SMEs in the green sector play a fundamental part in solving environmental and social issues faced in South Africa.
When SMEs gain access to green financing opportunities, they are able to focus more of their efforts on models that aim to solve environmental and social issues. Additionally, if there are increased efforts in green funding initiatives, there may be an increased interest in the creation of businesses that are sustainable.
In this article, we’ll highlight financing opportunities for green small and medium-sized enterprises (SMEs).
What Exactly is a Green Business?
A green business is essentially a sustainable business that directs its efforts towards having business operations that aren’t harmful to the environment and society. Additionally, this kind of business implements projects through its products or services that are aimed at benefiting local communities, society, and the environment.
Where to Get Green Financing Opportunities?
1. Government Grants and Incentives
Government programs play a big role in helping businesses go green. In South Africa, the Department of Trade, Industry and Competition (DTIC) offers grants for projects that cut carbon emissions or use renewable energy. These grants cover things like research, energy checks, and buying equipment.
Businesses can also use tax incentives like Section 12L. Section 12L was introduced by the Department of Energy (DoE) and the South African National Energy Development Institute (SANEDI) as a means to introduce energy efficiency.
This incentive rewards companies that lower energy use through better technology. Eskom rebates also help with solar systems and other clean energy projects by paying part of the cost.
2. Carbon Credits and Climate Finance
Many business owners do not see the value of carbon credits. If your business plants trees, uses less energy, or reduces waste, you can earn carbon credits and sell them. The JSE carbon market and voluntary markets in South Africa allow businesses to make money from green projects.
Climate finance is another big opportunity. Groups like the Development Bank of Southern Africa (DBSA) and the Green Climate Fund provide funding to projects that cut emissions or help fight climate change.
Even small businesses can join carbon trade programs. They can work with other companies or partner with groups that handle the process. This creates extra income and shows customers you care about the planet.
3. Sustainable Loans
Banks offer green loans for projects that use clean energy, save water, or support farming that protects the land. Banks like Nedbank and Standard Bank offer green finance initiatives for businesses that meet green goals.
Green bonds are another way to get money. These bonds raise cash only for green projects. In South Africa, banks use green bonds to fund things like solar power. Smaller businesses can join by working with bigger companies or as part of joint projects.
Case Study: Standards Bank Powers Up Green Business With a R700 M Loan
Standard Bank has provided a R700 million green loan to Resilient, a retail real estate investment trust, to support solar energy projects. The loan will fund the installation of solar panels and related infrastructure at shopping centres across South Africa.
Resilient already operates shopping centres in South Africa, Nigeria and France and has invested heavily in solar and battery systems to reduce reliance on the grid. Approved upgrades will significantly expand rooftop solar capacity at malls, including i’langa, Brits, Galleria and Arbour Crossing.
The funding aligns with Standard Bank’s commitment to sustainable finance and supports businesses addressing South Africa’s energy challenges.
How to Prepare for Green Financing
Getting green finance takes more than an idea. You need a strong plan. Here are the steps to follow:
1. Do an Environmental Check
Before you ask for funding, show how your work will cut emissions or save natural resources. Investors and lenders look for real results.
2. Write a Green Business Plan
Your plan should show how your project will make money. Include ideas like using solar, cutting waste, and helping local people.
3. Meet Green Standards
Certifications like ISO 14001 (Environmental Management) or a Green Building Council certificate make your funding request stronger.
4. Work with Others
Partner with local councils, NGOs, or private companies. This can open doors for more financial options and joint projects.
