Cape Town Green Bond


In 2017, amid severe drought, the City of Cape Town, in South Africa was issued its first Green Bond, which was used to invest in projects aligned to city’s sustainability goals to adapt to and mitigate climate change.  

The ZAR1 billion Green Bond was used to fund and refinance a number of green projects?in the city including procurement of electric buses; energy efficiency in buildings; water resilience initiatives; sanitation treatment; and the coastal structure protection and rehabilitation. 

At the time, Cape Town had the only green bond in the country to be accredited by the Climate Bonds Initiative (CBI) and demonstrated market appetite for green and climate initiatives. 

Stakeholders involved 

  • Accreditation by CBI 
  • Bond issued by Rand Merchant Bank 
  • Commissioned by City of Cape Town 
  • Facilitated by Cape Chamber of Commerce 
  • Financed by International investors 


  • Climate change is a global challenge that has had significant impact on the City of Cape Town, with the city experiencing an unprecedented water crisis after a period of severe drought between 2015-2017. 
  • In 2018, the rainfall deficit led to water supply in the city reaching critical levels and just narrowly avoiding running out of water.   


  • The Green Bond was first in South Africa and the only Green Bond in the country to meet CBI requirements and receive accreditation.  
  • The Green Bond was also the first in the country to receive Moody’s certification, with the agency rating the bond as GB1 (excellent). 


Results and impact 

  • Building investor trust and confidence in climate-aligned investmentsThe CBI accreditation, Moody’s certification and GB1 rating, and the JSE listing were key to building market confidence and gaining investor support in green and climate bonds. The green bond underwent a comprehensive accreditation processes involving in-depth pre- and post-issuance assessment conducted by an independent verifier approved by the CBI. The City of Cape Town committed to continuous reporting to bondholder to inform them on the application of the proceeds. These initiatives provide investors with additional assurance regarding the ultimate use of the bond’s proceeds. 
  • Alignment to local plans and priorities: the green bond supported the city’s long-term strategy of adapting to climate change through investments in water management, sanitation treatment and energy-efficient transportation projects.  
  • Supporting environmentally and socially responsible investment: the JSE listing of the green bond through the exchange’s green segment is expected to help investors meet increasing demand for socially responsible investment opportunities to address their ESG mandates. It also allows bond issuers to brand themselves as socially and environmentally responsible corporate citizens. 

Key lessons learnt 

  • Expected increase in green and climate bonds: As corporate social responsibility initiatives garners more attention and support, issuers and investors are looking to invest in green / climate initiatives in order to improve their sustainability ratings.? 
  • Effective governance and leadership: Issuance of green bonds present an opportunity for African cities to address the financing deficit. However effective governance, virtuous leadership and appropriate mechanisms that support and facilitate the issuance of green bonds in local markets is key to promoting investor trust and confidence. In addition, supporting global green bonds standards and principles, and adopting national green bonds standards and regulations can support future issuance of green bonds.? 
  • Regular reporting to ensure transparency and accountability: effective reporting through annual reports detailing the projects and assets that have utilised the proceeds of the bond, and the expected green impacts of these projects is key to enabling the investors to effectively evaluate the green performance of the bond and avoid greenwashing. Climate Bonds Standards provides an effective certification scheme with clear, objective, sector-specific climate eligibility criteria for projects and assets. 
  • In South Africa, formal accreditation of green bonds is not the norm nor a listing requirement in the bond market. This is a shortcoming that could result in “green-washing” (false or misleading sustainability achievements). 

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