The development of sustainability debt capital markets in South Africa : an analysis through Roger's diffusion of innovation theory

Abstract

South Africa is a signatory to the global initiatives that are aimed at addressing climate change and has committed to transitioning the economy away from a dependence on fossil fuels. The United Nations sustainable development goals have inspired innovation in financial markets. The research was undertaken to understand the current state of financial innovation and the factors that catalyse its diffusion in the context of South African financial markets. The chosen research methodology was qualitative for a deductive analysis approach, and semi-structured interviews were conducted with a non-probability sample of relevant industry professionals. The results are representative of a cross-sectional time horizon. The debt and loan capital markets of South Africa have created two new financing mechanisms that are aimed at giving effect to the country’s nationally determined contribution. The research reveals that the infrastructure to support the development and diffusion of sustainability debt capital market instruments is in the early stages of development and is driven at the governmental level in collaboration with industry stakeholders. Commercial banks dominate the nascent sustainability social system through significant resource advantages, access to data and information and distribution networks.