‘Why shareholders should vote FOR South Africa’s first shareholder resolution calling for climate risk disclosure’ 7 May 2019

At Standard Bank’s AGM on 30 May, shareholders will vote on a resolution proposed by the RAITH Foundation and Theo Botha, with support from Just Share. This is the first climate risk-related shareholder resolution to be tabled in South Africa… The board of Standard Bank has recommended that shareholders vote against both parts of Resolution 10. The RAITH Foundation, Botha and Just Share have prepared a memorandum for Standard Bank’s shareholders which provides further context to the resolution, responds to the board’s “reasons for non-endorsement” of the resolution, and gives further reasons for voting in favour of it.

Banks’ financing choices have a major role to play in promoting carbon reduction. Bank lending and investments make up a significant source of external capital for carbon intensive industries. Every rand invested by South African banks in new fossil fuels increases climate risk, renders it harder to achieve a just transition to a low-carbon economy, and exposes the banks to reputational and financial risks. Shareholders should be able to assess the extent to which Standard Bank is exposed to climate risk by virtue of its lending, investment and financing activities. However, the information currently disclosed by the company is insufficient to enable shareholders to adequately assess these risks.

…Climate risks “are a function of cumulative emissions”, in other words, the longer we leave it to act, the more costly will be the adjustment we have to make. Financial institutions will put both their businesses and shareholder capital at risk if they fail to grasp the pace of change that is required in order to move to a low carbon economy. Voting in favour of Resolution 10 will not only provide Standard Bank’s shareholders with much more meaningful information on climate risk than is currently disclosed by any South African financial institution; it will also mean that shareholders will set a precedent which will dramatically accelerate the pace at which South African companies consider, manage and report on climate change-related risk.