Just Share has analysed Nedbank Group Limited’s 2022 Climate Report, released in April 2023 and aligned with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).
Nedbank has also released, for the first time, its sustainable development financial inclusion criteria (SDFIC) which set out the bank’s “categorisation of sustainable-development financing (SDF) and investments, which create positive societal and environmental outcomes and support a just transition and are therefore considered SDF.”
Key messages
- Since 2021, Nedbank has shown leadership in the South African banking sector’s response to the climate crisis, demonstrating a firm grasp of the necessity of acting with urgency. However, its leadership role, and its commitment to addressing the crisis, is undermined by the fact that Nedbank’s financing of upstream gas increased by more than 250% in 2022, and its financing of upstream oil by almost 50%. This significant increase in its exposure to fossil fuels calls into question the extent to which Nedbank is willing to put its financing power behind the urgency of a just transition.
- Nedbank has, for the first time, quantified and disclosed the financed emissions of its corporate & investment banking fossil fuel portfolios. This is an important step, although the calculation currently excludes the bank’s off-balance sheet exposure.
- Nedbank has also started to develop short and medium-term targets – what it calls “net zero aligned decarbonisation glidepaths” – for fossil fuels and power generation, which the bank has committed to disclosing in 2024. This information is crucial: until it has been disclosed, there is no indication of what Nedbank’s fossil fuel financing reduction strategy will be between 2035 and 2045, at which point the bank has committed that it will have zero fossil fuel exposure.
- Nedbank’s exposure to upstream oil has increased by R6 billion (44,5%) in limits and R1,97 billion (21,6%) in drawn exposure over the year; and to upstream gas by R1,2 billion (262,8%) in limits and R956 million (225,5%) in drawn exposure.
In 2021 and 2022, the Intergovernmental Panel on Climate Change (IPCC) released the three working groups’ contributions to the Sixth Assessment Report, with the Synthesis Report released in March 2023. The report once again confirms that there is a rapidly closing window of opportunity to secure a liveable and sustainable future for all. “The choices and actions implemented in this decade will have impacts now and for thousands of years”.
The substantial increase in fossil fuel financing over the past year demonstrates, disappointingly, that while Nedbank’s Energy Policy makes commendable long-term commitments, it leaves significant room for financing which does not support climate action in the short- to medium-term. This makes no sense from a bank which purports to be fully appraised of the urgency of reducing carbon emissions.
IMAGE: TISO BLACKSTAR GROUP (PTY) LTD
