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National Treasury has published an updated version of its “Financing a Sustainable Economy” document as part of efforts to encourage more long-term investments in sustainable economic assets, activities and projects.

The technical paper was first published in May 2020.

In the updated paper published on Friday, Treasury said while financial institutions previously only focused on the return on investment of projects, the focus on sustainable finance encourages them to also be cognisant of how their investment decisions impact the environment.

“It is envisaged that this will assist in reducing pressures on the environment, including supporting the transition to a low carbon economy by phasing out greenhouse gas emissions and optimising the use of natural resources.

“The impact of climate change on the global and South African financial sector is potentially significant, if not effectively mitigated,” Treasury said.

In the paper, Treasury broadly classified climate-related risks for the financial sector as:

  • Physical risks from extreme weather – directly affecting financial institutions’ own operations or assets that they finance through damage, business disruption or default risks;
  • Transition risks – resulting from disruptive technologies, changing regulation, consumer or market preferences; and
  • Liability and disclosure risks – resulting from loss and damages, rising insurance costs, director’s liability and disclosure failures.

Comments received broadly support the recommendations and proposed workflow on sustainable finance. The main recommendations include introducing a green finance taxonomy; creating technical guidance for disclosure aligned to the Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD), and developing a benchmark climate risk scenario for use in stress tests by the financial sector and financial regulators.

Treasury said the paper also takes into consideration emerging international climate finance and policy developments, including the G20 and FSB roadmap for addressing climate-related financial risks.

The updated technical paper was broadly amended to incorporate substantive issues such as allowing for a more holistic approach to sustainable finance over time, by expanding the paper beyond climate risk issues to include the broader sustainability and social issues.

The paper was also amended to incorporate the recognition of broader sustainable financing opportunities than those represented by green bonds, by including an expanded list of sustainable finance instruments, and better addressing issues of biodiversity, circular economy, water and environmental risk.

The updated technical paper and comments matrix are available on the National Treasury website ( and Sustainable Finance Initiative website

Comments were received from 15 different stakeholders, including the Department of Environment, Forestry and Fisheries, other departments and the financial sector regulators (the Financial Sector Conduct Authority and Prudential Authority).

Extensive feedback from other departments, industry stakeholders and civil society was also received.

The updated technical paper published today incorporates responses to the comments received, accompanied by a comments matrix. –


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