SOUTH AFRICA- Financial institution Nedbank, will stop financing new thermal coal mines from 2025 and cut direct funding of new oil and gas exploration projects with immediate effect, the bank has announced amid growing pressure on banks from climate activists.
South Africa’s lenders, some of the biggest banks on the continent, are facing pressure from environmental groups to stop funding fossil-fuel power projects that are seen as a major risk to global plans to tackle climate change.
South Africa, the continent’s biggest greenhouse gas emitter, gets most of its power from coal-fired power stations.
Nedbank, one of the country’s four biggest banks lenders, has made the strongest commitments so far to curb its lending to the coal, oil, and gas sectors.
“Nedbank’s energy policy serves to guide the bank’s transition away from fossil fuels while still providing appropriate support to existing energy requirements,” said Nedbank chief financial officer Mike Davis.
Nedbank also said it aimed to finance local small-scale renewable power generation to the tune of US$141 million above its US$3.5 billion commitment to the country’s renewable energy tendering process.
While Nedbank will continue to finance natural gas production “where it will play an essential role in facilitating the transition to a zero-carbon energy system by 2050”, it aims to have zero exposure to all activities related to fossil fuels (except when required to back up renewable power) by 2045.
Nedbank’s exposure to thermal coal stood at US$251.8 million, or 0.7% of total advances, by the end of 2020, while renewable energy was US$2.259 billion.
Shareholder group Just Share said the new policy was the most ambitious of any South African bank.
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