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Treasury Seeks Comment on Technical Paper on Sustainable Finance

May 20, 2020

National Treasury

A draft technical paper entitled “Financing a Sustainable Economy” has been published for comment.

In a statement, national treasury described the proposed technical paper as a “framework for financial institutions to better disclose public information on their green practices and investments”.

“Such information is critical for various stakeholders including investors, trade unions, financial sector industry associations, regulators and non-governmental organisations, and enables them to assess how financial institutions are taking account of climate change and other environmental and social risks.”

According to treasury, the financial sector recognizes the need for a “framework for measuring, managing and reporting sustainable finance initiatives, in line with initiatives of the G20 Sustainable Finance Study Group, and the Financial Stability Board’s Task Force on Climate-related Financial Disclosures”.

The draft paper seeks to empower stakeholders to better understand the extent of the financial sector’s vulnerability to Environmental and Social risks posed by climate change, water and air pollution, degradation and resource depletion.

The draft paper focuses on defining sustainable finance, overview of developments within the South African financial sector, banking, retirement funds, collective investment schemes (securities and hedge funds), private equity, capital markets and insurance.

In its conclusion, the draft paper highlights the need for R2tn to address the transition risks faced by the country as a result of climate change.

It adds that treasury, in conjunction with government and the financial sector as a whole, “must find ways to stimulate the flow of public, private and blended funds through improved capital allocations, enhanced risk identification and management, and the generation of new products dedicated to solving these problems”.

Comment on the draft technical paper is invited until 30 June 2020.

Meanwhile, treasury has republished the 2020 Special Adjustment Budget guidelines on its website.

According to treasury, the proposed Special Adjustment Budget “seeks to modify the 2020/21 budget to utilise current baseline allocations to provide for the rapidly changing economic conditions and enable spending on the COVID-19 response”.

Treasury also plans to present a revised fiscal framework to “account for substantial revenue losses emanating from the economic shock of the pandemic and subsequent lockdown”.

Any other adjustments not included in the Special Adjustment Budget will be outlined in the October Medium Term Budget Policy Statement.

Technical financial amendments included in the Special Adjustment Budget process include adjustments due to significant and unforeseeable economic and financial events; Section 16 of the PFMA; virements and shifts within votes/departments and direct charges against the National Revenue Fund.

In the latest version, the dates for cabinet approval and tabling of the Special Adjustment Budget in parliament are still to be confirmed.