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Centre for Environmental Rights

ABSAFinancial Services

ABSA Group, formerly Barclays Africa Group Ltd., offers financial services including personal and business banking, corporate and investment banking, wealth and investment management, credit cards, and insurance.

Summary

ABSA does not identify climate change as a material business risk, nor does it disclose its direct or indirect risks from climate change with sufficient detail in its mainstream reports. The board is responsible for approving the bank’s risk appetite to risks posed by climate change, although there are no remuneration policies disclosed that could incentivise the board to reduce risk in line with a strategy.

ABSA does not disclose any strategy to mitigate climate change risks in its mainstream reports, with the bank reporting that it has “embarked on a group-wide sustainability programme to consider the potential implications on the Group’s operating model, products and services, our customers’ businesses and society at large.” Indeed, ABSA does not report using scenario analysis to assess its risks and only provides limited information on its risk exposure in its ESG report. In its Annual Report, ABSA mentions physical climate events that may have “credit and insurance implications” but does not report on the more pressing transitional risks nor, more generally, the risks in its lending and other financial intermediary business activities.

ABSA does not disclose the concentration of carbon-related assets in its portfolio, making it difficult for investors to assess their risk exposure in the absence of risk identification by the bank. The bank does not have a policy in place to reduce exposure to high greenhouse gas emitting industries.

R1 372 797 million
Total assets
Not disclosed
Concentration of carbon-related assets
0.79
Credit loss ratio (%)

Findings

Governance

Is the company a supporter of the TCFD?
No

“we are monitoring other guidelines such as the Task Force on Climate-related Financial Disclosures” – IR 2018, p 37

Who has oversight of climate-related risks and opportunities?
Board

Disclosure explicitly mentions that the board is responsible for overseeing climate risk. Board responsibility for “sustainability”, “environmental issues”, or “ESG” is not sufficient.

Under “financial implications and other risks and opportunities due to climate change” in the ESG Review 2018, ABSA states that the board is responsible for approving risk appetite, which is determined through the enterprise risk management framework.

“The Social and Ethics Committee monitors the Group’s activities relating to relevant legislation or prevailing codes of best practice on matters including social and economic development, good corporate citizenship, ethics, sustainable development, labour and employment, consumer relations, stakeholder management, transformation, the environment, and health and safety. The Committee oversees and evaluates management’s performance against these matters.” – ESG 2018, p 22

Does the remuneration policy include performance metrics used to measure and manage climate-related risks?
No

Remuneration policy does not include climate-related performance metrics.

Strategy

Does the company identify climate change as a material business risk?
No

Climate risks are not explicitly mentioned as a material or principal risk in the annual or integrated report.

Climate is not identified as a material or principal risk, but ABSA is increasingly “reflecting on environmental constraints and the impacts of current and potential future environmental and social risks on our own and our customers’ businesses.” – IR 2018, p 1

The “Focus on social, governance and environmental matters” is identified as a market driver, with climate change(adverse weather conditions) one of the associated risks. – IR 2018, p11

Has the company outlined the risks and opportunities from climate change?
Limited

Detailed disclosure in CDP with some disclosure in mainstream reports, but limited detail on timeframes and/or impacts provided.

Various risks and opportunities are identified in the ESG Review 2018, but no timeframes and impacts are given.

Does the company describe how its strategy might change to address climate change risks and opportunities?
No

No disclosure of how climate risks and opportunities are incorporated into strategy.

“acknowledging the concerning issue arising from climate change and the resulting pressures on future sustainability, we have embarked on a group-wide sustainability programme to consider the potential implications on the Group’s operating model, products and services, our customers’ businesses and society at large.” – IR 2018, p 22

Does the company describe the climate change scenarios used to inform strategy and financial planning?
No

No disclosure of scenarios in mainstream reports.

Does the bank describe significant concentrations of credit exposure to carbon-related assets or the amount and percentage of carbon-related assets relative to total assets?
No

No disclosure.

Does the bank disclose their climate-related risks (transition and physical) in their lending and other financial intermediary business activities?
No

Climate-related risks (transition and physical) in their lending and other financial intermediary business activities are not disclosed.

“Adverse weather conditions resulting in extreme environmental events (e.g. droughts, floods and fires) impacting community sustainability with credit and insurance risk implications.” – AR 2018, p 11 but nothing further.

Risk Management

Does the company have a process to manage climate-related risks?
Yes

Climate-related risks form part of company-wide risk management programme or specific climate-related risk management process.

Climate change considerations are mainly managed within the credit, operational and reputation risk categories of the enterprise risk management framework. – ESG 2018, p 40

Risk and opportunities linked to market drivers (which include “Focus on social, governance and environmental matters”) are assessed within the ERM Framework. – IR 2018, p 10

Metrics and Targets

Has the company set GHG emission reduction targets?
No

There is no GHG emission reduction target currently in place.

“A carbon reduction target expired in Sep 2018 and a new target has not been disclosed. As we have come to the end of the 2015 – 2018 target period, we will look to set future targets that will further reduce our emissions from energy activities.” – ESG 2018, p 45

“In 2016, we set a carbon reduction target of 10% by the end of September 2018, against the 2015 baseline. At the end of 2018, we saw a 18.7% increase against the 2015 baseline due to increased reliance on the South African electricity grid which has a higher emission factor than diesel and gas.” – ESG 2018, p 45

Is there a long-term GHG emission reduction target?
No

There is not an absolute or intensity reduction target over five years in duration.

Does the company disclose its GHG emissions?
Scope 1, 2 and 3

Companies report on their Scope 1, 2 and 3 emissions for the current year and at least the previous year.

Scope 3 emissions disclosed are flight, private cars, car hire, and transmission and distribution.

Does the company provide their internal carbon price?
No

No internal carbon price is disclosed.

Additional Information

Does the bank have a publicly-available policy on funding coal mining and coal-fired power?
No

No disclosure or policy not publicly-available.

Disclosures Considered

  • Integrated Report 2018
  • Environmental, Social and Governance Review 2018
  • Remuneration Report 2018
  • Carbon Disclosure Project (CDP) 2018 Climate Change submission

* This report is accurate as of 03 August 2019.

Company Profile