Abstract
The green building sector plays a vital role in protecting the environment. It provides environmental, health, and financial benefits. However, the limited financial assistance available towards green buildings limits their adoption. Globally, financial institutions, as one of the stakeholders in the green finance sector, contribute immensely towards green buildings through the provision of various green finance incentives. This study, therefore, aimed to investigate the role of financial institutions in funding green buildings in South Africa. It focused on the available green funding opportunities, various green finance incentives, criteria used to issue the incentives, and the progress that the top five financial institutions in South Africa (FirstRand, Standard Bank, Absa, Nedbank, and Investec) have made in funding green buildings. This study employed a mixed-method research design which combines both qualitative and quantitative data. The data in this study was collected by making use of interviews and document analysis research. About 20 emails were sent to the head of sustainable finance consultants, environmental, social, and governance (ESG) consultants, and sustainable finance consultants within the banks to request their participation. Four consultants from the sustainable finance sector of the banks (FirstRand, Standard Bank, Nedbank, and Investec) were interested and participated in this study. Online interviews, which ranged from 30 to 60 minutes, were held with the participants on different days, according to their availability. The results revealed that there are many green funding opportunities that are offered to various sectors, and the green infrastructure, energy, and sustainability sectors receive the majority of these opportunities, in the form of debt and equity. In terms of green buildings, green finance incentives such as green bonds and green loans are offered by all banks. Some incentives, such as green mortgages and green deposits, are selectively offered, while there is a lack of green insurance. Furthermore, the findings in this study highlighted the essentiality of possessing a green certificate and aligning with the financial institutions’ internal policies, as a green building project that requires funding. Moreover, financial institutions such as FirstRand and Nedbank achieved a 100% success rate in allocating proceeds of their green bonds towards green buildings. Standard Bank and Absa also depicted a good success rate in allocating proceeds of their green bonds. However, the targeted projects are renewable energy, not green buildings. Considering the results in this study, the introduction of green insurance and transition finance incentives that focus on assisting conventional buildings to transition into green buildings was suggested as one of the solutions to increase the funding pool for green buildings. In addition, the findings can be used to assist property developers who aspire to transition into the green building sector but have limited knowledge on green funding, the financial institutions that offer it, and the process of acquiring it.