After extensive engagement with shareholder activism organisations Just Share and Aeon Investment Management, financial services firm Standard Bank has agreed to the wording of a shareholder-proposed nonbinding, advisory resolution that Standard Bank, over a three-year timeframe, provides shareholders with increasingly detailed information about its financed emissions from oil and gas.
Financed emissions are the greenhouse-gas (GHG) emissions that banks and investors finance through their loans and investments. The resolution has been tabled for voting ahead of the bank’s May 31 annual general meeting (AGM).
The resolution also requests that Standard Bank, by March 31, 2025, update its March 2022 Climate Policy to include short-, medium-, and long-term targets for reducing these financed emissions, on a timeline aligned with the Paris Agreement goal of limiting the global temperature increase to 1.5 °C above pre-industrial levels.
Having analysed Standard Bank's March 2022 Climate Policy, Just Share and Aeon noted that it did not contain any short-term or medium-term targets for a reduction in the financial services provider's exposure to oil and gas.
In relation to long-term targets, the Climate Policy does not envisage any reduction in absolute financed emissions from oil and gas until 2040 at the earliest, the organisations noted.
Then, in March, Just Share and Aeon shared a draft resolution with the bank, asking that it update the 2022 Climate Policy by March 2023 to set short-term and medium-term absolute contraction targets for the bank’s GHG emissions from its exposure to oil and gas, which are targets that reduce the physical amount of GHG emitted into the atmosphere over time, as required by climate science.
Following further engagement, which included the bank’s views regarding feasible timeframes for obtaining financed GHG emissions data from its clients, Just Share, Aeon, Abax Investments, Visio Fund Management and the bank agreed on the wording for a resolution, which was formally filed on March 29.
“Just Share and Aeon look forward to high levels of shareholder support for the nonbinding advisory resolution at Standard Bank’s May 31 AGM. Shareholders should be particularly concerned about Standard Bank’s plans to increase its financing to oil and gas, and its continued assertions, in the face of a significant and growing body of evidence to the contrary, that fossil fuels will likely remain key to ensuring energy security in many African regions,” the organisations stated.
Climate science demonstrates that keeping the global average temperature increase to 1.5°C is essential to limit the worst impacts of global heating. This is only possible with immediate, rapid, and large-scale reductions in GHG emissions, Just Share said.
“Rapid and extensive scaling up of renewable energy generation is the most cost-optimal energy pathway for Africa and presents significant economic benefits and opportunities,” the shareholder activist organisation said.
A recent study by the International Institute for Sustainable Development (IISD), titled 'Gas Pressure: Exploring the case for gas-fired power in South Africa', points out that rapid declines in the cost of renewable energy and battery storage technology have upended the view that gas is a necessary “transition fuel” in the shift away from coal power.
The IISD finds that expanding gas use would be a “very expensive mistake”, and that renewables and storage should be the priority until at least 2030.
Just Share said there was a wealth of independent evidence demonstrating that gas is not clean nor climate or environment-friendly. Gas will not bring economic prosperity or poverty alleviation and the power sector does not require significant quantities of gas for energy security, it stated.