- Standard Bank aims to achieve net-zero emissions from its operations by 2040, according to its newly published climate policy.
- The group will increase its financing of renewable energy and has made explicit intentions not to finance new coal power plants.
- The group will mobilise between R250 billion and R300 billion for sustainable finance by the end of 2026.
The Standard Bank Group has committed not to finance new coal-fired power plants and intends to bolster its support of renewable energy projects across Africa.
The group on Wednesday released its climate policy. It sets out the group's short-, medium-, and long-term targets - geared at reducing its carbon emissions and increasing its sustainable finance commitments.
The group aims to achieve net-zero carbon emissions from its operations by 2040 and that of its finance portfolio by 2050.
In a briefing with journalists, Group CEO Sim Tshabalala said the publishing of the climate strategy is a "very important occasion in the group's history". He highlighted that while Africa had not made a significant contribution to global warming, by some "cruel irony", it is most vulnerable to the effects of climate change. Tshabalala said that the group is determined to "do what is right" for the continent.
Standard Bank aims to mobilise between R250 billion and R300 billion in sustainable finance by the end of 2025. Of this, R50 billion is targeted at renewable energy. An additional R15 billion will be underwritten for renewable energy by the end of 2024.
Kenny Fihla, chief executive of corporate and investment banking, explained the funding would be raised as capital from markets via the issuance of green bonds and deposits. "We will tap into all available sources, including our existing sources," he said.
Tshabalala explained that sustainable finance would be mainstreamed - and included on Standard Bank's balance sheet. "It's normal day-to-day business for Standard Bank," he added.
He added that limiting greenhouse gas emissions must be considered in the context of the continent's just transition. There is an energy deficit across African economies - less than 50% of people in sub-Saharan Africa have access to grid electricity, he said.
In light of the World Bank's encouragement of continued investment in brown activities - which are seen to increase carbon emissions - to support the continent's recovery from the pandemic, Standard Bank remains open to supporting "brown" mining and energy projects.
Tshabalala however emphasised that financing for these purposes will be made available in "tightly defined circumstances".
As part of the long-term goal for its portfolio to be net-zero by 2050 - the group will scale up financing of renewable energy, reforestation, climate-smart agriculture, decarbonisation, and transition technologies that have been proven.
Its policy indicates it will limit the exposure of group loans for thermal coal from 0.70% in 2021 to 0.50% by 2030.
The group will not finance the construction of new coal-fired power plants or expand the generating capacity of existing plants. Fihla noted the group had not financed new coal-fired power stations since 2009.
Fihla explained that Standard Bank previously had a policy for coal-fired power stations to be financed under certain conditions. "Those conditions were not met by some of the projects that came on stream, and consequently, we did not finance any of the subsequent developments that took place post the adoption of that policy," he said.
Standard Bank has decided to remove conditions for financing coal-fired power stations entirely. "We are making a very explicit decision about our intention not to finance coal-fired power stations…," he said.
The group will also reduce its financing to power sector clients that generate power mainly from coal.
Standard Bank will still finance new coal mines, but this is limited to the southern Africa region - and only when there is an "overall positive" environmental impact. For example, the group would consider financing coal mines closely located to coal-fired power stations - if it would eliminate emissions from trucking coal over long distances, Fihla explained.
The group is open to converting existing coal-fired power stations and oil plants to gas plants with the aim to support the energy transition.
The bank is committed to developing a finance product that can support the use of gas, specifically for aiding the energy transition on the continent, according to its policy. For example, the bank will finance the construction of gas power plants if they provide support for renewable energy.
It will also hold back on financing upstream oil, limiting advances by 5% by 2030. Standard Bank will similarly reduce finance to power sector clients that generate power mainly from oil.
The group will not fund fracking.
Standard Bank will not finance new oil-fired power plants or the expansion of existing plants - unless these plants provide support services for renewable energy.
Standard Bank further shared that it will not finance deforestation, except where this may have a positive impact - such as making farmland available for grazing and crops. Nor will it finance unsustainable fishing methods.
It aims to promote sustainable agricultural practices by providing lending products for these purposes.
The policy will be reviewed as technologies and climate science change, explained Wendy Dobson, head of group corporate citizenship.