JSE allows climate, sustainability bonds as ESG investment jumps


JSE Ltd., which runs Africa’s biggest stock and bond exchanges, said it has changed its listing requirements to increase exposure to the rapidly growing environmental, social and governance investment sector and to allow the sale of bonds to raise funds to fight climate change.

The changes will allow the listing of debt securities with pre-defined sustainability or ESG objectives, it said in a statement on Tuesday. The South African exchange operator will also cater for climate-related bonds, the proceeds of which will be used to combat climate change or to fund responses to rising temperatures, including cushioning coal-dependent communities from the financial impact of a transition to clean energy. 

To date, about $4 trillion worth of ESG-related debt has been sold globally, according to data collated by Bloomberg Intelligence, as concern grows about the warming climate, treatment of communities and equality in the workplace. Of the 108 stock exchanges tracked by the Sustainable Stock Exchanges Initiative, which partners with the United Nations, 40 have ESG bond segments, including Nasdaq and Euronext.

Climate change is increasingly in focus in South Africa, the world’s 12th-largest producer of greenhouse gases, with the president appointing an advisory panel on the issue, adopting a tougher emission reduction target and winning a pledge of $8.5 billion in climate finance from some of the world’s richest countries.

At the same time, the country has the world’s biggest divide between rich and poor, and companies are under pressure to improve their performance in dealing with social concerns.

The JSE will set up two new segments to track the bonds: a Sustainability Segment and a Transition Segment.