Financial services firm Absa has announced that its long-term ambition is to reach net zero by 2050 for scope 1, 2 and 3 greenhouse gas emissions.
It has also committed to setting short- and long-term Scope 1 and 2 emissions reduction targets and to have these targets validated by the private sector climate action organisation, the Science-Based Targets initiative.
Absa recognized its contribution to a sustainable future and the extent to which its business had to reflect this in the operational decisions it made. As such, it had a group-wide target to reduce operational emissions by 51% from 2018 levels by 2030 and was on track to meet that target, it said.
So far, it has achieved an overall reduction of 21.3%, he added, although he did not provide context for that figure.
“Our Net Zero Statement underpins our belief in and support for a just transition. The transition to a resilient and sustainable economy must be inclusive and equitable for communities, investors and industries, leaving no one behind back,” Absa’s head of strategy and sustainability said. Punk Modise.
In addition, Absa aims to move away from a reactive and compliance-based approach to sustainable finance, reporting and outreach and instead consolidate a strategic approach to unlocking social impact, climate resilience and the business shared value opportunities that present their sustainability and zero net commitments.
Absa said it planned to maintain its sustainability reporting and disclosures, in addition to the integrated King IV prescribed report, while ensuring it incorporated the latest standards and best practice, as the need for greater transparency grew.
Absa currently makes its ‘Environmental, social and governance’, ‘Task Force on Climate-Related Financial Disclosures’ and ‘Principles for responsible banking’ reports available to the public.
In addition, Absa has expressed its commitment to mobilize the necessary resources to support the energy transition of its customers, thus reducing its carbon emissions and, ultimately, those of the countries in which it operates.
“Our commitment to strengthening environmental, social and governance (ESG) principles across our business underpins this support, as we believe ESG is vital to delivering real long-term value and our purpose of empower Africa’s tomorrow together,” Modise said.
Support for a transition to a low carbon economy was underpinned by Absa’s aspirations to be an active force for good in everything it did, prioritizing business activities that had environmental, social and economic impact more positive, while mitigating negative impacts, he added.
“While we recognize Africa’s particular vulnerability to climate change, our approach to net zero also takes into account the development needs of the African population,” he stressed.
SECTORAL OBJECTIVES
With regard to the financing of coal, Absa is committed to the diversification of electricity and energy supply, and to a balanced energy mix, as well as to support customers in the energy transition.
“The financing of the coal sector will be in line with Absa’s Coal Financing Standard, which provides a framework for addressing Absa Group’s sustainability risks and disclosures. Coal’s credit exposure as a percentage of loans and advances to customers, including off-balance sheet items, was 0.04% in 2022.
“We expect to reduce coal credit exposure limits from 0.2% in 2023 to 0.11% in 2030, with further reductions to 0.06% in 2040 and 0.03% in 2050,” Modise said.
In addition, in the oil and gas sector, Absa’s oil sector credit exposure limits are expected to reach 1.41% of the group’s loans and advances to customers, including off-balance sheet items , in 2023, compared to 1.03% in 2022. , is targeting a significant reduction to 0.46% in 2030, 0.22% in 2040 and 0.04% in 2050.
“However, as we view gas as a transition fuel, the trajectory of our lending targets differs from oil and coal, and the gas sector group’s loans and advances to customers, including items off balance sheet, surpass oil in 2027.
“We expect our total credit exposure limits in the gas sector to increase to 0.60% in 2023, from 0.51% in 2022, and to reach 0.83% in 2030. Thereafter, we propose a material reduction to 0.52% in 2040 and 0.32% by 2050.”
Meanwhile, in the wind and solar sector, Absa plans to mobilize cumulative sustainable financing of R100 billion by the end of 2025, while its relationship banking unit in South Africa aims to finance 2,500 millions of euros of integrated renewable energy by 2025. .
Absa also expects to grow its renewable energy lending at a compound annual growth rate of 26% by 2025, doubling its lending commitment over the period.
In addition, Absa, through its vehicle and asset finance division, is committed to supporting the adoption of new energy vehicles, taking into account the charging and other infrastructure needs for both home use as well as for the road, Modise noted.
INTEGRATED ESG
“Last year we made a lot of progress in the area of sustainability, which is an integral part of our commitment to be an active force for good in everything we do. This has also seen us accelerate the incorporation of environmental, social and governance into our business,” said the Absa CEO. Arrie Rautenbach.
In addition, due to the severe offloading situation in South Africa, Absa has taken the initiative to help its customers during this time.
“We are working closely with them to discover inventive approaches that can reduce energy use, improve productivity and support the reduction of greenhouse gas emissions. Our goal is to help our customers reduce the ‘impact of the discharge on their daily activities and operations, while helping the global mission to mitigate climate change,’ he said.
Meanwhile, Absa has expressed satisfaction with the latest tax incentives announced by the Minister of Finance Enoch Godongwana, which promoted the adoption of renewable energy sources by both households and businesses. This had the potential to increase renewable energy production and ease the energy crisis, Rautenbach added.
“We support a just transition that addresses Africa’s energy poverty, and have prioritized the promotion of sustainable and inclusive economic growth, employment and decent work for all.
“Several of the countries where we operate depend on the oil and gas sectors for their socio-economic development. Our goal is therefore to help customers and communities achieve sustainable and inclusive growth, and leave no one behind, by providing services that facilitate the process of transition and adaptation, promoting an ethical and inclusive supply chain and ensuring that stakeholders have a say. in our decisions about climate change.
“Embarking on a journey to achieve a net zero state by 2050 is an important step in supporting a just transition and a sustainable future,” he added.
