Herbert Smith Freehills ESG Tracker (SADC Edition)
There are so many ESG-related publications and developments that it is hard to keep abreast of them all. For this reason, HSF publishes a monthly tracker of ESG-related publications and developments, with a primary focus on developments that may be of most interest to or impact our clients in the Southern African Development Community, be they corporates, asset managers or asset owners.
If you have any ESG-related questions, please get in touch with your usual contact at HSF who will be able to direct you as appropriate.
This issue covers the period from 1 to 31 March 2023.
ANGOLA
07 March 2023
Angola is preparing to set up 5 billion dollars real estate investment fund to manage the assets received in the fight against corruption, the finance minister announced. "The processes identified represent 15 billion dollars in total, between assets, real estate, shares, cars and money, and of those 15 billion dollars identified, 5 billion dollars have already been resolved, with the bulk of those 5 thousand million (recovered as part of the fight against corruption) is not money, it is real estate, cars and goods that we put in ministries or give to public entities that allow us to dispense with acquiring facilities for them"
17 March 2023
It has been reported that the Angolan Secretary of State for the Budget and Public Investment (SEOIP), said that the country has started to take important steps in the framework of sustainable finance, with the discussion and approval by the Executive of the document that aligns the strategy indebtedness with the country's social and environmental policies.
MALAWI
07 March 2023
Malawi's Minister of Finance and Economic Affairs presented the Budget Statement for the 2023/24 fiscal year to parliament on 2 March 2023. Following the presentation of the budget, the Malawi Revenue Authority issued a release providing an overview of the new tax measures as follows. Further, as noted in a separate release on the customs and excise measures, the budget measures will generally apply from 1 April 2023, following the approval of the relevant bills, although the customs and excise measures are already effective from midnight of 2 March 2023.
MAURITIUS
27 March 2023
The T3 landed on Friday 24 March using the cable ship CS Teliri which connected the first end of the system to the landing station located in Baie Jacotet to the south of the island. The new system adds to Mauritius Telecom's existing subsea cables, South Africa Far East (SAFE) and Lower Indian Ocean Network (LION) commissioned in 2002 and 2009 respectively. T3 has been developed to diversify the company's digital roads, secure its access to information highways and bolster digital transformation in the country.
MOZAMBIQUE
10 March 2023
In R (on the application of Friends of the Earth Limited v (1) The Secretary of State for International Trade/UK Export Finance (UKEF) (2) Chancellor of the Exchequer; interested parties (1) TotalEnergies E&P Mozambique Area 1 Limitada; (2) MOZ LNG1 Financing Company Limited [2023] EWCA Civ 14, the Court of Appeal unanimously dismissed Friends of the Earth's challenge to a decision of UK Export Finance ("UKEF") to provide up to USD 1.15 billion export credit support in relation to a USD 20 billion Area 1 liquefied natural gas ("LNG") facility in Mozambique.
14 March 2023
Mozambique's economic recovery is picking up steam, with growth reaching 4.1% in 2022, despite global economic headwinds marked by rising fuel and food prices. The medium-term economic outlook is positive, with growth expected to accelerate to 6% over 2023-2025, driven by continued recovery in services, increased liquefied natural gas production, and high commodity prices.
SEYCHELLES
31 March 2023
Fitch Ratings – London – 31 Mar 2023: Fitch Ratings has affirmed Seychelles' Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. Seychelles' 'BB-' rating is supported by relatively high income levels (3x the peer median), strong World Bank Governance Indicators, support from multilateral creditors and stable policymaking. These strengths are balanced by the exceptionally high concentration of the economy in the tourism sector, which heightens vulnerability to external shocks, and long-term risks associated with climate change.
UNITED REPUBLIC OF TANZANIA
30 March 2023
That U.S. Vice President Kamala Harris announced plans to boost trade with and investment in Tanzania during a visit , part of an African tour aimed at strengthening ties with a continent where China and Russia increasingly hold sway. "Working together, it is our shared goal to increase economic investment in Tanzania and strengthen our economic ties," Harris said, listing a number of initiatives. They included a new memorandum of understanding between the Export-Import Bank of the United States (EXIM) and the government of Tanzania. That will facilitate up to $500 million in financing to help U.S. companies export goods and services to Tanzania in sectors including infrastructure, transportation, digital technology, climate and energy security and power generation.
