EDITORIAL: Has the climate justice lobby gone too far?
Standard Bank cannot afford to be deprived of skilled directors, even though the transition to a low-carbon economy is SA’s eventual goal
As activists call for Standard Bank directors to not be re-elected over links to fossil fuel companies, it has left some wondering if SA’s climate justice lobby has gone too far.
On Monday, activist shareholder group Just Share urged stockholders to oust five of the bank’s non-executive directors, saying their links to fuel or coal mining companies undermine their impartiality to execute their duties when drawing up environmentally friendly policies.
It’s a first for SA, but not a world first per se. The longest-serving board member at JPMorgan Chase, Lee Raymond — a former CEO of oil major ExxonMobil and a known climate change sceptic — was recently demoted from his role as lead director after coming under fire from activists.
For Standard Bank, the climate activists have gone too far with their call for the company’s shareholders to vote against the re-election of nearly one-third of its board of directors because the lender refused to table yet another climate-related resolution.
The latest demand comes a year after Standard Bank gave in to demands that it table SA’s first climate-related resolutions, even as the lender warned shareholders the measures were impractical and could hurt its businesses.
One of the two resolutions was passed, forcing Standard Bank to set out and disclose its policy on lending to coal-fired power stations and coal-mining projects.
The passing of the resolution left Standard Bank basking in the glow of public relations goodwill, but Just Share gave the two subsequent policies on financing coal-fired electricity and funding coal-mining projects mixed reviews, trashing the former as disappointing and heaping praise on the latter as setting an “encouraging precedent”.
Now, as the shareholder activist group sought to have further climate-related resolutions tabled, the bank has dramatically fought back and rejected the tabling of these on the basis that the substance of the resolutions — which ask the bank to extend its coal financing policies to include its position of oil and gas lending — pertains to things shareholders have no right to vote on and in fact seeks to usurp the power of the board.
While this wasn’t an issue last year, the bank appears to have taken a leaf out of Sasol’s book, which refused to table proposed climate-related resolutions at its 2019 annual general meeting (AGM) on this basis.
Just Share argues that Standard Bank’s refusal to table the resolutions is down to the board now having two more directors with ties to the fossil fuel industry on its board than before, suggesting that getting rid of them would ensure that the resolutions are put before shareholders.
However, it is worth noting that 2019’s resolutions were tabled mainly at the behest of Standard Bank CEO Sim Tshabalala and not due to a particular eagerness on the board’s part.
Perhaps the bank is of the view it can never satisfy the climate justice lobby and the little finger it gave it in 2019 could very quickly become the whole hand if it doesn’t now draw a line in the sand.
If the call to vote against the re-election were successful, it would certainly be disruptive for the leadership of Africa’s largest lender at a time when financial institutions must play a critical role in the recovery of world economies from Covid-19. In a country still heavily reliant on fossil fuels, it may also prove difficult to find qualified directors without some sort of a link to the fuel and coal industries.
If the NGO’s appeal proves unsuccessful at the bank’s upcoming AGM — as many believe it will — an attempt at the takeover of the board by activists would have been torpedoed.
Climate change is the biggest crisis facing humankind, but we should also recognise that the energy transition in Sub-Saharan Africa to lower-carbon economies will take longer, suggesting that companies such as Standard Bank will inevitably draw their board members from a pool featuring directors with links to the industry.