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By Ciaran Ryan

Moneyweb: Journalist & Host of Moneyweb Crypto Podcast

Standard Bank shareholders defy board in vote for greener disclosure

This is the first time that a South African bank, or any listed company, has faced a shareholder resolution on climate change as protesters demand policy disclosure on lending to coal projects.

This is almost certainly the future of annual general meetings (AGMs) in SA. Get your environmental ducks in a row or it is going to get noisy.

Protesters were gathered outside Standard Bank’s Simmons Street head office on Thursday calling for shareholders attending the AGM inside to vote for a resolution compelling the bank to adopt and disclose a policy on lending to coal projects.

Non-governmental organisation Just Share says this is the first time that a South African bank, or any listed company, has faced a shareholder resolution on climate change.

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The resolution was proposed by the Raith Foundation and shareholder activist Theo Botha, and supported by Just Share. When asked by Tracey Davies, director of Just Share, why the bank recommended voting against the resolution, CEO Sim Tshabalala said the bank fully supported the Paris Agreement on climate change, and agreed that climate change represented a “clear and present danger”. The bank was embarking on a process of adjusting to the requirements of climate change as it affects its activities, he said, but was compelled to balance this against developmental objectives.

‘Unlocking potential’, or putting millions at risk?

Environmental activist Greer Blizzard of Just Share pointed out that Standard Bank is one of the lead arrangers for a US$2.5 billion loan to support the East Africa Crude Oil Pipeline through Uganda and Tanzania, which the bank claims will unlock East Africa’s potential. However, the oil to be transported through this pipeline will emit more carbon than the whole of Uganda and Tanzania currently does each year.

Thousands of people will be displaced, and the pipeline will run for several hundred kilometres though the Lake Victoria Basin, putting the drinking water of millions at risk.

A coalition of African and international environmental activists recently wrote to the bank urging it not to proceed with financing the project. They point to several studies showing major opportunities for financing renewable energy infrastructure which would meet the region’s energy needs in a clean and rights-compatible manner, which would represent a much less destructive use of the bank’s finances.

“Will the bank agree to meet with local people and listen to their concerns about the East Africa Crude Oil Pipeline?” asked Greer.

CEO agrees to meet with locals

Thsbalala said he would, adding that the bank supported the Task Force on Climate-related Financial Disclosures (TCFD), joining more than 500 organisations around the world committed to improving climate-related disclosures.

The TCFD’s mission is to “develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders.”

Some 55% of shareholders voted in favour of the bank adopting and disclosing a policy on lending to coal-fired power plants and coal mines.

“This was a significant result,” said Davies after the vote. “Firstly, for a majority of shareholders to vote in favour of the resolution despite [the] board recommending against it really shows that there is much more awareness and understanding of climate risk among our investment industry than it might appear.”

Greenhouse gas resolution 

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. This resolution was defeated, but still managed to swing 38% of shareholders to vote in its favour.

Davies says this was an impressive vote in favour of climate-related disclosures, considering this was the first time it had been tabled.

“Generally it takes several years to raise awareness behind climate-related disclosures among shareholders, and this is a far better result than has been obtained in other AGMs around the world when such resolutions were first introduced.

“It is clear we are moving rapidly in the right direction.”

Just Share commended those shareholders who voted in favour of the resolution, including Mergence Investment Managers, Old Mutual and Aeon Investment Management. ”We encourage other shareholders who voted in favour of the resolution to publicly declare that they did so,” says Davies.

“In SA, 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, says Just Share.

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