Standard Bank of South Africa (SBK) says it will launch a $1bn fund to promote the country’s transition to renewable energy.

The bank will work on the project with Stanlib, its asset management subsidiary, and Liberty, its property company.

Kenny Fihla, the chief executive of Standard Bank’s corporate and investment banking unit, said the company would invest an initial $107m, Liberty would provide an additional $54m and Stanlib would manage the fund.

He said this seeding from SBK and Liberty will offer “scale and diversity from the first day it is launched to the institutional market”.

He added: “We believe the fund will be well received, as it will offer compelling risk-adjusted and smoothed returns with a predictable income stream.”

Standard launched its climate policy in March 2022, with a target of raising up to $16bn for sustainable energy projects by the end of 2026.

In 2022, the bank said it exceeded its goal by executing 29 sustainable finance transactions with a total value of $2.9bn.

The fund is being launched at a time when South Africa is seeking to reduce its dependence on coal for electricity generation. Coal accounts for 45.6GW of South Africa’s 58.7GW installed capacity. As a result, it emitted 430 million tonnes of carbon dioxide in 2021, making it the world’s 14th biggest carbon emitter.