Activist group lauds Nedbank for best climate commitment by an SA bank


Nedbank kicked off a busy week for climate change with what has been described as the most ambitious climate commitment among South Africa’s top banks. The announcement coincides with Earth Day 2021 – when the globe takes stock of its collective commitment to saving the planet from irreversible destruction. 

In contrast to other major banks’ climate policies, Nedbank’s new policies on energy and climate change target zero fossil fuel exposure by 2045. 

The policies outline that without urgent, unprecedented action and co-operation from all stakeholders, future prospects for economic development, political stability and societal wellbeing are expected to deteriorate in Africa. 

“Failure to address climate change will commit the African continent to a much more challenging and less prosperous future, since Africa is both highly exposed to the physical impacts and often lacks capacity to respond to those impacts,” the Nedbank’s climate policy states. 

Nedbank aims to be at the forefront of managing climate change risks and financing innovative solutions in ways that are sensitive and flexible to the contexts and markets in which it operates, while being guided by the overarching ambition of achieving net zero fossil fuel exposure by 2050. 

“Nedbank will use the carbon budget construct to develop science-based targets and glide paths that will inform relevant sectoral policies, thereby allowing the bank to help clients across all sectors – and society more broadly – to realise a net-zero economy by 2050. Since most physical capital (for example power plants, industrial facilities, buildings, transportation infrastructure) implicated in greenhouse gas emissions is long lived, the timing of the shift in investments and strategies will be crucial to avoiding a disorderly transition,” the policy states. 

In addition to excluding funding to coal-fired power, Nedbank’s energy policy excludes:

Shareholder activist organisation Just Share was first to react to the news. The organisation welcomed Nedbank’s commitments as an example of what other banks should be doing, adding that the move gives impetus to other financial institutions to set meaningful climate science-based decarbonisation targets and fossil fuel financing exclusions. 

“The energy policy does not rely on the outdated, misleading narratives put forward by some other banks, that growth in fossil fuels is required for energy security, development, and poverty alleviation in Africa. In stark contrast, Nedbank’s energy policy recognises the need to increase efforts to finance non-fossil energy solutions needed to support socioeconomic development and build resilience to climate change. Crucially, the climate statement notes that the just transition is not a trade-off versus climate action; its achievement is inextricably linked to avoiding dangerous climate change,” Just Share said. 

What about other institutions?

While Nedbank’s policy has been welcomed, other major banks operating in the country are yet to truly align with warnings in climate science.

UK investigative media outlet, DeSmog, spotlighted Standard Bank in an analysis on climate-conflicted directors of the world’s biggest banks. DeSmog’s analysis found that 65% of directors from 39 banks had 940 past or current connections to industries that could be considered climate-conflicted. 

In June 2020, Just Share pointed out that seven of Standard Bank’s 18 board members were conflicted on climate change-related matters by virtue of their ties to the fossil fuel industry. These ties came to light when Standard Bank refused to table a shareholder-proposed climate resolution

According to the organisation, at the time of its refusal to table the 2020 resolution, two of Standard Bank’s independent non-executive directors also sat on the board of Sasol (one of South Africa’s biggest emitters). 

Shortly thereafter, another of Standard Bank’s independent non-executive directors was appointed to a senior executive role at Sasol. In March this year  Climate Action 100+, one of the world’s largest investor engagement initiatives, issued its first net-zero company benchmark of the world’s biggest corporate emitters, including Sasol and Eskom

It found that Sasol’s current greenhouse gas emission reduction target is not aligned with the goals of the Paris Agreement, contrary to Sasol’s claims that it is. Sasol has meanwhile committed to defining a 2050 reduction ambition and roadmap; while committing to allow shareholders a non-binding vote on its climate plans at its November 2021 AGM. 

“Board members with a conflict of interest are obligated – by the Companies Act, 2008 – to declare those interests and to recuse themselves from board meetings during consideration of any matter in relation to which they are conflicted. Such conflicts include not only personal conflicts, but also those with related parties, which include other companies of which the board member is a director. This is not about questioning whether directors are accomplished business people or have integrity: their recusal is a legal requirement,” Just Share said in response to Standard Bank’s regression on climate commitments in 2020. 

In 2020, Absa shareholders agreed to a non-binding resolution that will see this year’s AGM include an assessment of the bank’s climate risks in its lending. 

Tunicia Phillips is an Adamela Trust climate and economic justice reporting fellow, funded by the Open Society Foundation for South Africa.