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SUSTAIN-Africa gains traction on environmental, social and governance criteria for the banking sector in Tanzania

Starting in 2014, SUSTAIN-Africa was created to implement climate-resilient landscape development in Tanzania and Mozambique to catalyse the transition from business-as-usual to sustainable growth. Inclusive governance is central to SUSTAIN and efforts to empower local governance structures helped bring local processes and multi-stakeholder dialogues together to guide improvements in water quality and availability, positive impacts on land-use management practices and sustainable income generation for local communities.

As the first phase of the initiative ended in December 2019, emerging results in governance, integrated natural resources management, and business and investment are contributing to sustainable landscape development. Learning from the first five years together with national and landscape-level dialogues are helping to shape a second phase of SUSTAIN, currently under development.

Inclusive, green growth in Tanzania

Recently, Tanzania has seen an average annual growth of over 6% annually. However much of this growth has led to depletion of its natural resources. As part of the SUSTAIN programme IUCN NL, as one of the implementation partners, has worked to ensure inclusive, green growth in the Southern Agricultural Growth Corridor of Tanzania (SAGCOT). Inspired by similar events across the continent, most particular in neighbouring Kenya, SUSTAIN gained support from key financial sector actors to collaborate on the adoption and implementation of the Tanzania Sustainable Finance Principles.

CEO dialogue on sustainability principles for the banking sector

As part of the programme IUCN NL together with the Association of Investors for Sustainable Development (VBDO) organized a CEO dialogue, and developed draft principles for the banking sector that ensure that environmental, social and governance (ESG) criteria are followed in every project they fund. Today, this work has led to a commitment by the CEOrt- a forum through which industry leaders within the Tanzanian private sector could constructively engage with other stakeholders – members from the financial sector as well as the Tanzania Banking Association to collaborate in this process of adoption and implementation of national principles.

Next steps in the process include the revision of the principles (currently underway), the establishment of a steering group to implement the process of adoption of the principles and develop an implementation plan, and fundraising to support the continuation of the process.

Most important issues in Tanzania are related to climate change and water scarcity, especially affecting the agricultural sector. While agricultural lending represents the majority of lending in Tanzania, there are currently no standards that address non-financial risks such as related to ESG factors. If these investors were to set clear criteria on how their investments impact nature, this would hugely stimulate the green and inclusive development of SAGCOT.

Embedding this within the core business processes of financial institutions is not easy, but by crafting together with input from the Tanzania financial sector the Tanzania Banking principles VBDO has laid important groundwork into better application of ESG criteria. Whether it is a small scale farming project or a much larger infrastructural development the principles help financial institutions look at what material risks to their investment are relevant while at the same time ensure that impact on nature is limited.

The SUSTAIN Partnership is composed of IUCN, the IUCN National Committee of the  Netherlands (IUCN NL), the African Wildlife Foundation, SNV Netherlands Development Organisation, and Ajuda de Desenvolvimento de Povo para Povo (ADPP Mozambique), with the Micaia Foundation. SUSTAIN also has several strategic partners in each country, including the SAGCOT secretariat and the Vice President’s Office in Tanzania as well as Zambezi Valley Development Agency (ADVZ) and the Ministry of Land, Environment and Rural Development (MITADER) in Mozambique. SUSTAIN was made possible due to the generous financial support from the Ministry of Foreign Affairs of the Kingdom of the Netherlands.