Nedbank Group Ltd. has committed 50 billion rand ($3.5 billion) to renewable energy projects as the South African lender forges ahead with plans to retreat from fossil-fuel financing.
The nation’s fifth-largest lender by value has already approved over 37 billion rand for clean-energy developments. It also secured deals in South Africa’s latest bidding round for participation in renewable projects to extend a further 12 billion rand, Nedbank Chief Financial Officer Mike Davis said in an interview on Thursday.
“As we transition as a country away from coal into renewable energy, the bank sees our policy supporting existing clients, but with a strong steer toward renewable energy,” Davis said.
Banks have been taking steps to address climate change by limiting their exposure to energy projects that are most harmful to the environment, such as thermal coal mining. This month, investors managing $11 trillion have called on the world’s biggest banks to phase out financing of fossil-fuel companies and throw their weight behind the goals of the Paris climate agreement.
South Africa relies on coal for almost all of its electricity and exports the fuel to countries including China and India. Its carbon emissions rival those of the U.K., an economy eight times its size. Other South African banks such as Investec Ltd. and Standard Bank Group Ltd. are also pursuing plans that encourage clients to opt for greener technologies.
Under the plan, Nedbank will cease its funding of new thermal coal mines as of January 2025 and will do the same with new oil production a decade later. It has also stopped financing oil and gas exploration.
While the bank will continue funding renewable-energy projects involving oil and gas for a time, it plans to cut its exposure to fossil fuels entirely by 2045.
Nedbank will report annually on progress in achieving its climate-relevant performance targets and update its policies to ensure it reaches its 2045 deadline, Davis said.
Nedbank’s policy beats what the competition has offered thus far, shareholder-activism firm Just Share said in a statement.
“We hope that its approach will provide a much-needed impetus to other financial institutions to set meaningful, climate science-based decarbonization targets and fossil fuel financing exclusions,” said Robyn Hugo, director of climate change engagement at Just Share.