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Johannesburg Stock Exchange:

Introduction of Sustainability-Linked Debt Securities and Transition Debt Securities

12 October 2021


The South African Financial Sector Conduct Authority published on 23 September 2021 for public comment a proposed amendment by the Johannesburg Stock Exchange (JSE) of its listing rules to provide for the introduction of sustainability-linked debt securities and transition debt securities. The consultation procedure has in the meantime ended.


According to the JSE, sustainability-linked debt securities are forward-looking performance-based debt securities for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined sustainability and/or ESG objectives pursuant to sustainability-linked standards. The JSE’s rules already provide for “sustainability instruments” where the proceeds are used for sustainable activities or projects. However, these will be renamed to “sustainability use of proceeds debt securities” to align with its sustainability objectives.

The purpose of transition debt securities is to raise funds for climate transition-related purposes. The transition debt securities can take the forms of either sustainability use of proceeds debt securities or sustainability- linked debt securities.

The JSE observes that the inclusion of sustainability-linked debt securities will both broaden the investors’ choice as well as offer applicant issuers the ability to increase their participation in the broader impact and sustainability markets. These securities will enable issuers to be rewarded for improvement on specific ESG metrics even though they do not have a specific project to allocate the proceeds raised. The listing rules make in this respect reference to:

  • the Sustainability-Linked Bond Principles prepared and issued by ICMA; and
  • the Guidelines for Green, Social, Sustainability and Sustainability-Linked Bonds External Reviews prepared and issued by ICMA.

The transition debt securities will enable issuers to raise capital to enable their transition strategy and commitments with respect to decarbonisation. They considered as a key enablement tool towards a carbon free economy and alignment with the Paris Agreement. The Climate Transition Finance Handbook prepared and issued by ICMA is used as a reference guide for these debt instruments. 

New market segments

The JSE will furthermore establish two new segments to accommodate these debt securities:

  • a Sustainability Segment comprising sustainability use of proceeds debt securities and sustainability- linked debt securities; and
  • a Transition Segment comprising transition debt securities.


The inclusion of the new debt securities classes and their respective market segments is an important addition to the range of securities that can be listed on the JSE. The creation of rules that apply to these instruments, and in particular their sustainability features, will ensure that they meet international sustainability standards and reduce the risk of “greenwashing”. Both the sustainability-linked debt securities and transition debt securities could be an interesting source of funding for South Africa’s industrial, agricultural and energy sectors. Given the current focus of local and international investors on sustainability, it is likely that the inclusion of sustainability criteria in the conditions of debt securities will become a requirement rather than an option. 


Portrait ofPieter van Welzen
Pieter van Welzen
Senior Consultant
Portrait ofBridgett Majola
Bridgett Majola