“Rating agencies certify that green funds are being channelled towards their intended objectives”

During the API Conference held in Mauritius in 2023, industry leaders gathered to discuss the role of rating agencies in the dynamic real estate sector and sustainable financing. Saurav Chatterjee, Chief Executive of Care Edge Ratings Africa, was invited to share his insights on this topic.

Saurav Chatterjee highlighted the significant progress made by Mauritius in sustainable financing over the past few years. He mentioned that the Financial Services Commission (FSC) introduced guidelines in December 2021, focusing on green financing and the issuance  of green bonds. These guidelines clearly define the asset classes that qualify as ‘green’ and outline the principles that need to be followed.

The development of sustainable financing in Mauritius has paved the way for banks to offer financing at significantly lower rates compared to the Prime Lending Rate (PLR). This has resulted in a surge of green financing activities within the high-density areas of the country.

Rating agencies, according to Saurav Chatterjee, play a crucial role in this landscape, as they are guided by regulators. The FSC’s green bond guideline emphasizes the importance of pre-issuance reports and SPO (Second Party Opinion) reporting, which must adhere to the principles set by the International Capital Market Association (ICMA). Additionally, he mentioned that the Bank of Mauritius has recently issued climate change guidelines for the banking and financial services sectors. Moreover, Mauritius has introduced its own national sustainable finance framework, incorporating the use of financing proceeds and sustainability-related financing that aligns with rigorous Environmental, Social, and Governance (ESG) norms and standards recommended by ICMA and the Loon Market  Association.

These frameworks and guidelines provide a strong foundation for the jurisdiction, and instil confidence among investors, particularly Development Finance Institutions (DFIs), who seek clarity and assurance when considering investments.

Saurav Chatterjee also emphasized the crucial role of policy, technology, and financing in fostering jurisdictional development. He stressed the need for policy formulation at the national level, followed by effective implementation throughout organizations and at individual levels. Technology plays a vital role in streamlining administrative processes, while financing acts as the key catalyst for growth and development.

In terms of ESG analysis and green bond investments, Saurav Chatterjee explained that rating agencies play an important role in certifying that funds are being channelled towards their intended objectives. This certification provides reassurance to investors that their investments are aligned with sustainable principles.

Saurav Chatterjee commended the organizers of the African Property Investment conference for creating a collaborative platform for various stakeholders in Mauritius’ real estate sector to come together and discuss critical aspects of sustainable financing.