Standard Bank Group has committed to cease funding any new construction of coal-fired power plants as it targets net-zero by 2050 and mobilises up to R300 billion in sustainable finance. Photo: Supplied
STANDARD Bank Group has committed to cease funding any new construction of coal-fired power plants as it targets net-zero by 2050 and mobilises up to R300 billion in sustainable finance.
The banking group, which is a top oil and gas lender in Africa, announced its commitment target yesterday as it published its climate policy.
The policy outlines Standard Bank’s short-, medium- and long-term targets to reduce its contribution to carbon emissions and accelerate its sustainable finance commitments with a focus on renewable energy projects across Africa.
Standard Bank said it wanted to mobilise up to R300 billion in sustainable finance, potentially including for transition fuels like gas, by the end of 2026 from a targeted R40bn in 2022.
Another commitment the bank made was that it would reduce financing to power sector clients generating power predominantly from coal, from 0.18 percent of total group advances in 2021 to 0.15 percent in 2026 and 0.12 percent from 2030.
“Such clients will be required to provide comprehensive carbon emission reduction strategies in advance of financing. These strategies will be annually reviewed to assess progress against targets and alignment to net-zero by 2050,” Standard Bank said.
The bank said it would support any refurbishment of existing coal-fired power stations that has the specific purpose of improving efficiency and reducing carbon emissions using Carbon Capture, Usage and Storage (CCUS) technology.
“This refurbishment should form part of a clearly defined decarbonisation plan, aligned to net-zero by 2050,” it said.
The bank also committed to achieving net-zero carbon emissions from its own operations by 2040 and from emissions generated by projects that it finances by 2050.
The group will also mobilise a cumulative amount of between R250bn and R300bn for sustainable finance by the end of 2026, it said.
“This target includes R50bn of financing for renewable energy and underwriting of a further R15bn for renewable energy by the end of 2024,” the company said.
Chief executive Sim Tshabalala said: “To achieve our purpose to drive Africa’s growth, our core business activities are being directed towards solving Africa’s development challenges and maximising opportunities for sustainable and inclusive growth, while also managing the risks posed by climate change”.
Standard Bank said it remained open to supporting “brown” energy and mining projects in Africa.
“In our view, a refusal to accept this would amount to denying Africa’s right to sustainable development. Over the past several centuries, Africa has borne very considerable economic and human costs for other regions. A total or immediate ban on further transitional projects in Africa in order to help reduce environmental pressure in much richer regions would be a cost too far,” Tshabalala said.
Other commitments made by the group include not providing financial products and services for fracking. The company said it would not finance “exploration and production of tight oil resources, and pipelines transporting a significant volume of tight oil”.
Maaike Beenes, a campaigner at BankTrack, said the targets that Standard Bank published were not sufficient for it to be in line with the goals of the Paris Agreement (CoP26), and do not live up to the commitments they have made to their shareholders last year.
“Standard Bank said it would set short-, medium-, and long-term targets to reduce its exposure to fossil fuel assets on a timeline aligned with the Paris Goals. They have not done that. They have set a net-zero emissions target for 2050, but there is no overall target to reach zero exposure to fossil fuel companies.
“In addition, the interim targets are not about reducing actual financed emissions, but about reducing the percentage of the bank’s overall lending going to specific fossil fuel subsectors,” Beenes said.
In the past, the company came under fire as it was accused of isolating itself from its peers by continuing to flirt with financing carbon-intensive projects as financial services firms set net-zero targets to combat global warming.
Last month French and Chinese oil companies Total and Cnooc signed the final investment decision to start with a planned 10bn East African Crude Oil Pipeline (EACOP) project.
Standard Bank’s shareholder Industrial and Commercial Bank of China (ICBC) is listed as an adviser. The controversial project aims to tap the oil reserves of poverty-stricken Uganda and transport the fuel more than 1 400km across the East African nation, as well as neighbouring Tanzania, where it will be exported from the port of Tanga.
Beenes said Paris-based International Energy Agency (IEA) had pronounced that no new fossil fuel developments were needed if the world is to succeed in limiting global warming to 1.5ºC, but Standard Bank will continue to finance the expansion of the fossil fuel industry, including the East African Crude Oil Pipeline.
"They also make serious caveats in the policy, for example by using a 50 percent revenue threshold to identify coal mining companies to which financing should be reduced. This is absolutely not sufficient action from them," she said.
dieketseng.maleke@inl.co.za
BUSINESS REPORT ONLINE
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