South Africa’s Standard Bank announced new criteria for financing thermal coal mining projects on Thursday, but stopped short of cutting off funding despite pressure on banks from climate activists.
Under a new fossil fuels financing policy, Standard Bank may only finance thermal coal mining projects that comply with international conventions on greenhouse gas emissions and the environment such as the Equator Principles.
Climate activists have been pressuring Standard Bank – Africa’s largest bank by assets – to curb its lending to the coal, oil, and gas sectors, which together accounted for around 4% of its lending and commitments in December 2019.
“If we were to stop completely to fund any coal mining related activity, we could as well say we are stopping 80% of Africa’s electricity generation and we do not think that would be a responsible thing to do,” said Kenny Fihla, chief executive of Standard Bank Corporate and Investment Banking.
In South Africa more than 80% of electricity is generated through coal and lenders have not kept pace with international peers on ending funding for it.
Standard Bank has previously pledged to restrict its financing of new coal-fired power plants according to their size, emissions intensity, and the host country’s level of development.
The lender would only fund “subcritical” coal-fired power plants – which have the highest level of emissions – in countries in the International Development Association (IDA) group of poorest nations, and if they are smaller than 300MW.
“We can’t switch off the funding to these activities overnight, that would also cause a lot of harm,” said Wendy Dobson, head of group policy and sustainability in group risk at the bank.
Standard Bank, a top financier of Mozambique’s huge liquefied natural gas (LNG) projects, said it would only fund oil and gas clients that commit to curbing emissions and that have oil spill preparedness and response plans.
“The policy does not include any ambitious fossil fuel financing exclusions,” said shareholder group Just Share, which has pushed the lender to report climate risk in its activities.