South Africa’s Nedbank has issued its climate change position statement which outlines an ambitious net zero target by 2045.
On Thursday, Nedbank said it aimed to have zero exposure to all activities related to fossil fuels by 2045 and to accelerate financing of renewable energy.
The bank will address this by ceasing to fund new thermal coal mines by 2025 and halting direct funding of new oil and gas exploration as a measure to phase out its fossil fuel exposure over the next 24 years.
As the Bank’s climate statement points out, “immediate, rapid and profound” changes are required in the energy sector. The energy policy recognises the need for a “zero carbon energy system by 2050” and, importantly, that an “orderly exit” from fossil fuel financing is necessary “well before 2050”.
While Nedbank will continue to finance natural gas production “where it will play an essential role in facilitating the transition to a zero-carbon energy system by 2050”, it aims to have zero exposure to all activities related to fossil fuels (except when required to back up renewable power) by 2045.
Nedbank chief financial officer Mike Davis, said: “Nedbank’s energy policy serves to guide the bank’s transition away from fossil fuels while still providing appropriate support to existing energy requirements.”
Nedbank ahead on net zero ambitions
The bank, which is among South Africa’s four biggest banks, said it would limit financing for thermal coal mining companies further to 0.5% of the group’s total advances by 2030.
Nedbank’s exposure to thermal coal stood at R3.6 billion ($251.8 million), or 0.7% of total advances, by the end of 2020, while renewable energy was R32.3 billion ($2.259 billion).
“We are going to transition away from thermal coal, as indicated per this policy, and our clients are hopefully going to transition with us,” said Davis.
Nedbank said it aimed to finance local small-scale renewable power generation amounting to R2 billion ($134 million) in addition to its R50 billion ($3.5 billion) commitment to the country’s renewable energy tendering process.
Shareholder group Just Share said the new policy was the most ambitious of any South African bank.
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