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Nigerian banks and the climate crisis

It is no longer news that the window to keep the global temperature within 1.5⁰C or limit it to 2.0⁰C rise by 2050 as benchmarked against pre-industrial levels is closing fast. This target, commonly referred to as net zero, has ushered in a frenzied climate crisis which necessitates an urgent response from stakeholders all over the world, especially those whose activities are contributing to greenhouse gas emissions.

As a result, corporate social responsibility is no longer enough as conversations around climate change mitigation strategies are now frontline issues in all sectors and industries. Given accountability demands and global expectations on carbon emissions reduction, the focus is shifting fast to sustainability and environmental stewardship. How are Nigerian banks faring in this regard?

A critical assessment of the sustainability reports of a number of banks in Nigeria shows that they are gradually taking steps to reduce their direct and indirect emissions across their operational chains. With the adoption of different environmental sustainability reporting frameworks such as the GHG Protocol for Carbon Footprinting and Global Reporting Initiative (GRI), these banks have been able to monitor their emission trends and carried out initiatives that helped reduce their emissions over time. For instance, in a bid to reach its net-zero target by 2050 or sooner, the United Bank for Africa (UBA) reported some notable progress in the reduction of its GHG emissions. According to its 2022 Sustainability Report, the bank took practical steps like the conversion of 119 Automated Teller Machines (ATMs) to renewable energy sources, conversion to paperless communication, and anchoring procurement on the environmental compliance of suppliers. The bank said the combination of these climate actions amongst other environmentally friendly initiatives helped it reduce its Scope 1, Scope 2, and Scope 3 (upstream) emissions from 47,339.10 tCO₂e in 2021 to 44,188.74 tCO₂e in 2022. Such initiatives would in no doubt be critical to the Bank’s target of reducing its overall emissions by 43% annually if its net-zero target of 2050 is to be achieved.

While Access Bank, another prominent commercial institution, did not provide a numeric reduction in its emissions on a yearly basis, it said several initiatives such as providing a solar-powered water treatment plant that provided water to about 500 families in a community in Nigeria, defined its climate action. This is according to its annual sustainability report in 2021.

In addition, the bank said about 400 of its ATMs were powered by solar energy while strongly committing to recycling so as to reduce the impact on landfills or destruction of fauna for the production of papers. However, there seemed to be a lack of clarity about long-term plans to reduce the bank’s emissions in line with a GHG emissions reduction project that was launched in 2021.

Zenith bank, another frontline private financial institution, extensively outlined its emissions reduction pathways to meet the net-zero target by 2050. Although these targets are limited to Scope 1 emission pathways such as emission from vehicles, electricity consumption and diesel generators, air conditioners, ATMs energy use, masts operations, use of inverters and batteries, and emission from electronic wastes, they constitute about 75% of the bank’s total emissions, according to its 2021 sustainability report. The bank’s annual report of 2022 said it had 85.5% of ATMs nationwide powered by solar while 70.6% of all branches were powered by solar systems in 2021.

From this brief comparative analysis, it may be said that the Nigerian banking sector has bought into the global race to curb climate change through deliberate emissions reduction policies. While this is commendable, there is the argument of how much is required to be done to have a significant impact, which would enable the sector to contribute to the country’s nationally determined contributions

Aug 04, 2023 by Ogheneganre Eyankware