbarometer.co.za/report
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