SOUTH AFRICA
09 March 2023
The Minister of Mineral Resources and Energy called on interested parties to register prospective bids under the Battery Energy Storage Capacity bid window under the Independent Power Producers Procurement Programme, IPPPP Tender No: DMRE/028/2022/23 (the Programme). The new generation capacity to be procured from the bid window is set at 513MW. Bid submission is currently scheduled for 5 July 2023.
10 March 2023
The Minister of Mineral Resources and Energy published the Nuclear Non-Proliferation Regulations (the Regulations) under the Nuclear Energy Act, 1999. The Regulations focus on (i) keeping of records; (ii) reports to minister; (iii) measurements on nuclear material and maintaining measuring control programmes; (iv) provision of information on design of nuclear installation and site concerned and all changes effected to the design thereof; and (v) physical stocktaking of nuclear material. The Regulations came into effect on the date of publication.
10 March 2023
The Department of Water and Sanitation published a call to all registered water users to update registrations, or to submit a new registration. Amendments which the Department is required to be made aware include replacement of outdated contact details (postal and physical address, email address, telephone, cellphone number or fax numbers); provision of updated information on new property owners upon buying of property or change in customer name (water user name) including transformation of the Irrigation Boards or Government Water Scheme into Water User Association; renewal information of passport holders; updating or corrections on Value Added Tax (VAT) and business registration information. Water users conducting section 21(a) (abstraction), (b) (storage) and (d) (stream flow reduction) water uses under the National Water Act, 1998 are required to notify the Department of these amendments within 90 days.
14 March 2023
The National Assembly passed the Prevention and Combatting of Hate Crimes and Hate Speech Bill (the Bill), originally introduced in 2018. The Bill is now under consideration by the National Council of Provinces.
Among other things, if enacted, the Bill proposes to:
- give effect to the Republic's obligations regarding prejudice and intolerance as contemplated in international instruments;
- provide for the prosecution of persons who commit offences referred to in the Bill;
- provide for the prevention of hate crimes and hate speech; and
- provide effective enforcement measures.
15 March 2023
In March 2022, the Pretoria High Court delivered the Deadly Air court judgment, which ruled that the inadequate air quality in the Highveld Priority Area, spanning from eastern Gauteng to Mpumalanga Highveld, violates residents' section 24(a) constitutional right to a safe and healthy environment. The judgment also announced that section 24 of the Constitution can be immediately enforced in the present moment and ordered the government to pass regulations to implement and enforce the Highveld Priority Area Air Quality Management Plan (Highveld Plan), which aims to clean up the air in the Highveld to meet health-based air quality standards.The Minister of Forestry, Fisheries and the Environment (Minister) requested permission to appeal to the High Court on behalf of the state regarding the interpretation of section 20 of the National Environmental Management: Air Quality Act. However, the state is not appealing the initial part of the order that concerns the immediate implementation of Section 24 of the Constitution.The Supreme Court of Appeal granted the Minister leave to appeal.
17 March 2023
The Department of Forestry, Fisheries and the Environment published the Consultation on Proposed Regulations for implementing and enforcing Priority Area Air Quality Management Plans (Proposed Regulations) under the National Environmental Management: Air Quality Act, 2004. The Proposed Regulations set out the requirements necessary for implementing and enforcing any approved priority area Air Quality Management Plans. The Regulations will provide for mandatory implementation of interventions; mechanisms for government to monitor and evaluate the effectiveness of the plans; transitional arrangements as well as the activation of enforcement measures where non-compliance is identified.
The public has 30 days within which to comment on the Proposed Regulations.
ZAMBIA
10 March 2023
The Zambian government announced that it intends to make Kabwe a "green city" could offer an important opportunity to address the toxic lead that has been harming residents for decades.
