Investec, the private bank and wealth manager, has taken the bold step of publishing the total carbon emissions of all the assets it financed in its £26.74bn (R528.2bn) loan book for the 2021 financial year.
The dual-listed bank, whose shares trade on the London and Johannesburg stock exchanges, took the brave decision at its August 2021 AGM to begin disclosing its total scope 3-financed carbon emissions as far as they can be calculated. That has culminated in the bank publishing in its latest climate-related financial disclosures report a detailed breakdown of the CO2 emitted by the various asset classes it finances.
“We’ve taken our entire loan book and calculated how many emissions we are financing as far as they can be calculated based on the material data available for the various asset classes,” said Melanie Janse van Vuuren, Investec’s sustainability manager. “There are not a lot of companies that disclose their financed emissions. Some banks might calculate the figure for oil and gas but not many do it for their entire loan book.”
Investec’s total group scope 3-financed emissions amounted to just more than 1.77-million tonnes of CO2 equivalent in its loan book for the year to end-March 2021. Most of that amount stemmed from commercial and residential real estate, which accounted for a combined 1.29-million tonnes of CO2 equivalent. Mortgages, motor vehicle finance, and power and infrastructure accounted for a relatively small portion of its financed emissions (see table).
“You could argue that we’re taking a risk by being so open about the emissions of our loan book but we really want to be transparent and open about our climate disclosures,” said Tanya dos Santos, Investec’s global head of sustainability.
Reliable data
To calculate its total group-wide scope 3-financed emissions Investec assessed the 68% of its loan portfolio for which it could determine material figures for CO2 emissions related to its lending activities. While that technically still leaves 32% of the loan book’s emissions unaccounted for, Janse van Vuuren said certain lending activities simply don’t have material emissions data that is sufficient to produce reliable data. “For instance if you finance an accounting firm it’s very difficult to get material emissions data on their activities,” she said.
The bank’s decision to publish its scope 3-financed carbon emissions — those stemming from downstream lending for activities such as asset finance, home loans, real estate or power and infrastructure projects — form part of Investec’s aim to take a lead role in ESG-related transparency and disclosure. It also follows the bank’s achievement of carbon neutrality on its scope 1, scope 2 and operational scope 3 emissions for four consecutive years.
Operational scope 3 emissions are those arising from employees’ daily activities such as business travel, while scope 1 emissions refer to those stemming from activities within a firm’s own premises such as using a generator.
Scope 2 emissions refer to general power and energy use from external utilities, which in the case of SA’s coal-fired grid Investec has been able to mitigate by purchasing carbon offsets and renewable energy certificates.
Though Investec says in its 2022 climate-related financial disclosures report that it is committed to the move to a “sustainable net-zero world” a note in the same document by its CEO acknowledges that achieving the goal of carbon neutrality by 2050 will not be easy. “As much as we believe we have improved our transparency and level of disclosure, we acknowledge that the transition to net zero is exceptionally challenging,” Fani Titi said in the report.
Dos Santos too acknowledges that achieving net zero by the targeted date will require a delicate balance between climate commitments and the necessary sociopolitical considerations that come with operating in an emerging market such as SA.
“SA’s entire economy is built on fossil fuels, so achieving that balance is a major challenge,” she says. “But we’re still saying we have to do both — we’ve got to meet climate and sustainability goals and at same time manage the social challenges that come with that.”
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