- Standard Bank has come under fire for continuing to fund new fossil fuel projects.
- It has promised to do due diligence to limit harm.
- CEO Sim Tshabalala says the AGM has become a forum for policy advocacy and debate – which is not in the interests of the company.
Standard Bank, which has come under fire for continuing to fund new fossil fuel projects on the continent, says it will do proper diligence to ensure that the projects it invests in do not harm society – but it will not let climate groups dictate how the bank is run.
Speaking at the banking group’s 51st annual general meeting recently, CEO Sim Tshabalala told investors that as much as it is committed to addressing climate change concerns, the bank does not believe it is in the best interests of the company and its stakeholders to let its AGMs be used as “an annual forum for policy advocacy and debate”.
“It is crucially important to affirm the group’s commitment to sustainable human development, to a just transition away from carbon intensive economic activity and to environmental sustainability,” said Tshabalala.
However, he said despite all progress the group has made to be transparent about its financing of fossil fuel transactions, single-issue advocates have been hell bent on dictating the agenda of the group’s AGMs and who it appoints to its board.
“In our view, it is not in the best interests of the company and its stakeholders that its AGM become an annual forum for policy advocacy and debate.
“Yes, in some limited set of circumstances, an AGM may be right venue for the company and its shareholders to consider a policy matter. But in our view, no general or statutory right exists to convert AGMs into forums on company or public policy,” added Tshabalala.
But Shareholder activist group, Just Share said such assertion is “ridiculous” because this argument shows that Standard Bank thinks climate change is an issue of relevance to only few minority shareholders.
“[It] fails to recognise the fundamental importance of this issue for every single one of us. Climate risk is now firmly at the top of the professional investor agenda,” said Just Share executive director, Tracey Davies.
Climate group’s demands
Standard Bank declined to table climate risk shareholder resolution at this year’s AGM, just a year after the watershed moment when it became the time South African company to do this in 2019. The majority of its shareholders voted against the climate change resolution then, but environmental activists who hold shares in the bank pushed harder to ensure that their concerns dominate this year’s AGM.
The bank also drew the ire of environmental activists when it came to light that seven of its current board members have links with companies involved in fossil fuels. Shareholder activist group, Just Share and 14 other climate justice NGOs wanted shareholders to vote against the election of five of board members who happen to also hold directorships in companies including Sasol, BP Southern Africa, South32 and Engen. It was the first time in SA’s history that shareholders were called on to vote against directors based on their links to coal and oil companies.
But Tshabalala said the view that these board members who include the bank’s former CEO, Jacko Maree and Ichor Coal NV CEO, Nonkululeko Nyembezi-Heita are “climate-conflicted” is not accurate as they have shown “unquestionable integrity”.
The group’s stance in financing fossil fuels
A day before the AGM, environmental activists handed over a petition signed by more than 20 000 people to Standard Bank opposing the bank’s plan to fund an oil pipeline in East Africa. The bank has not yet made a final decision to fund the project and Tshabalala said it will be engaging concerned groups and appoint an independent consultant to environmental and social risks of the project.
But the bank has already agreed to fund a large chunk of the Mozambique Liquefied natural gas (LNG) project. Some of the shareholders blamed the bank for supporting a government that is “widely known to be extremely corrupt” with this project while others pointed out that the project will result in forced removals and is not benefitting locals in terms of jobs created or local consumption as only 12% of the gas extracted will reportedly be used domestically.
But Tshabalala said Standard Bank’s continued involvement in Mozambique and investing in its projects is in the best interests of the bank’s stakeholders. He said the projects the bank funds undergo strict due diligence and adhere to responsible banking and human dignity principles.
He said since 2012, 86% of the group’s total underwriting to energy transactions has been to green energy and Standard Bank already has stringent policies on lending to coal-fired power projects and to coal mining operations. But later this year, the bank plans to publish its first disclosures on climate-related financial risks. It will also provide more detailed disclosures on its financing of renewable energies versus other energy projects as it was criticised for funding way more LNG transactions than other green energies.
