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Centre for Environmental Rights

Standard BankFinancial Services

Standard Bank group offers retail and commercial banking, corporate and investment banking, wealth services, and life insurance through Liberty Holdings.

Summary

Standard Bank explicitly acknowledges that climate change poses a material business risk in its annual reports and the bank discloses transitional and physical climate-related risks in its lending and other financial intermediary business activities. However, detailed disclosures of risks, including timeframes and impacts, are only set out in the banks Carbon Disclosure Project (CDP) submissions. Standard Bank only makes limited disclosures of its strategy to address climate change risks and opportunities. Its strategy is not informed by climate scenario analysis (such as a 2°C or lower scenario). It is, therefore, difficult to determine the effectiveness of the strategy and whether Standard Banks interventions are appropriate.

Standard Bank does not disclose the governance structures in place to manage its climate risks and oversee the implementation of a strategy. It also does not have any targets to reduce its greenhouse gas emissions, despite reporting its direct and indirect (including scope 3) emissions. More positively, following a shareholder resolution, Standard Bank released a groupwide policy on lending to coal-fired power projects in July 2019. It is in the process of developing a policy on lending to coal mining operations, which will also be released.

R2 126 962 million
Total assets
Not disclosed
Concentration of carbon-related assets
0.56
Credit loss ratio (%)

Risky Activities:

  • Continues to fund coal-fired power generation but within policy guidelines
  • Lead arranger, underwriter and book-runner in Anglo American’s acquisition of South African coal assets strategically important to Eskom’s baseload power generation fleet
  • Provides services to Dangote Cement
  • Provided funding to Thabametsi coal-fired power prior to withdrawal in early 2019

Findings

Governance

Is the company a supporter of the TCFD?
No
 
Who has oversight of climate-related risks and opportunities?
Not disclosed

Responsibility is not clearly disclosed.

“The group environmental and social risk and finance (GESRF) team is responsible for ensuring that environmental and social risks are identified, evaluated and managed and that green, social and carbon financing opportunities are identified and pursued.” – ESG 2018, p 43

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?
Yes

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

“Adaption and mitigation of climate change, especially in relation to water in key sectors and markets” is identified as a material issue. – AR2018, p 7

“Balancing Africa’s power and energy needs with the negative impact of climate change” is also identified as a material issue. – AR2018, p 7

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.

“Develop a climate change strategy based on our data to identify sectors and geographies likely to be heavily impacted by climate change and assist our clients operating in these sectors and geographies to mitigate and adapt to this risk.” – AR 2018, p 85

Working with our clients to mitigate or adapt to climate change events (such as rising sea levels, extreme weather events, changes in weather patterns or ambient temperatures); Reducing/mitigating the negative impact of human development on climate change (such as greenhouse gas emissions); and Encouraging positive impact opportunities, such as green energy development. – ESG 2018, p 13

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

Do 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?
Yes

Climate-related risks (transition and physical) in their lending and other financial intermediary business activities are disclosed.

“We consider physical and transitional risk in our portfolio and lending analysis. Transition/regulatory risks can have financial, reputational and community support impacts on a client’s operations”. Risks include: shifts is demand and supply, reputational risks and physical risk. – ESG 2018, p 13

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 environmental and social risk and finance (GESRF) team is responsible for ensuring that environmental and social risks are identified, evaluated and managed and that green, social and carbon financing opportunities are identified and pursued.” – ESG 2018, p 43

Metrics and Targets

Has the company set GHG emission reduction targets?
No

There is no GHG emission reduction target currently in place.

“In 2018 we decided to pursue a science-based target (SBT) on our direct emissions that is aimed at preventing global temperature rises by 1.5°C.” – ESG 2018, p 23. But no target is given.

An energy reduction target of 15% by 2020 is in place.

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

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

“In 2018 we decided to pursue a science-based target (SBT) on our direct emissions that is aimed at preventing global temperature rises by 1.5°C.” – ESG 2018, p 23. But no target is given.

“In 2018, SBSA investigated the various methods available through science based targets that take into consideration the unique energy context as well as the future growth of developing countries within which we operate…The method defined a clear target for Standard Bank operations in South Africa to reduce direct emissions by 79% by 2040 when compared to the 2014 base year.” – ESG 2018, p 23

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 flights, rental cars, paper and waste disposal. – ESG 2018, p 47

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?
Partial

A publicly-available policy addresses either funding of coal mining or coal-fired power.

Following a shareholder resolution, Standard Bank released a groupwide policy on lending to coal-fired power projects in July 2019. It is in the process of developing a policy on lending to coal mining operations, which will also be released.

Disclosures Considered

  • Annual Integrated Report 2018
  • Environmental, Social and Governance Report 2018
  • Governance and Remuneration Report 2018
  • Coal-Fired Power Finance Policy 2019
  • Carbon Disclosure Project (CDP) 2018 Climate Change submission

Company Profile

Locations

South Africa, Kenya, South Sudan, Tanzania, Uganda, Botswana, eSwatini, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Zambia, Zimbabwe, Angola, Coe d’Ivoire, Democratic Republic of Congo, Ghana, Nigeria

Key Shareholders

  • Industrial and Commercial Bank of China Ltd (20.1%)
  • Public Investment Corporation (SOC) Ltd. (13.0%)
  • The Vanguard Group, Inc. (2.77%)
  • Allan Gray (Pty) Ltd. (2.34%)
  • Dimensional Fund Advisors LP (1.83%)
  • Dodge & Cox (1.78%)
  • Alexander Forbes Investments Ltd. (1.67%)
  • BlackRock Fund Advisors (1.55%)