Standard Bank AGM - SA’s first climate risk-related shareholder resolution
Resolution 10 in Standard Bank’s Notice of AGM was proposed by activist shareholders the RAITH Foundation and Theo Botha, with support from responsible investment and shareholder activism NGO Just Share.
If more than 50% of Standard Bank’s shareholders vote for Resolution 10 on 30 May, the bank will have to:
provide shareholders with more meaningful information about the climate-related risks they are exposed to by investing in the bank, through the bank’s lending, investing and financing activities in relation to fossil fuels; and
adopt and publicly disclose a policy on lending to coal-fired power projects and coal mining operations.
Why is it important?
Around the world, shareholder resolutions have become one of the most powerful tools for raising awareness about climate change risk, and for driving the business and financial sectors to take action to understand, mitigate and avoid that risk.
South Africa is one of the world’s biggest carbon emitters, and many of the biggest companies listed on the JSE are extremely carbon-intensive, i.e. they emit huge quantities of greenhouse gases. Many of the financial institutions that invest in these high carbon emitters and lend money to them are themselves listed companies.
However, thus far South Africa’s investment industry has done far too little to tackle the climate risks inherent in the investment portfolios of millions of investors, including everyone in the country who has a pension fund.
Standard Bank describes itself as the “leading oil and gas bank in sub Saharan Africa”. In other words, it is heavily involved in lending money to fossil fuel development and extraction across Africa. Every rand invested by banks in fossil fuel projects increases climate risk and makes it harder to achieve a just transition to a low-carbon economy.
In essence, the resolution is only asking the bank to provide shareholders with more information about its fossil fuel lending and risk exposure: it would not require the bank to change anything in terms of actual lending practices. There are many banks around the world which are already disclosing this information. However, Standard Bank’s board has recommended that shareholders vote against the resolution.
Asset managers and asset owners who claim to be responsible investors will, for the first time in relation to a South African company, have to take action which will indicate how serious they really are about engaging with climate risk in their investment decision-making.
Many of South Africa’s institutional investors are signatories to and/or have publically declared support for responsible investment initiatives like the Principles for Responsible Investment (PRI) and the Code for Responsible Investment South Africa (CRISA).
This vote will demonstrate how seriously they take these commitments.
In South Africa, where we are still so heavily reliant on fossil fuels for energy, climate risk and the transition to a low-carbon economy pose unprecedented risks and opportunities for our society and economy. The financial sector has a crucial role to play in driving this transition. Banks should already, at the very least, be disclosing the extent to which they are exposing their businesses, shareholders, and the planet to climate risk via their financing of fossil fuels.
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