DFCD supports Société Générale Madagascar in a first of its kind Sustainability Bond

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Unique ecosystems at risk

Madagascar faces significant environmental challenges due to its unique biodiversity and fragile ecosystems. Approximately 95% of its reptiles, 89% of its plant life, and 92% of its mammals exist nowhere else on Earth. Deforestation, soil erosion and desertification from unsustainable farming practices and illegal logging degrade the Malagasy landscape, while overfishing and coral reef destruction harm its marine life. Climate change worsens these issues with more frequent droughts and unpredictable weather, affecting both the environment and local communities. Innovative finance solutions are crucial in addressing Madagascar’s environmental challenges, by providing sustainable funding for conservation, restoration, and climate resilience efforts.

An innovative financial solution

SGM, part of the Société Générale group, is in a phase of acquisition by BRED-Banque Populaire since the inception of the Sustainability Bond (the press release can be viewed here). SGM has been operating in Madagascar for 25 years and has issued a first of its kind Sustainability Bond which is designed to (re)finance renewable energy projects, SMEs, and Microfinance initiatives in Madagascar, marking a significant stride in supporting sustainable development in Madagascar. This issuance will not only be a first for SGM but also for Madagascar and the Indian Ocean community, setting a sustainability precedent in the region.

This senior unsecured bond, equivalent to USD 38 million in Malagasy Ariary, has a three-year maturity. Anchor investors include the International Finance Corporation (IFC), Dutch Development Bank (FMO) through its Massif Fund, and Proparco, while domestic investors like insurance companies and pension funds have also shown interest, highlighting strong local support for the project.

Working with DFCD

SGM will put a grant of EUR 167,000 from the DFCD towards strengthening and derisking this deal. The origination project focuses on two key areas to support this deal:

1. Strengthening capacity for ESG

2. Green pipeline development

In addition to these two key areas of support from the Origination Facility, WWF Madagascar will be working directly with SGM to support best practice knowledge sharing and regional upscaling of similar instruments. Moreover, WWF Madagascar will work together with SGM to source green pipeline projects and promote climate adaptation throughout.

Forecasted Impact:

Through their Sustainable and Positive Impact Bond Framework, SGM will create impact through:

• Mitigation: avoided GHG – 80 KTCO2eq/ year
• Employment and financial inclusion: 120 direct jobs, 918 indirect jobs created

“We are very excited that DFCD supports SGM in this pioneering sustainability bond in Madagascar. We believe that this will pave the way for Banks to issue more sustainable financial products in the country. This will further complement the financial offers of DFCD by providing relevant financing to sustainable projects for local SMEs.” Santatra Razafindratsimba, Business Engagement Senior Officer & South West Indian Ocean program Blue Finance Lead, WWF-Madagascar.

“We are proud and honoured to be accompanied by DFCD on our inaugural sustainability bond as the first Financial Institution to receive this support on this innovative climate instrument. We are proud of our sustainability journey and of what we achieved so far. With the support of DFCD and other partners we are ready to tackle the challenge of climate change with responsibility, for the benefits of future generation and for nature.”

Dimbiniaina Rakotojoelimaria, Structured Finance Officer, Société Générale Madagasikara

Contact

For more information, contact Gillian Trollope, WWF’s Bankable Regional Advisor for Africa, at gtrollope@wwf.nl.

In case you have any grievances in relation to this project of the DFCD’s Origination Facility, please contact us through our service desk at servicedesk@wwf.nl.

About Société Générale Madagascar

Combining financial strength and sustainable growth strategy, Société Générale Madagascar supports all categories of customers: Corporate, SMEs/SMIs, individual and wealth management customers as well as professionals and institutional investors, with the ambition of building a better, more sustainable future by providing responsible and innovative financial solutions.

About DFCD

The Dutch Fund for Climate and Development (DFCD) is a climate resilience fund, dedicated to supporting climate adaptation and mitigation projects which benefit vulnerable communities and landscapes. Initially funded by the Dutch government, it is powered by a consortium of four expert organisations: FMO (Dutch Entrepreneurial Development Bank), CFM (Climate Fund Managers), SNV, a global development partner, and WWF Netherlands.