BURN ignites change with Sh1.5 billion green bond for clean cooking
Clean cookstove maker BURN Manufacturing (BURN) has issued Sub-Saharan Africa’s first-ever green bond, aiming to raise US$10 million (just over Kes1.5 billion) for clean cooking initiatives. The bond’s proceeds will enable BURN, a clean stove distributor, to expand its manufacturing capacity in Kenya.
With this injection of funds, BURN anticipates increasing its production from the current 400,000 units per month to 600,000 units, including a range of life-saving biomass, electric, and LPG stoves.
BURN, which is also involved in carbon offset projects, plans to use the fresh capital to establish a new plant in Lagos, Nigeria. Founded in 2011, BURN seeks to save lives and forests by revolutionizing the clean cookstove sector in Africa.
BURN’s stoves have received independent verification from respected institutions such as the University of Pennsylvania and the University of Chicago, along with a comprehensive impact assessment survey conducted by Yunus Social Business.
These assessments have consistently highlighted the significant health, financial, and climate action benefits provided by BURN stoves. The Green Bond’s funds are poised to extend these benefits to an additional two million households in 2024.
Green financing
“Our decision to issue the first green bond to support clean cooking underscores our strong belief in the power of financial innovation to drive positive environmental and social change. Leveraging benefits such as investment communities’ interest in green financing and potential tax advantages to investors, green bonds have gained considerable traction in recent years. BURN is excited to deploy this innovative instrument to catalyze sustainable development” said Peter Scott, CEO, and Founder of BURN.
The issuance of the bond received backing from DRY Associated Limited, serving as the Placement Agent. FSD Africa, a specialized development agency financed by UK International Development, played a pivotal role in offering technical insights on the bond’s structure and providing technical support for the second-party opinion, conducted by Agusto & Co., a prominent Pan-African Credit Rating Agency and Green Bond Verifier.
Commenting on the announcement, Evans Osano, Director, Capital Markets, FSD Africa, said: “We are proud to have supported this landmark issuance, the first-ever green bond to finance clean cooking activities in sub-Saharan Africa. Proceeds from this capital raise will support these households to transition to more sustainable alternatives. These are not only better for the environment but also have health benefits from the reduction of particulate and carbon monoxide emissions which particularly impact women given their greater exposure.”
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Carbon dioxide emissions
Ikechukwu Iheagwam, Regional Director (East Africa) Agusto & Co. said “BURN displayed transparency in its pursuit to reduce greenhouse gas emissions following the very detailed scientific process backed by international standards and robust laboratory testing to ensure that the cookstoves consume less wood and charcoal fuel at ISO/IWA Tier 4 thermal efficiency ratings levels. While this project is expected to have a significant positive environmental impact in terms of tonnes of firewood saved and tonnes of carbon dioxide emissions mitigated for each stove manufactured, the catalytic social, financial, economic and health benefits are quite compelling.”
“The Green Bond programme underscores the opportunities available for fixed-income investments in Kenya to catalyze capital formation, employment, and economic growth. We are attracted to BURN for the leadership team’s focus, green finance acumen and the scale and professionalism of BURN’s manufacturing operation in Kenya. BURN’s export growth story is a stellar example that Kenya can indeed deliver quality to the world” added Reuben Mabishi, Head of Research from Dry Associates Investment Bank.
According to the Africa Energy Outlook 2022 report from the International Energy Agency, the goal of achieving universal access to clean cooking fuels and technologies by 2030 necessitates the annual transition of 130 million individuals worldwide from polluting cooking fuels. The issuance of green bonds emerges as a vital channel for facilitating this transition towards the embrace of cleaner cooking alternatives for communities.
