FIRSTRAND has become the latest bank to stop funding new coal mines following in the footsteps of Nedbank as pressure mounts for lenders to limit fossil fuel funding.
In its climate change policy and updated energy fuel policy published yesterday, FirstRand said it believed climate change was one of the defining issues of this century.
“It is a global crisis that has the potential to alter geopolitics and interstate relations, disrupt business models and markets across all sectors, and to impact the livelihoods and well-being of individuals across the world. FirstRand acknowledges that the group must be part of the solution by supporting climate resilience and a just transition to a low carbon world,” said FirstRand.
In the policy, FirstRand stated its long-term ambition was to be net zero by 2050 for scope 1, 2 and 3 emissions 2. The lender said it would no longer finance new coal-fired power stations with immediate effect and no longer provide direct project finance for new coal mines from 2026 onwards. In addition, the group said it had reduced its short- and medium-term caps on its overall coal exposure and provided insight on the expected long-term trajectory of its fossil fuel pathway.
FirstRand also said it recognised that energy consumption from fossil fuels – and coal in particular – were the biggest contributor to greenhouse gas emissions and constituted a priority area to address in the global decarbonisation pathways.
Commenting on Twitter, former FNB chief executive Michael Jordaan said: “This is actually a rational business decision as coal is no longer financially viable. Investing in new, long-term coal projects is very risky as solar is already cheaper and still becoming cheaper.”
Robyn Hugo, a climate change engagement director at Just Share, a shareholder activism non-governmental organisation, commended FirstRand’s new energy and fossil fuel financing policy, saying it was a significant improvement on the bank’s previous energy-related policies.
“However, FirstRand’s new energy and fossil fuels policy still lacks the urgency that should accompany the bank’s acknowledgement that climate change is “one of the defining issues of this century”.
For example, “accelerating its transition away from fossil fuels” only in the 2040s, and accepting that coal will be the country’s “core energy source” until 2049, demonstrates insufficient ambition. Similarly, the references to gas as a transition fuel, and to carbon capture and storage, are not supported by the latest climate science,” Hugo said.
Hugo also said FirstRand’s commitment to “be net zero by 2050 for scope 1, 2 and 3 emissions” was laudable, “but it is important that such long-term ambition be accompanied by short- and medium-term targets for reducing the bank’s financed emissions”.
Mineral Resources and Energy Minister Gwede Mantashe and the Department of Energy in August told Parliament’s portfolio committee on mineral resources and energy that coal was still an important part of South Africa’s energy mix and one of the best-performing commodities in South African mining.
“We cannot say Day Zero of 2050 is coming, so we must kill coal now. We are not going to be part of that strategy. It is a dangerous strategy to the economy,” the minister said.
A census by Statistics SA this week in mining between 2012 and 2019 found that the biggest gains in jobs were recorded in “mining of coal and lignite” with a gain of 17 112 jobs. Stats SA said South African coal production amounted to 306 million metric tons in 2019.
BUSINESS REPORT ONLINE