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Green Financial Solutions

© James Morgan/WWF-US

The global finance system enables all types of economic activity, much of which can have significant negative impact on our planet. Yet, both environmental risks and opportunities are becoming increasingly important to financial decision-making.

What is the issue?

The majority of financial returns are still largely dependent on unsustainable consumption of natural resources and most investments and financial products lack the integration of environmental impacts. By demonstrating the value of nature and the links between financial and environmental risks, we aim to redirect the flow of finance away from activities that harm our planet toward those that restore it.

A few actors in the finance sector have made tremendous strides in their approach to incorporating environmental risks in their business models. We are also starting to see a growing interest in the investment opportunities shaped within frameworks like the Sustainable Development Goals, the Paris Agreement on climate change and the principles of a circular economy.

But we need to swiftly move away from financial systems that favour short-term returns over long-term wealth creation and in support of inclusive development and the protection of natural assets.

What are we doing?

WWF works to integrate environmental, social and governance risks and opportunities into mainstream finance and redirect financial flows to support global sustainable development.

How do we do this?

WWF develops and supports effective and credible standards and metrics, as well as green financial mechanisms and solutions that are relevant to mainstream asset owners. We want to enable investors to allocate investments sustainably.
We work with key financial institutions to drive business change and develop the necessary best practices and standards. We also support innovative public and private sector financial frameworks and mechanisms that encourage investments that are environmentally sustainable, low carbon and resource efficient.

Our aim is to push for a measurable increase in public and private financial flows – both listed investments and personal assets – toward sustainable development. We work to redirect financial flows to ensure that money is invested in sectors that have a lower impact on the planet.
 

Who do we work with?

WWF works in collaboration with various investment partners such as Fairtree Capital, Prescient Investment Management and Sanlam as well as banks such as the Development Bank of Southern Africa and World Bank. We also work with closely with GreenCape, Ocean Hub Africa, the South African National Biodiversity Institute, UCT Bertha Centre for Social Innovation and Wilderness Foundation Africa.

How did it start?

WWF has been working with the finance sector for more than a decade on innovative collaborations to establish green financial solutions.

In 2012, we identified the opportunity to influence and mobilise private sector asset flows and investments towards environmentally sustainable paths. WWF established a programme of work and the relevant skillsets to proactively engage with leading financial institutions to develop sustainable yet market competitive investment products that attract asset owner attention.

The first initiative was a partnership with Prescient Investment Management which led to the launch of a mainstream investment fund known as the Prescient Living Planet Fund.

In 2016, WWF joined a multi-partner design team to create a green financial solution for impact investing. Known as the Green Outcomes Fund, it incentivises South African fund managers to increase investment in green businesses in the SMME space.

Using these experiences, WWF South Africa then began working with the WWF global finance practice and increased its scope of work around sustainable finance. 

What are the big wins?

  1. The Prescient Living Planet Fund was named the winner for ‘Best Aggressive Allocation Fund’ in the 2021 Morningstar South African Fund Awards. Where Morningstar is a global provider of investment research, the awards emphasise the one-year return at the end of 2020 in addition to a strong three- and five-year track record.

  2. Since its launch in early 2020, the Green Outcomes Fund has secured over R90 million from National Treasury’s Jobs Fund and other key partners. Through a call to green businesses for funding applications, the initial funding has catalysed over R390 million in committed private capital, unlocking over R480 million for small and growing green businesses. 

  3. The Sustainable Landscape Finance Coalition is the first of its kind in South Africa, an innovative national multi-expert platform launched in 2020, to drive the development of finance solutions for enduring conservation. The coalition is running several incubators to bring new financial mechanisms that support conservation onto the market. One is the Biodiversity Management Agreement Tax Incubator which has a feasibility study underway.

Disclaimer:

Prescient Investment Management (Pty) Ltd, is an authorised financial services provider (FSP 612),Collective Investment Schemes in Securities (CIS) should be considered as medium to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance. Collective investment schemes are traded at the ruling price and can engage in scrip lending and borrowing. A schedule of fees and charges and maximum commissions is available on request from the manager. Performance has been calculated using net NAV to NAV numbers with income reinvested. There is no guarantee in respect of capital or returns in a portfolio. Prescient Management Company (RF) (Pty) Ltd is registered and approved under the Collective Investment Schemes Control Act (No.45 of 2002). For any additional information such as fund prices, fees, brochures, minimum disclosure documents and application forms please go to www.prescient.co.za.