Linking financing to ESG outcomes in the South African automotive industry –
Standard Bank has created the first local currency/rand based sustainability financing in the South African automotive sector.
He successfully led the arrangement of a R6 billion Sustainability Linked Term Facility and a R800 million Sustainability Linked Working Capital Facility to Motus Automotive Group. The automotive group has its roots in the founding company Imperial Holdings Limited, which started as a single car dealership in Johannesburg in 1948. Motus was listed on the JSE in 2018 following its separation from Imperial Holdings Limited.
The 6.8 billion financing package is intended for Motus’ own operational needs. Sustainability-linked lending links financing terms to ESG outcomes to support and encourage responsible corporate behavior and the creation of shared value. As Motus achieves its Key Performance Indicators (KPIs), it receives an incentive in the form of a favorable pricing advantage and vice versa if it does not achieve its KPIs.
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This is supposed to drive the environmental and social impact of Motus through the selection of material KPIs and the setting of ambitious targets, with a focus on its own road fuel consumption, water consumption, electrical efficiency and gender equality to foster diversity and inclusion.
“Partnerships remain essential not only to provide access to funding for our expansion plans, but also to leverage our vast reach, experience and knowledge of the social, economic and regulatory landscape of the African market,” said said Osman Arbee, CEO of Motus.
Through its Sustainable Finance division, Standard Bank is focused on providing financial products and services that support positive ESG outcomes, including green and social bonds, sustainability-related loans and bonds, sustainable trade solutions and working capital and impact investing.
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This particular round of sustainability-related finance is part of Standard Bank’s commitment to mobilize between R250 billion and R300 billion in sustainable finance by the end of 2026.
Anneke Lund, Head of Sustainable Finance at Standard Bank Group, emphasized that ESG performance is both a financial and an ethical priority. “Companies that operate sustainably tend to have lower risk profiles and outperform those that don’t over the long term.
“Because of this, demand continues to grow for sustainability-related financing that can provide clients with the opportunity to focus on their environmental impact strategy and achieve socio-economic impact,” Lund said.