Not up to stan­dard

Share­hold­ers di­rect a bar­rage of ques­tions at CEO Sim Tsha­bal­ala at the bank’s AGM, af­ter it re­fused to ta­ble two new cli­mate change-re­lated res­o­lu­tions

Financial Mail - - STANDARD BANK - Lisa Steyn steynl@busi­nesslive.co.za

ý What a dif­fer­ence a year makes. This time last year, Stan­dard Bank was bask­ing in the warm glow of good PR when it be­came the first SA cor­po­rate to ta­ble cli­mate-re­lated res­o­lu­tions at its AGM.

Two res­o­lu­tions were tabled — one for the bank to dis­close its ex­po­sure to fos­sil fuel lend­ing and the other to adopt and pub­lish a pol­icy on fi­nanc­ing coal projects; the lat­ter was, some­what sur­pris­ingly, ap­proved by share­hold­ers.

This year, how­ever, things got messy.

Africa’s big­gest lender this time re­fused to ta­ble two fur­ther cli­mate-re­lated res­o­lu­tions — one ad­dress­ing its ex­po­sure to fos­sil fuels and one ask­ing it to in­clude its po­si­tion on oil and gas fi­nanc­ing in its new coal lend­ing dis­clo­sure — as­sert­ing that share­hold­ers did not have a le­gal right to vote on such mat­ters.

Ac­tivists, led by share­holder ac­tivist or­gan­i­sa­tion Just Share, hit back, call­ing on share­hold­ers to vote against the reap­point­ment of five di­rec­tors to the board who, they al­lege, are con­flicted on mat­ters of cli­mate change by virtue of their ties to fos­sil fuel com­pa­nies.

How­ever, at the 2020 AGM, held via we­b­cast last week, their call to ac­tion failed and the di­rec­tors were reap­pointed.

Stan­dard Bank CEO Sim Tsha­bal­ala, mean­while, ad­dressed a bar­rage of ques­tions from ac­tivists and oth­ers.

While the Stan­dard Bank board felt it was in the in­ter­est of stake­hold­ers for last year’s pro­posed res­o­lu­tion to pro­ceed, not so this year, he said. “In our view it is not in the best in­ter­est of the com­pany and stake­hold­ers that its AGM be­come an an­nual plat­form for pol­icy ad­vo­cacy and de­bate.”

Tsha­bal­ala said al­low­ing “sin­gleis­sue ad­vo­cates” with no fidu­ciary du­ties to dic­tate parts of the agenda for the en­tire group was not in the in­ter­est of good gov­er­nance or democ­racy more broadly.

But the ques­tions posed at the AGM were not only asked by non­prof­its.

Aeon In­vest­ment Man­age­ment voted against the rel­e­vant di­rec­tors be­ing reap­pointed when a ques­tion about how the con­flict would be man­aged was not an­swered by the bank ahead of the vote. Chief in­vest­ment of­fi­cer Asief Mo­hamed says a con­flict of in­ter­est can’t merely be de­scribed as “nar­row in­ter­ests”.

No­tably, Stan­dard Bank’s own group head of sus­tain­abil­ity man­age­ment, Karin Ire­ton, asked why the board would not ta­ble a pro­posed res­o­lu­tion to dis­close its port­fo­lio risk to cli­mate change, given that it is “emerg­ing best prac­tice”.

Robert Lewen­son, head of ESG (en­vi­ron­men­tal, so­cial and gov­er­nance) en­gage­ment at Old Mu­tual In­vest­ment Group, which sup­ported both cli­mate-re­lated res­o­lu­tions at the 2019 AGM, says it is com­fort­able that the bank is tack­ling the ques­tion of its port­fo­lio’s ex­po­sure to cli­mate change as it has com­mit­ted to pro­duce a re­port on this later this year.

Lewen­son says the group had not sup­ported the call to vote against cer­tain Stan­dard Bank di­rec­tors as it does not view a di­rec­tor as cli­mate con­flicted for sim­ply sit­ting on the board of an ex­trac­tive com­pany.

How­ever, Lewen­son says Old Mu­tual In­vest­ment Group strongly dis­agrees with Stan­dard Bank’s con­tention that the pro­posed cli­mate-re­lated res­o­lu­tions are not a share­holder mat­ter. “If the com­pany had al­lowed the share­holder res­o­lu­tions in 2019 on the same share­holder con­cern of cli­mate risk then cer­tainly it is a share­holder mat­ter,” he says, adding that he ex­pects the le­gal cor­rect­ness of this ar­gu­ment to be tested soon.

Given the chronic in­equal­ity in SA, Mo­hamed be­lieves NGOS ought to push cor­po­rates to act on so­cial is­sues. When it comes to as­set man­agers, he sees ESG as more of a mar­ket­ing tool to get more as­sets. “In re­al­ity they do not

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