Over the past few years, sustainability has become an issue at the forefront of the financial sector. Efforts to tackle the climate crisis, mitigate risks and respond to consumer demands have led to the birth of new economic dimensions including ESG investing, socially responsible investing (SRI) and impact investing.
Financial players and individuals alike are becoming more involved in sustainable finance today, and the current trend clearly shows that despite the general slowdown experienced in 2022, sustainable investment regained its momentum in 2023.
In the same vein, the evolution of ESG in Mauritius is dependent on and shaped by a combination of global trends, regional priorities, and local initiatives. In this respect, Mauritius has embarked on an ambitious journey by taking some bold initiatives, in reducing the country’s greenhouse gas emissions by 40% by 2030. This is in line with its national determined contributions (NDCs) under the 2015 Paris Agreement. Mauritius thus requires funding to the tune of USD 6.5 billion for meeting the NDCs. The government and domestic private sector will fund up to 35% of that amount while the remaining 65% (USD 4.3 billion) will be financed externally.
In the banking sector, for instance, Mauritius has embraced the Equator Principles. The Government of Mauritius and regulatory bodies have thus laid a robust foundation to cater for the issuance of green bonds and to better identify the risks and opportunities arising from the transition to a low-carbon and more circular economy. Likewise, the Stock Exchange of Mauritius launched the Stock Exchange of Mauritius Sustainability Index (SEMSI) in 2015 which outlines the ESG reporting requirements for listed companies. It is noteworthy that this paved the way towards the launch of the first green bond in 2022.
Additionally, to create the right infrastructure for private sector investment in sustainable finance, the Bank of Mauritius published a guide on the issuance of sustainable bonds in June 2021. The objective is to ensure the integrity of the sustainable financing ecosystem in Mauritius and preventing greenwashing. Subsequently, a guide recommending that bonds be aligned with global benchmarks and standards such as the Green Bond Principles of the International Capital Market Association and the International Climate Bonds Standards of the Climate Bonds initiative, was established.
As the future outlook for ESG initiatives in Mauritius unfolds, there is definitely a need for an increased regulatory oversight by strengthening regulations and policies to promote ESG best practices, as well as pushing for enhanced transparency, and compliance. As a result of the recent developments, investment in climate-resilient infrastructure, renewable energy, and adaptation measures are on the rise. The Government of Mauritius and the private sector are both aggressively pursuing eco-friendly initiatives and certifications such as the Green Key or Green Globe.
On the same wavelength, Mauritius may witness an increased use of innovative technologies to address ESG related challenges, such as AI-powered data analytics and IoT applications for resource management.
To that end, Mauritius-based CARE Ratings (Africa) Private Limited (CRAF) is signing an MOU with the Africa Union’s Africa Peer Review Mechanism (APRM) to establish the first ever Africa Credit Rating Agency. This credit rating will include a significant ESG component and thus, will enable an Africa–centric assessment of investment projects.
This will notably strengthen the image of the Mauritius International Financial Centre (Mauritius IFC) as the key investment platform for Africa and will eventually help to bridge the finance gap estimated at USD 2.3 trillion of impact investment by 2030.
