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NSE eyes green bond to drive sustainable growth agenda

By Dominic Omondi | July 25th 2016

The Nairobi Securities Exchange (NSE) will soon launch green bonds as it moves to attract investors who are concerned about sustainable development.

Geoffrey Odundo, the CEO of the Nairobi-based bourse, said this would be in keeping with the trend around the world where companies are not just looking at profits but also the impact their operations have on people and the planet.

“We are keen on how to create opportunities within the market so that social investors can tap into this market,” said Odundo, who added that they were engaging the capital markets regulator capital markets authority (CMA) on these proposals.

Green bonds are used to raise funds dedicated to climate-change mitigation, adaptation and other environment-friendly projects.

In a round-table discussion on sustainable stock exchange dialogues on green finance at the just concluded fourteenth United Nations Conference on Trade and Development (UNCTAD 14), Odundo noted that while there are investors who look at financial benefits, there are others who want to see the social benefits of their investments.

“There is a need for us to come up with a framework and address this opportunity,” he said, noting that there are a number of investors trooping into the country who are conscious of environmental and social issues.

He noted that Kenya is already miles ahead in some green financing as it has already pumped a lot of money in a number of renewable energy projects including geothermal, wind and solar. These projects, he said, can attract long-term funding.

“NSE is looking at how to convert these conversations into products,” he said during a round-table discussion on green finance.

The Nairobi Securities Exchange (NSE) was recently boosted by a government announcement that it would soon introduce carbon credits trading after the Government pledged to offer expertise and facilitation.

Energy and Petroleum Principal Secretary Joseph Njoroge said the ministry is ready to support the NSE on the planned launch.
“We will chip in if you (NSE) need any expert advice or facilitation from the ministry.

“We are more than willing to support this important and innovative idea of trading in carbon credits,” said Dr Njoroge.

Mr Sean Kidney, Chief Executive Officer and Co-founder, Climate Bonds Initiative in the United Kingdom noted that there are a lot of stocks in Kenya that should be described as green bonds.

CEO of NSE Geoffrey Odundo said Africa has a huge population with a limited number of infrastructure opportunities.

African government would thus benefit a lot from green financing.
However, he requested the government to consider offering tax incentives to energy-efficient projects as these are long-term projects.

Besides looking at the environment, sustainability reporting will also look at gender diversity.

They will also insist on best business practices such as anti-corruption initiatives.

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