Climate change is one of the defining systemic issues of the 21st century, alongside poverty and inequality, which are themselves exacerbated by climate change. Without urgent, unprecedented action and cooperation from all stakeholders, future prospects for economic development, political stability and societal wellbeing are expected to deteriorate. Failure to address climate change will commit the African continent to a much more challenging and less prosperous future, since Africa is both highly exposed to the physical impacts and often lacks capacity to respond to those impacts.
The Nedbank climate change position rests on the objectives and principles of the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, further informed by the scientific reports of the Intergovernmental Panel on Climate Change (IPCC).
Nedbank is committed to achieving the goals of the Paris Agreement, keeping global warming well below 2 degrees Celsius above preindustrial levels by 2050 and to pursue efforts to limit the temperature increase to 1,5 degrees Celsius. We have further targeted having 100% of our lending and investment activity supporting a net-zero carbon economy. This effectively means that we aim to create a balance between the quantity of greenhouse gases produced and replacing GHG-intensive technology in the energy mix to contribute towards reducing GHG emissions in the atmosphere.
Nedbank will use the carbon budget construct to develop science-based targets and glidepaths that will inform relevant sectoral policies, thereby allowing the bank to help clients across all sectors - and society more broadly - to realise a net-zero economy by 2050. Since most physical capital (e.g. power plants, industrial facilities, buildings, transportation infrastructure) implicated in GHG emissions is long-lived, the timing of the shift in investments and strategies will be crucial to avoiding a disorderly transition. For the energy sector specifically, the objectives of the Paris Agreement imply immediate, rapid and profound change: The sector should be decarbonised fully by 2050, which allows additional space and time for sectors and activities with limited abatement options (e.g. steel, cement, aviation).
The Sustainable Development Framework of the bank, founded on the UN Sustainable Development Goals (SDGs), will continue to inform its understanding of how to close financing gaps and capture new business opportunities linked to creating the next economy. The Climate Risk Management Framework of the bank provided an overarching framework for the identification and management of climate-related risks which allows for purpose-driven decision-making across the group. These opportunities include the provision of clean, affordable, safe and efficient energy services, as well as clean water and sanitation, nature-based solutions, sustainable cities, climate resilient infrastructure and digital technologies, with both the positive and negative impacts of these activities being considered.