National Standard intends to launch a Renewable Energy Private Debt Impact Fund by the end of 2022 in line with its impact investing objectives. Whilst South Africa has been leading in the increasing renewable energy power production, there remain opportunities for more renewable energy production. All African countries are experiencing a power crisis in one form or another. South Africa is particularly vulnerable because of its intensive industrial energy demands with mining, smelting and pulp and paper production being key industries that consume power and contributing significantly to the economic growth of South Africa. The country’s current energy production capacity is insufficient to provide reliable power to consumers and industries with widespread load shedding over the past few years and expected to continue into the next few years. Whilst there are many renewable energy-focused funds in South Africa and globally, there remains significant scope for debt funding of both existing and new renewable energy power production capacity and related value chains. There is currently renewed focus on renewable energy production to complement the existing fossil fuel power production. There is also a need to focus on powering rural areas with renewable energy through working with municipalities across South Africa and the African continent. Other opportunities exist in solar installations in new and existing residential and industrial developments with positive impact outcomes. The Fund’s impact objectives in renewable energy will be anchored broadly around two objectives:

• improving access to affordable and clean energy; and


• improving energy efficiency, which, in turn, reduces energy consumption and offsets harmful emissions.

Based on research on global practices in renewable energy impact investing, the Fund will seek to differentiate itself through focusing on the following strategies in supporting capital allocated towards renewable energy for greater and sustainable positive impact:

• • Choosing not to invest in or to favor certain investments that, if all investors did the same, would ultimately lead to a ‘pricing in’ of effects on people and the planet by the capital markets more broadly.

• • Engaging actively through using expertise and networks to improve the environmental/societal performance of businesses. Engagement will include a wide spectrum of approaches from dialogue with portfolio companies to the Fund taking board seats and using our own teams or consultants to provide hands-on management support. While a significant dialogue with companies, including about environmental, social and governance factors, is a normal part of the fund management process, the phrase ‘engage actively’ reflects a strategy that involves, at a minimum, significant proactive efforts to improve businesses’ effects on people and the planet.

• • Growing new or undersupplied capital markets through anchoring or participating in new or previously overlooked opportunities to enable businesses to generate impact. This may involve seeking out non-traditional illiquidity, complexity or perception of disproportionate risk, which the Fund will consider in pursuit of financial alpha.

• • Providing flexible capital through recognizing that certain types of businesses will require acceptance of disproportionate risk-adjusted financial return in order to generate certain kinds of impact. For example, creating a new market for previously marginalized populations can require patient capital that may not offer an above-market financial return.

• • End-user financing for purchase/lease of energy access through the provision of financing options, for example, through supporting microcredit providers, specifically to enable end-consumers to purchase or lease energy products or services. Products that may be financed through this model include efficient home products, fuel-efficient vehicles and electric vehicles among others.

• Waste-to-energy services, which is a renewable energy technology that converts traditional waste into clean, renewable energy through incineration, thus reducing the volume of waste. The heat generated through this process can be used directly for heating or electricity generation.