15 March 2023
It has been reported that Zambia is working very hard with its creditors, including China, so that a debt restructuring can be agreed by the end of March or shortly afterwards, Finance Minister Situmbeko Musokotwane said. Zambia was the first African country to default on its sovereign debt during the COVID-19 pandemic in 2020, but the restructuring of its external debts to creditors including China and Eurobond holders has been greatly delayed.
AFRICA
01 March 2023
According to a recent study published by the African Development Bank (AfDB) and the Liberian government, expanding financial access for Liberia's artisanal and small-scale mining sub-sector is feasible through formalisation and de-risking measures. According to the report, potential solutions to support the livelihoods of small-scale miners include setting up enabling regulatory and institutional frameworks and providing efficient extension services. The study draws on broad-based stakeholder consultations and a robust review and analysis of Liberia's financial ecosystems and the artisanal and small-scale mining value chain. It offers a compelling case for greater financial inclusivity as a key enabler for small-scale miners in Liberia and includes a roadmap to formalise the sub-sector. The report posits ample opportunities for financial institutions to engage with the artisanal mining sub-sector, including offering tailored solutions. The report includes supply-side and demand-side interventions to drive financial inclusion. These interventions align with three pillars: access to financial services, promoting digital financial services and improving consumer protection and financial capabilities.
07 March 2023
This is the purpose of the new green finance mechanism set up by the Economic Community of West African States (ECOWAS) Bank for Investment and Development (EBID) is the promotion of inclusive and sustainable growth in the West African economy. The ecological transition should accelerate very soon in West Africa. EBID will finance green projects through its recently published inaugural Environmental, Social and Governance (ESG) Finance Framework. The funds it will release over the next three years will be used to implement the United Nations (UN) Sustainable Development Goals (SDGs) initiatives in its member states. These projects presented by the governments of the targeted countries via local companies will contribute to the promotion of economic integration, social protection (health, education, housing) and especially climate resilience in the region.
09 March 2023
Uganda has said it expects to start generating at least 1 000 megawatts (MW) from nuclear power by 2031 as it moves to diversify its sources of electricity and accelerate its energy transition, a key part of its climate change response. Uganda has uranium deposits and President Yoweri Museveni has said his government was keen to exploit them for potential nuclear energy development. The first nuclear project, Buyende Nuclear Power Plant, would be located at Buyende, about 150 km (93 miles) north of the capital Kampala.
09 March 2023
The African Development Bank (AfDB) and the Coalition for Dialogue on Africa (CoDA) have officially launched a three-year support project to improve regional coherent and coordinated response to illicit financial flows (IFFs). The project will help African stakeholders actively engaged in stemming such flows to improve domestic revenue mobilisation in African countries. The project aims to improve regional coordination of combatting illicit financial flows and the oversight and accountability of public finances, for optimal revenue mobilisation and management in African countries. It will support the coordinated implementation of recommendations of the High-Level Panel on Illicit Financial Flows and the implementation of joint strategies and initiatives related to international taxation.
14 March 2023
Finance ministers from the Horn of Africa are seeking ways to attract more private sector backing for projects in infrastructure, energy and technology, to better build economic resilience as drought and inflation bite. The leaders met under the Horn of Africa Initiative (HoAI) in Nairobi and agreed to develop a "comprehensive" private-sector engagement strategy, which is expected to be tabled at the next meeting in October. This is projected to help bridge the existing funding gap that has slowed down the implementation of the initiative's priority areas: infrastructure development, trade and economic integration, building resilience and human capital development.
19 March 2023
The Council of Ministers of the Southern African Development Community (SADC) met in Kinshasa, to deliberate on issues aimed at consolidating regional integration, cooperation and development. The meeting was held under the 42nd SADC Summit Theme, Promoting industrialization through agro-processing, mineral beneficiation, and regional value chains for inclusive and resilient economic growth, which takes into account the urgent need to enhance the roll out of the SADC industrialisation and market integration programmes in the SADC Regional Indicative Strategic Development Plan (RISDP) 2020-2030. The meeting was officially opened by the Prime Minister of the DRC who in his opening statement highlighted the need for enhanced peace, stability and security to create an enabling environment for sustainable investment and economic growth in the SADC region
Global
01 March 2023
It has been reported that lawmakers in the European Parliament and the European Council announced an agreement on the creation of standards for proposed European Green Bonds (EuGB), as well as voluntary disclosure guidelines for green bond issuers aimed at preventing greenwashing in the sustainable bond market.
