30 May 2019
Standard Bank AGM: shareholders challenge board, favour the climate
In a first for South Africa, at Standard Bank’s Annual General Meeting today climate-conscious shareholders compelled the bank to adopt and publicly disclose a policy on lending to coal-fired power projects and coal mining operations. Resolution 10.2 received 55% of shareholder votes, and is therefore binding on the company. This is the first time that a South African bank – or any listed South African company – has faced a shareholder resolution on a climate-related issue. Standard Bank’s board had recommended that shareholders vote against it.
A second part to the climate-related resolution* would have required the bank to report to shareholders its assessment of the greenhouse gas emissions resulting from its financing portfolio and its exposure to climate change risk in its lending, investing and financing activities. While this part of the resolution was not passed, it received significant support with 38% of shareholders voting in favour, indicating strong shareholder demand for climate risk-related disclosure.
Tracey Davies, Executive Director of Just Share, says: “We are extremely encouraged by the levels of support for both parts of the resolution. Considering that this was the first time shareholders in SA have had to vote on such a resolution, and also that the board recommended that they vote against it, the results are significant. They show that there is a broad section of our investment community which understands the importance of acting on climate risk. We commend the shareholders who voted in favour of the resolution, like Mergence Investment Managers, Old Mutual, Aeon Investment Management and many others who were bold enough to support the resolutions and provide the climate leadership that is so desperately needed within SA’s financial and business sector. We encourage other shareholders who voted in favour of the resolution to publicly declare that they did so”.
In South Africa, where we are still so heavily reliant on fossil fuels for energy, climate risk and the transition to a low-carbon economy pose unprecedented risks and opportunities for our society and economy. The financial sector has a crucial role to play in driving this transition and today’s developments prove that institutional investors are starting to demand it do so.
Banks should already, at the very least, be disclosing the extent to which they are exposing their businesses, shareholders, and the planet to climate risk via their financing of fossil fuels.
Shareholder resolutions have become one of the most powerful tools for raising awareness about climate change risk, and for forcing the business and financial sectors to take action to mitigate and avoid that risk. It is very encouraging that so many investors have supported the call for better climate risk disclosure, and we hope that others will consider proposing and supporting more such resolutions at the upcoming AGMs of South African companies.
* Resolution 10 in Standard Bank’s Notice of AGM was proposed by activist shareholders the RAITH Foundation and Theo Botha, with support from responsible investment and shareholder activism NGO Just Share.