From short-term to sustainable – how finance can future-proof our economies against disasters
By Kuda Mukova, partner at IQbusiness
The sharp and long tail of Kwa-Zulu Natal’s flood disaster has painted South Africa’s vulnerability to climate, health and infrastructure disasters into sharp relief. As plans and budgets to rebuild trickle towards fruition, now is the time to deliberately break away from short-term financing to longer-term and sustainable finance to future-proof against disasters and risks to come.
The good news is that future-proofing our economy through sustainable financing need not be overly layered and technical. Especially in South Africa right now, the simplest solutions are often the best ones. We need committed and open-minded financing that allows communities to rebuild their immediate infrastructure and homes, while offering a responsible safety net for business and society to hope for a safer future while remaining prepared for disasters when they do inevitably strike.
The key here is a concerted move from traditional investing over the short-term in search for immediate and competitive returns regardless of environmental, social or governance (ESG) factors – to responsible impact investing. Much has been said in board rooms and management tomes about progressively screening investments and projects based on their ESG risk profile. But very few people and businesses truly understand and apply these daily. The truth is that most projects, especially with highly risky socio-economic and political profiles and sub-investment grades like South Africa, remain vulnerable to short-term thinking.
But we must take a broader and braver view. We must take our ambitions a step further than mere rhetoric, and practically drive maximum impact solutions through sustainable and thematic impact investing. We are surrounded by glaring reminders of how important it is to align investment strategies and priorities with the 11th UN Sustainable Development Goal, which seeks to make our cities and human settlements inclusive, safe, resilient and sustainable.
We have some inspiring examples from South African banks that we can look to.
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