(Bloomberg) -- FirstRand Ltd., Africa's biggest bank by market value, is ending its funding of new coal-fired power stations immediately and will halt the financing of new projects to mine the fuel over the next five years.
The Johannesburg-based lender joins its peer Nedbank Group Ltd. in making such commitments as pressure mounts on banks to shun fossil-fuel lending from investors and activists. While South Africa's largest banks are reducing their exposure to activities that pollute the environment, they have set differing time-lines to take into account the nation's reliance on coal.
“It is the long-term ambition of FirstRand to be net zero by 2050,” it said in its updated policy published on Wednesday. The bank will also reduce its short- and medium-term limits on its overall coal exposure, it said.
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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.
FirstRand, owner of retail lender FNB and Rand Merchant Bank, sees its transition pathway assuming a gradual reduction in coal production and ending use from 2025 to 2030 as Eskom Holdings SOC Ltd. decommissions five of its coal-fired power stations and as global demand for exports of the fuel declines, it said.
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“The pathway assumes the end of coal as the core energy source of South Africa between 2042 and 2049,” it said.
While FirstRand's policies are commendable, they lack urgency and demonstrate “insufficient ambition,” said Robyn Hugo, director for climate change engagement at shareholder activism firm Just Share.
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