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Centre for Environmental Rights

InvestecFinancial Services

Investec provides asset management, wealth and investment management services, specialist transactional banking, lending, treasury and trading and other financial services.

Summary

Investec explicitly acknowledges that climate change poses a material business risk in its mainstream reports, although it only outlines details of its risks and opportunities in its Carbon Disclosure Project (CDP) submissions. Investec has a strategy in place to mitigate its risks, however, the strategy is only outlined in broad terms with little detail provided. Investec does not describe the climate scenarios’ (including a 2°C scenario) used to inform its strategy, or targets. The bank does not disclose any emissions reductions targets.

The board has oversight and responsibility for monitoring that Investec operates as a responsible corporate citizen, and remuneration policies provide incentives for ESG related measures, including limiting the bank’s direct operational carbon impact.

Critically, the bank does not disclose the physical and transitional risks in its lending and financial intermediary businesses activities and does not disclose it’s the concentration of risky carbon-related assets relative to its total assets. This could be worrying to investors, clients, and the public who are not easily able to access Investec’s policy on funding coal projects.

£57 724 million
Total assets
Not disclosed
Concentration of carbon-related assets
0.31
Credit loss ratio (%)

Findings

Governance

Is the company a supporter of the TCFD?
No

We recognise and support the recommendations of the TCFDs to report clear and consistent information and have expanded on our previous disclosure as seen on pages 75 and 76 in volume two of the Investec group’s 2019 integrated annual report.

This is the start of a long-term process to build a better understanding of environmental, social and governance (ESG) reporting and climate-related risks and opportunities and we will enhance our disclosure over time in line

ESG 2019, p 10

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.

“There is also oversight by the social and ethics committee on social and environmental issues, including climate-related impact considerations.” – AR2019 v1, p 34

“The board has the ultimate responsibility to monitor that the group is operating as a responsible corporate. The DLC SEC takes overall responsibility for reviewing ESG aspects, including policy and strategic intent, and meets four times a year.” – AR2019 v2, p 75

“Climate related risk considerations are integrated into multidisciplinary, companywide management processes throughout the group.” – AR2019 v2, p 75

Does the remuneration policy include performance metrics used to measure and manage climate-related risks?
Yes

Remuneration policy includes climate-related performance metrics.

“ESG” related measures have a 5% weighting for short-term incentives under the remuneration policy. The “ESG” related measures include human capital, intellectual capital, social and relationship capital and natural capital, which has “limiting our direct operational carbon impact” as a priority. – AR2019 v1, p 193

Strategy

Does the company identify climate change as a material business risk?
Yes

Climate risks are explicitly mentioned as a material or principal risk in the annual or integrated report.

“The risk that our lending and investment activities give rise to unintended environmental (including climate change), social and economic consequences.” is considered to be a principal risk. – AR2019 v1, p 34

“Investec recognises the risks of climate change and is committed to support the transition to a clean and energy-efficient global economy.” – AR2019 v1, p 166

Has the company outlined the risks and opportunities from climate change?
CDP only

Detailed disclosure, including timeframes and impacts, with timeframes in CDP only.

Does the company describe how its strategy might change to address climate change risks and opportunities?
Limited

Some disclosure of how climate risks and/or opportunities are incorporated into strategy, but with insufficient detail.

Investec describes its strategy in very broad terms with little detail provided. – AR2019, p 75

“we believe that the widest and most positive influence we can have is for our businesses to use their specialist skills in advisory, lending and investing to support our clients and stakeholders. This not only navigates risks, but also takes advantage of the opportunities that sustainable growth presents. An important aspect of our approach is a deliberate focus on financing infrastructure solutions that promote renewable and clean energy and we have developed strong expertise in this sector” – AR2019 v2, p 75

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

No disclosure of scenarios in mainstream reports.

“In terms of our business impact, there is still a large degree of uncertainty around climate scenario analysis for the financial sector. We have embarked on a process to collect and disclose the relevant metrics and targets for potential climate risks and opportunities for our business and will enhance these disclosures within the five-year pathway, as outlined by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures.” – AR2019 v2, p 76

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.

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.

“The group has a holistic approach to corporate sustainability, which runs beyond recognising our own footprint on the environment and includes our many corporate social investment activities and our lending and investing activities….Accordingly, corporate sustainability risk considerations [which include climate-related impacts] are considered by the credit committee or investment committee when making lending or investment decisions.” – AR2019 v2, p 17

Metrics and Targets

Has the company set GHG emission reduction targets?
No

There is no GHG emission reduction target currently in place.

There are energy reduction targets for SA and UK but no emission reduction target.

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

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

“We are therefore exploring various opportunities as we work towards our ultimate goal of becoming carbon neutral.” – ESG, p 42

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 disclosure includes paper consumption, general waste, rail travel, road business travel, taxi and commercial airlines.

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.

“The group strengthened its climate change statement and policy on funding coal projects.” – ESG, p 7. Investec has a policy on funding coal projects but it is not publicly available.

“As a general principle, Investec will avoid providing funding to coal-fired power projects and will only consider funding under very strict acceptance criteria.” – ESG 2018, p 41

Disclosures Considered

  • Annual Report v1-3
  • Group environmental policy and climate change statement
  • Carbon Disclosure Project (CDP) 2018 Climate Change submission

*This report is accurate as at 03 August 2019.

Company Profile

Locations

South Africa, UK, Mauritius

Key Shareholders

  • Public Investment Corporation (SOC) Ltd. (13.6%)
  • Allan Gray (Pty) Ltd. (12.1%)
  • ABSA Investment Management Services Pty Ltd. (Invt Mgmt) (4.56%)
  • Jupiter Asset Management Ltd. (4.17%)
  • Ora Fund Managers (Pty) Ltd. (3.84%)
  • Schroder Investment Management Ltd. (3.54%)
  • Absa Asset Management Pty Ltd. (Investment Management) (3.38%)
  • The Vanguard Group, Inc. (3.33%)