Nedbank CIB on its role in enabling a just transition to low carbon resilient economies

Brad Maxwell, Managing Executive at Nedbank Corporate and Investment Banking (CIB), talks about CIB’s role in enabling a just transition to low carbon resilient economies and the importance of highlighting conversations on climate transition in emerging markets on the global Davos stage.

On how the Covid-19 environment has derailed this transition to green emerging markets

From my perspective, the Covid-19 pandemic has had a significant impact on the global economy over the last two and a half years. The way I like to look at it is potentially not derailing the overall climate change objectives, but really just slowing it down to an extent. A lot of governments have had to focus on the key crisis around health, the safety of their people, saving lives, saving jobs and getting their own economies going again. From a perspective of not losing jobs and creating income, they’ve had to ensure the value chains and supply chains continue. I certainly don’t think it has derailed anything. But the other key point I would like to raise is what we are going to see between now and 2050, certain global events are going to continue, of which Covid-19 was one of them. But if you take the current Ukraine-Russian war that is going on at the moment, we’re going to continue to see events like these and others which will really make governments and countries think about the security of their energy supply, and which third parties they are reliant on. A lot of these key aspects will ultimately impact some of the decision-making. Fundamentally, we cannot move off what is critical in terms of the climate change journey we are on.

On what Nedbank CIB is doing to contribute to the net-zero targets and to lower emissions across industry

We are looking at a couple of things. Certainly, we’re looking at moving back to our purpose, which is to use our financial expertise to do good for individuals, families, businesses and societies. Through that purpose, we have committed to various sustainable development goals where we believe we can have the biggest impact. One is clean energy, which is the topic of some of the discussions we’re having today. Nedbank was one of the first banks to announce our energy policy. That really set out the blueprint and our glide path to a carbon-neutral economy in terms of how we deliver between now and 2050. That incorporates aspects like no longer financing oil production and new oil production, not project financing new thermal coal production and ultimately, how we set that out and transition to a carbon-neutral economy. Embedded in that is also the policy and the climate frameworks within the bank and there has been a tremendous amount of work done on that. So, if we just take the renewable energy programme as an example, we have committed to fund up to R50bn in the renewable energy programme. To date, we have financed about R30bn in terms of that programme. It’s really how we work with our clients in that just transition over this period. 

On the extent to which local communities are going to benefit from the transition to clean energy in emerging markets

Climate change impacts all of us, but it certainly impacts the most vulnerable communities the most. If we look at the floods we’ve had this weekend in KZN, this is evidence of that. The fundamental thing for me is, how do we create the policy frameworks and environments that ensure everyone is able to participate in this just transition? It’s always in a lot of discussions we have around ESMG and how you balance it is critically important. Ultimately, from a South African Government perspective, if I look at South Africa’s NDC – which is the nationally determined contribution – it sets out very clearly how we get a balance between socio-economic benefits and climate resilience. Those two points are fundamentally important as to how we balance that. In terms of South African investment into future mitigation and adaptation strategies, which will benefit all parties and local communities, it’s critically important to get that balance correct between those elements. If done properly, we can deliver on those objectives. 

On whether developing countries will see enough effort from the developed world to help facilitate the transition in emerging markets

The original objectives of the Paris Agreement sets out a lot of objectives. It spoke to three things around how the developed world provides finance to developing countries. How do they look at technology and technology transfer? And how do they assist with providing capacity in what they referred to as capacity building? Those are the key elements of discussion at the World Economic Forum and I am really looking forward to some of the outcomes in the discussions over this coming week. From my perspective, I see a lot of progress from a finance perspective. If we look at COP26, the UK, Germany, France, the US and other areas of the EU committed R134bn to South Africa to assist us in our financing of this transition. That is evidence of a step in the right direction. In addition, what is important is understanding some of the global technology benefits and technology learnings and transfer that we could all discuss and consider. This also comes down to capacity. One of the key things for me is the implementation and execution of the plan and having sufficient capacity to deliver into that. There is a big role; the developed economies need to assist the developing economies in their own just transition journeys. I look forward to hearing some of the outcomes of this week’s events. And COP27 that is coming up.

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