South Africa’s Nedbank revealed last week that it had decided to phase out funding for all fossil fuel projects.

In a statement, the financial services group said that it had taken this step as part of a wider effort to reduce its net carbon emissions to zero by 2045. It declared that it would work to achieve this goal by halting funding to organisations involved in thermal coal mining by 2025 and direct funding for crude oil and natural gas exploration.

In practice, the statement explained, this campaign will entail restricting the amount of financing offered to thermal coal mining, along with the trade and infrastructure related to thermal coal mining, to 1% of its aggregate total lending by 2025. The share will then be reduced further to 0.5% by 2030, it said.

Nedbank also indicated that it was not planning to abandon gas entirely. The group will continue to provide financing for gas production “where it will play an essential role in facilitating the transition to a zero-carbon energy system by 2050,” the statement noted. It stressed, though, that the bank was dedicated to bringing its level of exposure to fossil fuels down to zero by 2045. (It also made provisions for some exceptions, including the integration of gas-fired facilities into renewable energy schemes as back-up power sources and the replacement of coal and petroleum product-fired power stations with gas-fired plants.)

According to the statement, Nedbank is taking this step to uphold its pledge to bring its business into line with the goals stated in the Paris climate agreement. “We recognise that meeting the Paris agreement objectives will require, among other things, full decarbonisation of the global energy system by mid-century,” it said. “An orderly exit from fossil fuel financing will be necessary well before 2050, given the long lifetimes of the physical assets.”

This is not the bank’s first move in this direction. Nedbank had already announced last month that it intended to stop providing funding for coal projects. The new policy goes further, as it also targets oil and gas – and, as the shareholder activist organisation Just Share noted last week, sets a deadline of 2045 rather than following other banks and companies that are aiming to reach net zero by 2050.

Mike Davis, the group’s CFO, described the new policy as capable of balancing climate imperatives with the demand for reliable energy supplies. “Nedbank’s energy policy serves to guide the bank’s transition away from fossil fuels while still providing appropriate support to existing energy requirements,” he commented.

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