We do not expect the greylisting by the Financial Action Task Force (FATF) to have any effect on any institutions implementing a Green Finance Taxonomy (GFT). The GFT is an important pillar in the comprehensive approach of reducing the carbon intensity of the South African economy. The primary purpose of the GFT is to provide market clarity for green/environmentally sustainable activities, thus reducing market risks. The GFT is a voluntary market tool and was established on 1 April 2022. While the Carbon Tax sets a price for emissions to help businesses fully internalize the costs of their activities, the GFT sets out those projects, investment and assets which are required to reduce the carbon intensity of companies (and thereby reduce their emissions). The GFT adopts international best practice in recognition of the fact that the capital required for investments into ‘green assets’ (as is the case generally) comes from both domestic and international sources.
In any case, as noted in National Treasury’s statement on the FATF greylisting: there are no items on the action plan that relate directly to the preventive measures in respect of South Africa’s financial sector. This reflects the significant progress that South Africa’s financial sector supervisors have made in the application of a risk-based approach to the supervision of banks and insurers. National Treasury therefore expects that the grey-listing will have limited impact on payments, broader financial stability or broader inward investment, including the use of the green finance taxonomy for green investment.