Tshabalala: bank’s fossil fuel stance nullifies need for vote
Standard Bank CEO Sim Tshabalala has pushed back at shareholder activist demands to table a climate-related resolution at its annual general meeting (AGM), saying the bank is already working towards publishing fossil fuel lending targets by the end of the year.
“They are kicking against an open door,” Tshabalala told Business Day in an interview. “We don’t actually disagree with the shareholders and Just Share on this one.”
Last month Aeon Investment Management, Abax Investments and Visio Fund Management, together with shareholder activist organisation Just Share, proposed the bank table a nonbinding advisory resolution to disclose its plans, if any, to set and publish a strategy and targets to reduce its exposure to fossil fuel assets.
“We’ve made the decision to do precisely what the resolution was asking of us, which is to set out the strategy and set out targets by the end of this year, which will hold us accountable,” Tshabalala said.
Standard Bank’s response comes as pressure ramps up on lenders to align their lending with global decarbonisation aims. The bank, Africa’s largest lender, was in fact the first company in SA to table a climaterelated resolution at an AGM, before refusing to do so again in 2020 and now at the upcoming AGM on May 27.
Last month, Nedbank set a 2045 deadline to have no exposure to fossil fuel. That drew praise from Just Share, which lauded it as by far the most ambitious fossil fuel financing policy among SA banks.
Tshabalala said Standard Bank is alive to the global decarbonisation trends and how its competitors are responding.
“It’s fiercely competitive out there … banking is a contact sport. We want to compete and win against [our competitors]. We’re not going to copy them.”
Standard Bank recognises that for human life to improve in the long run requires a reduction in greenhouse gas emissions, so “we obviously have to find an accelerated process to get to a point where we reduce emissions through renewables”, Tshabalala said.
But at the same time, he said, the Paris Agreement on climate change also contemplates a just transition, protecting the future and livelihoods of workers and their communities in the move to a low-carbon economy.
“We’ve got a large oil and gas business exposed to the African continent. But a large proportion of these economies are driven by hydrocarbons. What do we do? Do we shut the business because those economies are not changing? I would argue we don’t. We argue for a just transition and we insist on people doing the right thing,” he said.
When it comes to the environmental, social and governance (ESG) concerns of so-called socially responsible investors, “I’m committed to the E, but I’m also committed to the S and to the G”, Tshabalala said.
Just Share said it was pleased that Standard Bank had now, for the first time, committed to disclosing a Paris-aligned strategy, with targets for reducing its exposure to fossil fuels.
However, the bank’s argument that this means that it does not have to table the shareholder resolution is wrong in law, said executive director Tracey Davies. “SA law is clear that, at the very least, shareholders are entitled to file non-binding, advisory resolutions on climate issues, and that directors do not have unilateral discretion to refuse to table those resolutions, even if they think that they are unnecessary,” she said.
“By barring its shareholders
2020 the year when Standard Bank refused to table a climaterelated resolution at its AGM
3 shareholders joined with activist organisation Just Share to propose that the bank table a resolution
from voting on the resolution, Standard Bank’s directors are setting a very poor standard for corporate governance, transparency and accountability to their shareholders.”
Tshabalala said the bank’s own legal advice, which it relied on in declining to table climaterelated resolutions last year, did not concur. Further, he said, the pattern developing around these proposed resolutions had become “inexorable” and at stake is the fundamental corporate governance principle of what is in the board and management domain versus what shareholders can compel them to do.
Splashy as the headlines can be, Tshabalala said, he did not view the impasse over the resolution with activist shareholders as reputationally damaging.
“I just see it as part of the corporate dialectic.
“We get criticised, it gives rise to social conduct and change. Sometimes it doesn’t result in change, and that engagement continues,” he said. “I’m comfortable to continue the engagement, it’s an important part of corporate democracy.”
AT STAKE IS THE CORPORATE GOVERNANCE PRINCIPLE OF WHAT IS IN THE BOARD AND MANAGEMENT DOMAIN