The Eastern and Southern African Trade and Development Bank (TDB) is pioneering a new frontier in sustainable finance with the introduction of its Green+ Class C shares. Launched in 2022 at the COP27 summit, the TDB Green+ Class C Shares are gaining ground as a groundbreaking equity instrument designed to channel capital into climate action projects across Africa. The African Development Bank (AfDB) became the first investor, committing $15 million to the initiative, signaling a strong endorsement of TDB’s innovative approach.
In 2024, a further equity investment of USD 15 million in TDB’s pioneering Class C Green+ shares to support clean technology and low carbon projects in its member states was sourced from the Clean Technology Fund (CTF), which will also support the establishment of a project preparation facility to boost investment in clean technologies. The CTF, part of the Climate Investment Funds, provides resources to developing countries to scale up low-carbon technologies with significant potential for long-term greenhouse gas emissions savings.
TDB Green+ Class C Shares: Structure and Purpose
The Green+ Class C shares are thematically aligned with the Sustainable Development Goals (SDGs) and the Paris Agreement on Climate Change. They enable TDB to leverage each dollar invested up to four times, funneling capital into both public and private sector projects that are climate and SDG-aligned. This leveraging effect is pivotal, amplifying the impact of each investment by multiplying the financial resources available for qualifying projects.
TDB\’s innovative approach builds on the success of its previous Class B shares, which were designed to attract institutional investors such as pension funds and sovereign wealth funds. The Green+ Class C shares, however, go a step further by focusing specifically on climate finance, making them an attractive option for impact investors looking to contribute to Africa’s green growth.
While these shares do not come with direct voting rights, Green+ Class C shareholders receive senior priority over Classes A and B in the event of a liquidation.
TDB Green+ Class C Shares: Financial Impact
The introduction of the Green+ Class C shares is expected to significantly bolster TDB’s capital position, enabling it to scale up its impact across its 25 member states. The bank’s capital structure has already been diversified over the past decade, allowing TDB to mobilize debt capital on increasingly favorable terms and achieve investment-grade ratings. The new shares are senior in nature, offering shareholders annual dividends similar to those of Class B shares, while also contributing to long-term climate resilience and sustainable development in the region.
TDB Green+ Class C Shares: Strategic Partnerships and Future Prospects
To address the challenge of insufficient bankable green projects, TDB has established a Project Preparation Facility in collaboration with FSD Africa. This facility aims to provide the necessary technical assistance to bring more projects to financial closure, thereby ensuring a steady stream of opportunities for investment through the Green+ Class C shares.
Looking ahead, TDB’s Green+ Class C shares are poised to become a model for other financial institutions aiming to align their investment strategies with global climate goals. By optimizing the use of concessional funding and leveraging private sector resources, TDB is setting a precedent for how innovative financial instruments can drive sustainable development in Africa.
Conclusion
The launch of Green+ Class C shares marks a significant milestone for TDB and the broader African financial landscape. As TDB continues to mobilize capital for climate action, these shares offer a unique opportunity for investors to earn competitive returns while contributing to the continent’s sustainable development goals.
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For more detailed financial data and annual reports on TDB’s performance and impact, visit their official site.
