Absa publishes coal-funding policy
The bank is responding to calls for greater disclosure around lending to the fossil-fuels industry
Absa, one of SA’s largest banks, has published its policy on funding coal as banks around the world continue to come under pressure to disclose more information about their exposure to the fossil-fuel industry.
The banking group said on Thursday that burning fossil fuels, such as coal, has been found to be the predominant cause of global warming and climate change and as a result, “Absa will not fund new, coal-fired electricity generation unless under extenuating circumstances that will be governed under strict guidelines”.
Projects requesting this type of funding will, from now on, be evaluated using enhanced due-diligence criteria, Absa said.
Absa is the latest in a string of SA financiers that have responded to the growing pressure for more transparency around their funding of fossil fuels as climate-change concerns intensify. The policy piles pressure on the coal industry, dominated by Exxaro and Seriti Resources, to watch their environment-friendly credentials or risk being cut off from funding.
Standard Bank adopted a policy on coal funding in July 2019 and released the document in March this year. FirstRand published its thermal coal financing policy in August 2019; while Investec Bank, last month, published a group fossil-fuel policy — making it the first SA bank to publish a lending policy that extends beyond coal to include oil and gas.
In publishing its standard for financing coal, alongside its updated sustainability policy, Absa said it has affirmed the group’s commitment as a responsible financier to address the negative effects of climate change.
In line with its standards, Absa will continue to finance existing coal-sector clients while supporting them to transition to more sustainable business models. Green field coal-mining projects will not be financed unless they meet Absa’s new criteria.
The bank said it encourages renewable energy technology as a viable means to meet Africa’s power needs.
“We are already a leading player in financing the continent’s renewable energy, and we plan to intensify our focus on funding renewable energy projects that are environmentally, socially and economically feasible,” said Absa group CEO Daniel Mminele.
Absa said it will add standards for financing other climate-sensitive sectors in due course.