01 March 2023
It has been reported that the Government of Canada has released the new "Standard on the Disclosure of Greenhouse Gas Emissions and the Setting of Reduction Targets." As of April 1, 2023, major suppliers to the Government of Canada will be compelled to disclose their greenhouse gas (GHG) emissions and set targets to reduce them. According to Canada's new standard, federal procurements greater than $25 million will induce suppliers to measure and disclose their and adopt a science-based target to reduce GHG emissions in line with the Paris Agreement.
02 March 2023
Australia's competition regulator the Australian Competition and Consumer Commission (ACCC) announced that it will be investigating companies for potential greenwashing, after it conducted a study that found concerning environmental or sustainability-related claims from over half of businesses reviewed.
10 March 2023
The EU's financial regulators will carry out a comprehensive system-wide analysis of the financial sector's resilience to climate-related risks, and its ability to facilitate financing for Europe's green transition under stress scenarios, according to a letter by European Commission Financial Stability, Financial Services, and the Capital Markets Union Director General John Berrigan
13 March 2023
The European Central Bank, and Europe's three primary financial regulatory agencies, the European Supervisory Authorities (ESAs), announced plans to introduce new climate change-related disclosure requirements for structured finance products, aimed at enabling investors to better identify climate-related risks.
14 March 2023
The European Parliament announced that it has adopted a revised Effort Sharing Regulation, including a first-ever requirement for all EU member states to reduce greenhouse gas emissions by 2030, and raising the EU's overall 2030 emissions reduction target to 40% compared to 2005 levels, up from its prior 30% goal.
15 March 2023
The Chancellor of the Exchequer, Jeremy Hunt, announced in his 2023 Spring Budget Speech that nuclear power will be classified as "environmentally sustainable" under the UK's upcoming green taxonomy, with access to the same investment incentives provided for renewable energy, in a move aimed at encouraging private investment.
20 March 2023
President Biden exercised his veto power to protect ESG investment considerations in retirement plans. US Senate Republicans voted to block a Labour Department Rule that allows retirement plan managers to include environmental, social and corporate governance considerations in their investment plans. In the statement, the President said that "there is extensive evidence showing that ESG factors can have a material impact on markets, industries, and businesses but the resolution would force retirement managers to ignore these relevant risk factors" and that "retirement plan fiduciaries should be able to consider any factor that maximizes financial returns for retirees across the country."
20 March 2023
The Financial Conduct Authority (FCA), the conduct regulator for financial services firms and financial markets, announced that it has found "the potential for widespread failings" by administrators of ESG benchmarks, including poor quality of ESG-related disclosure and the use of outdated data or ratings. In a letter sent to the CEOs of the benchmark administrators, the regulator warned of potential enforcement action if the issues are not addressed.
22 March 2023
The European Commission unveiled the proposed "Directive on Green Claims," a new set of rules requiring companies to substantiate and verify their environmental claims and labels, aimed at protecting consumers from greenwashing.
23 March 2023
Lawmakers at the European Parliament and members of the EU Council announced that they have reached an agreement on "FuelEU Maritime," a new regulation mandating reductions in emissions in the maritime transport sector, with targets beginning as soon as 2025. The agreement marks another step towards the completion of negotiations for the European Commission's "Fit for 55" roadmap – the EU's proposed strategy to cut greenhouse gas (GHG) emissions by 55% by 2030, compared to 1990 levels, following decarbonization deals for other sectors such as automotive, road transport, buildings and agriculture, as well as an agreement to strengthen the EU's internal cap and trade carbon pricing mechanism, EU ETS.
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