Standard Bank directors reappointed despite conflict of interest concerns

Standard Bank CEO Sim Tshabalala
Standard Bank CEO Sim Tshabalala

Five Standard Bank directors have been reappointed to the board of Africa’s largest lender, despite activist concerns that they are conflicted on matters of climate change.

At the virtual AGM, which took place on Friday, the majority of shareholders approved the reappointment to the board of Maureen Erasmus, John Vice, Trix Kennealy, Nomgando Matyumza, Jacko Maree, Priscillah Mabelane and Nonkululeko Nyembezi.

The latter five were identified by shareholder activist group Just Share as being climate-conflicted because of their links to fossil fuel companies. Before the AGM, Just Share appealed to shareholders not to reappoint those directors.

Just Share formed part of a group that successfully proposed two climate-related resolutions be tabled at the bank’s AGM last year, one of which was passed, compelling Standard Bank to adopt and publish a policy on lending to coal projects.

Standard Bank chair Thulani Gcabashe said the board recommended the reappointment of the directors. “Suffice to say we as the board are satisfied by the contributions these members bring,” he said. “I don’t believe there is a conflict of interest by virtue of the other industries they may be in.”

Aeon Investment Management’s Tinyiko Mabunda asked if nonexecutive directors has historically recused themselves from the board and subcommittee meetings when they had had a conflict of interest with respect to climate discussions and climate change decisions, and what the board’s policy would be in the future.

Group secretary Zola Stephen said directors did recuse themselves when they had a conflict of interest in a matter that arose. “But just because a director has an interest does not necessarily translate to a conflict,” she said. For example, a Standard Bank director who is also a director at Sasol would not have to recuse themselves on a climate-related matter.

Just Share’s appeal to shareholders came after the Standard Bank board declined to table further proposed climate-related resolutions in the 2020 AGM.

Standard Bank CEO Sim Tshabalala said the board had felt that it was in interest of all stakeholders that the climate-related proposals proceed in 2019. However, there was already concern that allowing such resolutions could have governance and public policy implications not in the interest of the group’s entire stakeholder base.

Tshabalala said that risk materialised in 2020 when resolutions were again proposed despite the bank’s progress in contributing to the transition away from fossil fuels and willingness to engage.

“No general or statutory right exists to convert AGMs to forums on company public policy,” he said. “It would be contrary to fair and effective corporate governance if single- issue advocates with no fiduciary duties to the corporation were able to dictate parts of the agenda of the entire organisation.”

Commenting on Friday’s AGM, Just Share executive director Tracey Davies said the bank had not adequately addressed the conflict of interest issue and “failed to explain how the risk and capital management committee can properly address the imminent risks from climate change and reduce fossil fuel finance, when the majority of its members are paid are paid by fossil fuel companies to do exactly the opposite”.

The bank’s argument against climate-related shareholder resolutions rests on the idea that climate change is an issue of relevance only to a few minority shareholders, and fails to recognise the fundamental importance of this issue for every one of us, Davies said.  

“Climate risk is now firmly at the top of the professional investor agenda,” she said. “We are making progress, and today’s AGM has only strengthened our determination. This fight is a long and hard one, and we will not be giving up."

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