Executive summary

South Africa’s banks are not passive participants in the transition. With R9.2 trillion in assets, their lending decisions help shape the direction and pace of the economy. All five banks assessed in this report recognise climate change as a material issue and have policies, targets and governance structures intended to manage it. However, across three editions of the research, commitments have accumulated faster than evidence showing that capital is moving in response. The results show a sector that has made progress, but not consistently or at the required pace. No single bank performs strongly across the full assessment framework.

Four findings stand out

Firstly, policies are moving, but movement does not always mean progress. Four of the five banks have updated fossil fuel financing policies, yet some updates strengthened restrictions while others weakened them. Gaps remain regarding coal mining, oil and gas, and midstream infrastructure. Secondly, targets do not always demonstrate transition. While banks have interim reduction targets for coal, only one has such a target for oil and gas. Other measures rely on intensity or engagement activity, which can show progress without demonstrating absolute reductions in financed emissions. Thirdly, gas remains a significant policy gap. All five banks treat gas as a transition fuel, but few impose use-case restrictions or quantified pathways for reducing exposure. Finally, disclosure and accountability remain uneven. Transition finance volumes are not separately disclosed, and board climate expertise is often asserted without explanation.

What needs to change

Banks’ customers should use their purchasing power to demand credible transition plans and transparent reporting on financed emissions. Investors should treat climate commitments as investment-relevant and use their rights as shareholders to demand change where commitments are not credible. Policymakers and regulators should establish a common minimum standard for climate-related disclosure and transition planning to provide consistent, decision-useful information for stakeholders to compare strategies and understand how climate considerations affect capital allocation.

Introduction

The global banking sector is retreating from climate ambition just as physical consequences like heatwaves and wildfires become harder to ignore. For banks, climate change is a material financial risk. The South African Reserve Bank (SARB) finds that transition risk to the South African market could amount to almost R2 trillion accumulated between 2013 and 2035. As of June 2026, the South African banking sector manages approximately R9.2 trillion in assets, placing it in a powerful position to influence the direction of the economy and support a low-carbon, inclusive and resilient transition.

How do the banks measure up?

Nedbank retains its title as the highest-scoring bank since 2023, leading in emissions disclosure, governance, and nature and biodiversity, although its score declined marginally by 1% since 2023 to 59%. Investec ranks second overall with 49%, leading in fossil fuel exposure and sustainable finance. FirstRand drops to third place with 46%, while Absa maintains fourth place at 32%. Standard Bank remains the lowest-ranking bank at 31%, although it is the only bank to consistently improve its score each year, increasing by 12% since the first assessment.

Transitioning the loan book

Fossil fuel exposure is not yet on a sustained downward trajectory. Only Investec and Nedbank have reduced absolute exposure since the last assessment. Standard Bank remains the most exposed, with fossil fuels accounting for 61% of its total energy financing; this rises to 68% when including its disclosed off-balance sheet exposure. Renewable energy lending is growing rapidly, with absolute growth of 112% at Investec and 175% at FirstRand. However, Standard Bank remains an outlier, with renewable energy accounting for just 39% of its energy financing. In terms of financed emissions disclosure, FirstRand is the only bank reporting across its entire loan book, while other banks cover between 35% and 66%. A new theme, nature and biodiversity, shows that practice is underdeveloped, with Nedbank leading at 60% due to its location-specific geospatial client analysis.

Commitments and claims

While all five banks have fossil fuel financing policies, exclusions often fall short of meaningful constraints. All banks exclude new coal-fired power generation, yet this has limited relevance as no new stations have been proposed in South Africa for years. Only Nedbank has interim absolute emissions reduction targets for both coal and oil and gas. For oil and gas, other banks rely on intensity targets or engagement milestones. No bank has yet published a transition plan with defined actions and accountability mechanisms for missed milestones. Furthermore, all banks treat gas as a transition fuel without establishing comprehensive frameworks to ensure this does not create new fossil fuel dependence.

Governance and strategy

Nedbank is the only bank with a board committee dedicated specifically to climate. While banks increasingly identify directors as having climate expertise, the basis for these assessments is rarely clear. No bank discloses the basis for characterising a director’s experience as climate expertise as opposed to general sustainability or fossil fuel sector experience. Climate-linked remuneration remains weakly transparent, though Nedbank leads by disclosing a measurable KPI linked to progress on sectoral financed emissions glidepaths. Although all banks use climate scenario analysis, only Nedbank provides concrete evidence of how it informs financial decisions, including R1.6 billion in impairment overlays for climate-related risks.

Conclusion

Growth in green financing is not a substitute for reduction in high-carbon lending. Reported financed emissions rose at every bank, and absolute emissions reductions are required to change the direction of the economy. Across the sector, commitments exist but very little binds them, as elements that would convert a commitment into an obligation are missing or self-defined. The next phase of responsible banking should focus on turning climate commitments into decisions that can be measured, challenged, and shown to have changed the allocation of capital.