Industry and economy
Kyle Durham, FNB Head of Sustainability
For years, sustainability has been defined by ambition, measured in targets set, frameworks adopted and commitments announced. That era is giving way to something more practical and consequential.
Today, sustainability is increasingly judged by its business, environmental and social impact, and by how effectively it shapes risk management, capital allocation and competitiveness.
This shift is reflected in South Africa's operating environment. The Climate Change Act was formally proclaimed in March 2025, and the 2026 National Budget allocated more than R1 trillion in public infrastructure spending over the medium term, including R27.7 billion for metropolitan water and electricity reform.
Performance linked utility models for municipalities and the expansion of the carbon tax framework point to a clear direction of travel: sustainability considerations are becoming embedded in the economic system. Businesses that act early and decisively will be better positioned to adapt and compete.
The water crisis facing South Africa illustrates the types of decisions businesses now face, and the importance of moving beyond high level commitments to practical solutions. Agriculture accounts for approximately 61% of South Africa's annual water use, and increasing scarcity driven by climate change, population growth and ageing infrastructure managed by Government poses a direct threat to productivity, food security and business continuity.
For FNB, which has a significant portion of its commercial exposure in the agricultural sector, this represents a material risk that requires a precise response. A large share of agricultural lending is concentrated in high value crops where yield losses of 35-45% are projected under worsening water stress scenarios in which farmers do not invest in irrigation efficiency improvements and where public investment in water infrastructure does not materialise. In these scenarios, declining water availability translates directly into heightened production volatility, weaker borrower cash flows, and increased balance sheet risk.
Working with DEG Impulse, FNB modelled water availability risk across thirteen priority catchments under multiple climate scenarios. The results were compelling: investment in drip and subsurface drip irrigation efficiencies could, coupled with water infrastructure development reduce average crop losses from 31% to 1% in favourable scenarios, and to below 8% even under severe climate stress. A second phase of this work is already under way, targeting interventions in a water catchment where, without the required investments, production losses under extreme scenarios could be as high as 30%.
This type of granular, sector specific analysis reflects a broader approach to sustainability - one that starts with understanding the risk, then designing financial solutions that deploy capital where it delivers measurable impact. Through its dedicated sustainable finance capability, FNB Commercial provides funding across nine priority areas, including renewable energy, green buildings, climate smart agriculture, clean transport and sustainable water management. In the 2025 financial year, the bank originated R1.17 billion in new green and transition aligned advances supporting both climate mitigation and adaptation.
Importantly, the mix of sustainable investments is diversifying. Non solar sustainable finance solutions grew from 8% to 25% of total sustainable finance payouts in FY2025, indicating a maturing market where businesses are investing in electric vehicles, water capture and storage, and climate resilient production alongside renewable energy.
Commercial clients realised an estimated R120.6 million in utility cost savings from renewable energy installations in the same period. When sustainability initiatives are carefully structured, they are delivering tangible financial returns.
For businesses where upfront capital remains a constraint, alternative models are playing a growing role. FNB Energy Solutions, launched in October 2024, offers renewable energy as a service through power purchase agreements. Under this model, FNB retains ownership of the energy infrastructure and sells electricity directly to clients, removing the need for capital outlay while improving cost certainty and energy security.
Designed for businesses with electricity spend of R200 000 or more per month, the solution is delivered in partnership with specialist providers including ACES Africa, Nuvo Energy, Rhino Energy Solutions and RenEnergy. It demonstrates how financial innovation can accelerate adoption and translate sustainability goals into real-world outcomes.
The era of well intentioned sustainability ambition is being replaced by a sharper focus on execution and outcomes.
For South African businesses, the challenge is no longer whether sustainability matters, but how to finance and implement initiatives that deliver measurable environmental and financial returns.
FNB's approach, grounded in data, translated into practical financial solutions and delivered at scale — is designed to help businesses move confidently from intention to impact.
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