FirstRand commits to fossil fuel policy
FirstRand shareholders voted for the first time on climate change resolutions at the banking group’s annual general meeting (AGM) on Thursday, an indication that green issues are increasingly taking centre stage at SA’s top companies.
While a resolution for FirstRand to adopt and disclose a policy on fossil fuel lending was passed, another to have it assess and report on its exposure to climate-change risk, failed.
Banks are coming under more pressure to disclose and cut their exposure to greenhouse gas-emitting industries. The climate change resolutions tabled at FirstRand follow similar ones tabled at Standard Bank’s AGM in May. Shareholder activist organisations Just Share and the Raith Foundation proposed the resolutions.
SA is the 14th-largest emitter of greenhouse gases in the world, due to its heavy reliance on coal-fired power generation.
Although a carbon tax was introduced in 2019, it has been criticised as too weak to change behaviour.
A climate change bill is still in the works.
On Thursday, the resolution on adopting a fossil fuel policy was endorsed by the FirstRand board, passing with 99% of the vote. The resolution to have the group disclose its exposure to climate change risk by October 2020 was not endorsed by the board and failed to get passed when only 33% of shareholders voted in favour of it.
FirstRand chair Roger Jardine said the board was not philosophically at odds with the urgent need for interventions to mitigate climate change, but “as a major financial institution we felt that we needed more time to analyse our lending book in detail so that when we give information to the investment public, it is as accurate information as possible”.
Tracey Davies, executive director of Just Share, said global efforts to mitigate climate change are not enough to keep global temperatures from rising above targeted levels.
Given that FirstRand thought a year is insufficient to assess its risk, “do you think you fully appreciate the scale of the emergency that we face and the pace of change that’s required to address it?”
Mehluli Mncube, who represented various pension funds, said as long-term investors they expected the board to look at the issue with greater urgency.
“We find your nonendorsement of this a bit two-faced, where you are supportive of it but at the same time you are defensive of it,” he said.
Jardine said dealing with climate risk is not a linear process. FirstRand is “seized with the issue” and its interventions along the way are well documented.
Former FirstRand chair Laurie Dippenaar said calculating emissions for everything the bank finances is complex.
“I honestly think it’s impossible to do,” he said.
Mncube countered that the bank should require of the companies it finances to account for their emissions.
“Even from the pension fund point of view, we are going to be held to account for our portfolios in terms of how much they are exposed, and we are going to rely on pressing our invested companies to disclose.”
Davies said the call is for banks to look at the clients they lend to who have significant greenhouse gas emissions and not to document each and every emission.
“Don’t put the whole thing off indefinitely, do what you can, explain what you are doing. No-one can criticise you for that,” Davies said.
At Standard Bank’s AGM in May, a resolution to have the bank adopt and disclose a policy on lending to coal-fired power projects and coal mining was passed with 55% of the vote. A resolution to disclose exposure to climate change risks was, however, voted down.