South Africa’s Nedbank has pledged to stop funding new thermal coal mines by 2025 and halt direct funding of new oil and gas exploration as it accelerates its commitment to finance renewable energy solutions.
Nedbank has adopted a new energy policy that redirects investment funds towards cleaner energy alternatives. It will also align its business strategy, policies, mandates and incentives with the Paris Agreement, while scaling up its commitment towards the fast-growing renewable energy sector.
One of South Africa’s four largest banks, Nedbank has committed not to provide funding for new thermal coal mines from 1 January 2025. The bank also announced that it will not directly finance new oil and gas exploration projects with immediate effect, and not advance any new finance for oil production from 1 January 2035.
In addition to the R50billon limits already committed to the South African Renewable Energy Independent Power Producer Procurement Programme, Nedbank will further its embedded generation financing to accelerate the transition and aims to achieve R2billion in financing by 2022.
Mike Davis, chief financial officer at Nedbank, says: “Banks play a central role in driving sustainable socioeconomic development for the benefit of all stakeholders, by directing capital where it is needed most. Nedbank’s financing choices can serve to accelerate the transition to a net-zero economy and contribute towards building climate resilience through the financing of adaptation measures.
“Nedbank’s energy policy serves to guide the bank’s transition away from fossil fuels while still providing appropriate support to existing energy requirements.”
According to Nedbank, while it does see a potential role for natural gas in facilitating the transition to a zero-carbon energy system, it aims to have withdrawn fully from fossil fuel extraction activities by 2045.
The Sustainable Development Framework of the bank, based on the United Nations Sustainable Development Goals (SDGs), will drive its understanding of how to close financing gaps and capture new business opportunities linked to creating a net-zero economy.
It will focus on:
- The provision of clean, affordable, safe and efficient energy services
- Clean water and sanitation,
- Nature-based solutions
- Sustainable cities
- Climate-resilient infrastructure
- Digital technologies
Nedbank has also endorsed the guidelines of the Task Force on Climate-related Financial Disclosures (TFCD) on governance, strategy, risk management, metrics and targets, and will report progress annually. inaugural TCFD report is now available.
Earlier this month, Nedbank launched YouthX, a platform designed to enable youth potential by giving them access to resources and inspiration.