Just Share’s top priorities for assessing the climate ambition of South African banks in 2025
South Africa’s “big five” banks – Absa Group Limited, FirstRand Limited, Investec Limited, Nedbank Group Limited, and Standard Bank Group Limited – all state that they support climate science and the goals of the 2015 Paris Agreement, and all have publicly committed to achieving net zero in their financed emissions.
South Africa must submit a new Nationally Determined Contribution (NDC) in terms of the Paris Agreement this year. The NDC must “reflect its highest possible ambition, reflecting its common but differentiated responsibilities and respective capabilities, in the light of different national circumstances”. South African banks have a crucial role to play in ensuring that the country takes timeous and effective climate action to meet its international commitments.
Just Share regularly analyses the effectiveness of the big five banks’ integration of climate risks and opportunities into financial decision-making. Our 2024 report, How Cool is your Bank?, found that, despite their sustainability claims, all of the big five banks are continuing to fund new fossil fuels, even in the face of increasingly severe and unpredictable weather events which are already having catastrophic impacts. They are also failing to set clear, science-aligned emission reduction targets and to adopt strategies to achieve them.
In 2025, Just Share will be analysing the banks’ climate-related disclosures with a view to assessing their approach to the following five key issues:
1. Commitment to climate leadership
We will assess whether the banks are holding firm to their existing commitments to climate action and prioritising the strengthening of these commitments, including via updates to their fossil fuel financing policies. We will also be keeping an eye out for any weakening of current commitments.
2. Transition planning
We will be looking for increased detail in the banks’ disclosures relating to their transition plans, as well as for greater ambition in their target-setting. At a minimum, banks need to be:
- Disclosing 100% of their scope 3 emissions according to the Partnership for Carbon Accounting Financials (PCAF) guidelines.
- Setting clear short- and medium-term emission reduction targets that include scope 3 and focussing on those parts of their portfolios that are most exposed to high-carbon industries.
- Aligning clear short- and medium-term emission reduction targets to executive remuneration.
- Laying out explicit strategies for how they will meet their emission reduction targets.
- Including just transition metrics into their transition plans, taking care to be explicit about their categorisation of these metrics. To this end, the banks should be incorporating externally-validated definitions such as those from the JSE’s Sustainability Disclosure Guidance.
3. Sustainable finance
We will be looking for:
- Frameworks that clearly define and delineate the banks’ sustainable finance criteria, aligned with science;
- Disclosure of Rands spent on sustainable finance, expressed as a percentage of banks’ overall financing; and
- Clear targets and strategies to increase sustainable financing.
4. Transition finance
We will also be analysing how the banks approach transition finance – a concept that is increasingly adopted by the finance sector and which, like sustainable finance, is vulnerable to greenwashing. “Transition finance” should not, for example, be a cover for financing of new gas projects. We will be looking for:
- Clear definitions and guardrails setting out the banks’ criteria for transition finance, which must at the very least be time-bound and aligned with science.
- Disclosure of Rands spent on transition finance, expressed as a percentage of banks’ overall financing.
5. Approach to financing gas
We will interrogate the banks’ justifications for continuing to finance gas-related projects. Banks should be acknowledging that there are significant risks inherent in investment in gas projects, and providing clear evidence that they have adequately incorporated these risks into their decision-making. This will also influence the definitions in their transition and sustainable finance frameworks.
In addition to these five priority areas, Just Share will also continue to assess other aspects of banks’ disclosures including: climate-related governance, potential climate-conflicted board members, and alignment of policy engagement with the Paris goal of limiting temperature rise to 1.5°C above pre-industrial levels.
IMAGE: Getty
