Rand Merchant Bank (RMB) has solidified its position as a leader in sustainable and transition finance, playing a pivotal role in numerous significant ‘impact’ transactions. With ambitious objectives to spearhead natural capital initiatives, carbon markets, and blended finance solutions, RMB’s influence is rapidly expanding on a global scale.
In the period between April 2023 and September 2024, RMB facilitated an impressive ZAR106 billion ($6 billion) in sustainable and transition finance, according to Nigel Beck, Head of Sustainable Finance and ESG at RMB. This substantial figure includes a variety of ‘impact’ themed deals designed to promote environmental and social progress.
Among these landmark transactions is Lango’s groundbreaking $325 million sustainability-linked loan (SLL), recognized as one of the largest SLLs in Africa’s real estate sector. This deal underscores RMB’s capacity to manage large-scale, complex sustainable finance arrangements.
Furthermore, RMB was instrumental in East Africa’s first sustainability-linked bond (SLB) issuance and the world’s first SLB for a national development bank, specifically for the Development Bank of Rwanda (BRD). BRD’s inaugural FRW30 billion ($24.8 million) SLB highlights RMB’s innovative approach to development finance and its commitment to extending sustainable finance instruments to diverse markets.
RMB’s leadership was also evident in South Africa’s largest syndicated SLL for a food retailer, acting as sustainability coordinator and arranger for Pick n Pay’s inaugural ZAR4.5 billion syndicated SLL. This transaction demonstrates RMB’s capability to drive sustainability within established sectors and support large corporations in their ESG journeys.
To strategically guide its lending practices towards greater positive impact, Rand Merchant Bank has implemented a comprehensive framework. This framework categorizes lending exposures into ‘green’, ‘olive’, ‘grey’, and ‘brown’ categories, reflecting the greenhouse gas emissions profile of clients and transactions. This structured approach enables RMB to transparently manage and steer its portfolio towards greener outcomes.
RMB’s strategy for accelerating the transition to a sustainable economy prioritizes increased origination in the ‘olive’ and ‘green’ categories. A key element of this strategy is the commitment to ensuring a minimum threshold of 80% renewable energy mix within its power generation portfolio by 2030. This ambitious target showcases RMB’s dedication to fostering clean energy development.
Beyond climate impact, Rand Merchant Bank is proactively financing initiatives that promote social inclusivity. This includes targeting increased female representation in middle management within client companies, providing crucial loans to women-led small- and medium-sized businesses, and advocating for safe and fair social and labor conditions for workers across value chains.
Nigel Beck emphasizes that voluntary carbon markets, natural capital, and blended finance hold the most promising growth potential within impact finance. He points to the operationalization of Article 6 for carbon trading at COP29 as a significant catalyst for the expansion of voluntary carbon markets.
Looking ahead, RMB aims to significantly expand its biodiversity bond program, targeting “up to” $150 million in annual funding for biodiversity and nature conservation. This includes a diverse range of bonds focused on specific species, landscapes, and critical water catchment areas. RMB aspires to be the world’s first commercial bank to programmatically arrange biodiversity bonds, further cementing its pioneering role in sustainable finance.
“RMB remains dedicated to collaborating with clients across all operating jurisdictions,” Beck states, “to thoroughly understand their sustainability strategies and seamlessly integrate these strategies with their financing approaches. Our overarching goal is to support our clients in their transition towards a more climate-resilient, lower-carbon, and socially inclusive economy.”
