Mediclinic has refinanced R8.45 billion in loans through Rand Merchant Bank, the hospital operator said on Tuesday, in what the bank described as Africa’s first sustainability-linked banking facility.
Investors and environmentalists have been critical of South African banks for not doing enough to meet sustainability targets and being easy on funding to fossil fuel-based projects.
Under pressure, the top four banks in the country have taken measures such as reducing funding for coal and increasing exposure to renewable and environmentally sustainable projects.
“By achieving pre-agreed sustainability performance targets, Mediclinic Southern Africa will benefit from a reduced facility margin through an incentive-based pricing mechanism,” the country’s third biggest hospital chain operator said.
The targets are directly linked to key group environmental and social goals of progressing to becoming carbon neutral with zero waste to landfill by 2030, it said.
RMB, a division of FirstRand Ltd, said the loan was Africa’s first syndicated sustainability-linked loan arranged by a bank in Africa.
South Africa’s FirstRand, among the country’s top banks, said last week that it would end funding for new coal-fired power stations and coal mines as part of its initiative to reach net-zero emissions by 2050.
It is among the two top banks out of four in the country to have explicitly announced a halt to fossil fuel-based funding.
Nedbank Group said in April that it would stop funding new thermal coal mines by 2025 as it plans to phase out fossil fuel exposure over the next 24 years.