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Standard Bank to disclose climate-related lending in 2020

As banks globally are increasingly under pressure to shun carbon-heavy activities and fund more clean-energy projects.
Image: Bloomberg

Standard Bank Group is nearing the point where it will be able disclose its climate-related financial exposures and should be able to announce its position by the end this year, chief executive officer Sim Tshabalala said.

The Johannesburg-based lender has created a special working group and collaborated with the Banking Association of South Africa and the National Business Initiative to help in its readiness to make these disclosures. This comes as banks globally are increasingly under pressure to shun carbon-heavy activities and fund more clean-energy projects.

“If there is a demand that we should be disclosing more, it is kicking against an open door,” Tshabalala said in an interview. “We will be making disclosures.”

Shareholder and environmental activists have written to investors of Africa’s biggest bank by assets asking that they vote against the re-election of seven non-executive directors with ties to fossil-fuel companies at its annual general meeting later this week. Standard Bank has declined to table a shareholder-proposed resolution on its oil and gas financing activities.

Sketchy data in the African markets in which Standard Bank operates has hindered it from reporting the climate risk in its lending portfolios sooner, Tshabalala said. “There are information gaps that are missing that we are working on filling.”

Standard Bank is pushing ahead with its climate-related commitments as it grapples with escalating bad debts and the coronavirus pandemic takes a toll on its clients in various markets. The lender expects the economy in its home market to contract by roughly 8.5%, while economies in its West African region will also slump into recession.

“The consequence of that manifests in the evolution of bad debts,” the CEO said. “The biggest bad debt, the most severe and the largest are happening in South Africa. The worst of it will be this year, with a likely recovery in the second half of the year into next year.”

Absa’s experience

Absa Group — which like its bigger Johannesburg-based peer has expanded into the rest of Africa to offset slower growth at home — expects its experience with bad debts to match its rivals, Chief Executive Officer Daniel Mminele said by phone on Monday. Impairments are likely to be a problem in South Africa and the rest of the continent, he said.

Mminele said he is still reviewing Absa’s strategy after taking the top post at the end of January, which could see the lender accommodate structural changes that may follow in the wake of the pandemic to the operating environment for banks.

Other lenders in Africa’s most-industrialized economy have joined Standard Bank and Absa in extending cash-flow relief to customers hamstrung by the country’s lockdown and made donations to help regional governments prop-up health care systems.

Absa will continue to help clients that require financial assistance as its first round of payment holidays comes to an end this month, Mminele said. Capitec Bank Holdings is offering clients who took three-month payment breaks a full refund on the interest on their loans, provided customers continue repaying the debt, the Stellenbosch-based lender said in a statement on Monday.

© 2020 Bloomberg

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What percentage of the Standard Bank’s employees pensions is invested in companies that do not comply with the climate mission investment statements???

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