South Africa’s largest banks are increasing their financing of renewable energy and other sustainable activities, but this progress has not been matched by a meaningful reduction in financing for fossil fuels and other high-emitting activities, according to Just Share’s latest How Cool Is Your Bank? report.
The assessment of South Africa’s five largest banks – Standard Bank, FirstRand, Absa, Nedbank and Investec – finds a persistent gap between banks’ climate commitments, where they direct capital and the emissions associated with their portfolios. The highest overall score achieved was just 59%, while some banks’ scores have declined since the previous How Cool Is Your Bank? assessment.
How Cool Is Your Bank? assesses the five banks across five themes: fossil fuel exposure; emissions disclosure and targets; governance and strategy; sustainable and transition finance; and nature and biodiversity. It examines whether banks are aligning their balance sheets, strategies and governance with the transition they have committed to support.
The findings come as the global banking sector faces growing pressure to manage climate risk. In 2025, while 40% of banks globally reduced their fossil fuel funding, the world’s largest banks increased their funding of fossil fuels by more than 27%. Some banks with the strongest stated climate commitments continue to finance activities that drive climate change. At the same time, prominent financial sector climate initiatives have weakened or fallen away, including the disbanding of the Net-Zero Banking Alliance.
For South African banks, climate change is not simply an environmental or social issue. It is a material financial risk. As the global economy shifts towards lower-carbon technologies and energy systems, businesses, assets and industries that cannot adapt may face falling demand, higher costs and declining values. Banks that finance these activities are exposed to these risks through their lending and investment portfolios.
The South African Reserve Bank’s Climate Risk Stress Test found that transition risk to the South African market could amount to almost R2 trillion between 2013 and 2035. This risk matters given the scale of the banking sector, which managed approximately R9.2 trillion in assets as of June 2026.
This gives South Africa’s banks significant influence over the pace and direction of the economic transition. Their financing decisions can help reduce exposure to transition risk, support credible pathways for emissions-intensive sectors and direct capital towards the technologies, businesses and infrastructure needed for a low-carbon, inclusive and resilient economy.
The research finds progress in areas such as sustainable finance and renewable energy financing. But these developments have not translated into a corresponding reduction in financed emissions. Banks continue to finance fossil fuels and other high-emitting activities at scale.
The result is a significant disconnect between what banks say about the transition, where they direct capital and the emissions associated with their portfolios.
South Africa’s economy remains deeply reliant on fossil fuels, making the transition complex. Banks must manage both the financial risks of transition and the socioeconomic consequences of change. But complexity does not make transition optional. Credible pathways for an orderly and just transition already exist.
The How Cool Is Your Bank? findings indicate that South Africa’s banks are not yet doing enough to manage climate risk or align their financing with the transition required by the Paris Agreement.