‘Update: South African banks and climate change’ 8 April 2020

While the world’s immediate priorities have understandably shifted to focus on the COVID-19 pandemic, the risks posed by climate change remain unaltered. The coronavirus is showing us the importance of early action in tackling global threats, and it is crucial that we do not emerge from this crisis to find that we are in an even worse position to tackle climate change. Last week, there were three significant developments at South African banks in relation to the disclosure and management of climate change risks.

…Investec Bank has published a group fossil fuel policy, as well as a “key messaging” document relating to the policy. The policy “covers coal-fired power generation, coal mining, and oil and gas” in all of Investec’s operations, making it the first fossil fuel financing policy to be published by a South African bank. The policy states that Investec “support[s] the Paris Agreement’s aim of holding the increase in the global average temperature to well below 2°C above pre-industrial levels and of pursuing efforts towards limiting it to 1.5°C. We also recognise the urgency and need to accelerate action which has been incorporated into our approach.” The bank states that it “will apply prudent due diligence to all fossil fuel activities and require senior decision-making approval”. The policy will be reviewed annually...In its Notice of Annual General Meeting released on 1 April 2020, Absa has voluntarily included a “Non-binding advisory vote on climate change risk and opportunity disclosure” (page 9, vote 3), which reads as follows: 

“Resolved that the Company, in its integrated report next year, provide shareholders with an assessment of its exposure to climate change risk in its lending and financing portfolios, and of the opportunities to finance climate change mitigation and adaption, including:
a) the quantum of its loans to carbon-related assets and the percentage to total loans;
b) a description of any significant credit concentration to carbon-related assets and how it manages the associated risks; and
c) its financing of climate-related opportunities.”