Motus secures ESG funding facilities worth R6.8bn

Group’s sustainability drive gets a boost from Standard Bank.
Achieving its key performance indicators will see Motus receive a favourable interest rate, and vice versa should it not achieve them. Image: Supplied

JSE-listed automotive company Motus Holdings confirmed on Tuesday that it has secured an environmental, social and governance (ESG) funding facility worth R6 billion from Standard Bank South Africa, together with a working capital facility of R800 million.

“This ground-breaking ZAR-denominated ESG facility will enable the next phase of Motus’ ESG journey. It will focus on the fuel used by group vehicles, water and electricity consumption, as well as gender equality to drive diversity and inclusion,” the group said.

Read: Standard Bank to raise R300bn to fund green projects

“Sustainability-linked facilities tie the terms of funding to ESG outcomes to support and incentivise responsible corporate behaviour and the creation of shared value. As Motus achieves its key performance indicators [KPIs], it receives an incentive in the form of a favourable interest rate benefit and vice versa should it not achieve its KPIs,” it explained.

Affirmation

Motus believes the ESG facility in South Africa, which comes after the group secured international ESG-linked facilities two years ago, reaffirms its ongoing pledge to ESG principles and outcomes.

Motus secured a sustainability-linked loan of £120 million (over R2 billion) in January 2020 for a three-year facility targeting fuel and water consumption.

Motus CEO Osman Arbee said in a statement on Tuesday that the company is working on reducing carbon emissions and contributing towards social change to ensure a better, more sustainable business.

“We are pleased to be able to work with partners who have developed innovative products to integrate our sustainability values with responsible capital market participants.”

‘Green’ funding 

Standard Bank SA CEO Lungisa Fuzile says the financial institution is focused on providing financial products and services that support ESG outcomes, including green and social bonds, sustainability-linked loans and bonds, sustainable trade and working capital solutions, and impact investing.

“Our partnership with Motus affirms our commitment to mobilise between R250 billion and R300 billion in sustainable finance by the end of 2026,” adds Fuzile.

“We are therefore delighted and proud to partner with Motus in supporting their growth ambitions while also contributing to transformation in our economy.”

Read:
Motus to continue its acquisitions spree
Netcare and Standard Bank in R1bn ‘green bond’ deal

Arbee says the company’s commitment to ESG practices and principles will ensure that it remains a sustainable and valuable contributor to customers, employees, supply chain partners and communities.

Nondumiso Lehutso is a Moneyweb intern.

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Is Standard Bank greenwashed? Many ESG funds mislead investors. The typical ESG fund doesn’t bring fresh funds to the companies in their portfolio. Such funds exploit the apparent ignorance of investors who confuse financial investment in stocks with capital expenditures. Many investors believe that if they invest in funds with names such as the Umoya Energy Fund (fictitious name), the companies in the fund will receive money to produce wind energy. Nothing is further from the truth…umoya nje.

In reality, the money invested in the fund is used to buy shares from other investors who are selling their wind energy shares. For all we know, these sellers may turn around and buy petrol-guzzling SUVs with the proceeds or buy a coal mine in Witbank. The underlying companies are not affected. For them, it’s a zero-sum game.

SA Regulators should start cracking down on ESG funds that pretend to want to save the planet without actually investing in green stocks – an all-too-common practice known as greenwashing. South Africa should adopt a corporate sustainability reporting directive that includes guidelines for funds targeting the ESG market. Rules requiring ESG funds to disclose information about their strategies must be drafted and complied with.

Especially when it comes to Food Retailers and companies along the Food Value Chain lots of Greenwashing going on.

Comforting to know that both I and Standard Bank like the stock.

End of comments.

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