Standard Bank CEO Sim Tshabalala.
In the context of climate policy, exclusion and inequality are slowing the energy transition in the Global South and fuelling resistance in developed countries, Standard Bank group chief executive Sim Tshabalala has said.
At the fifth edition of the Standard Bank climate summit in Johannesburg on Tuesday, Tshabalala said recent political shifts are best understood through these “two tightly-linked concepts”.
“Why are some people so sceptical about the benefits of trade? Why do they think that climate change is not a serious problem, or even that it’s happening at all?” he asked.
It’s not because they have found a new economic model that refutes comparative advantage. “There’s just no such model,” he emphasised. “Similarly, it’s not because they have new data that challenges the correlation between the concentration of carbon dioxide in the atmosphere and average temperatures.”
There’s no such data, either. “People reject settled science because they feel materially excluded, because they don’t think that they were properly consulted and heard. And because they suspect or know that policies, which are presented as good for everyone, are in fact harming their families, their communities and their loved ones.”
Citing Nobel prize-winning economist Joseph Stiglitz, who chairs the new G20 Extraordinary Committee on Global Inequality appointed by President Cyril Ramaphosa, Tshabalala warned of the dangers of deepening divisions.
“Inequality has widened to extremes that threaten democracy itself and should be a concern of all of us,” Stiglitz said. “The profound rise in the discontents of mismanaged globalisation, which in many places has contributed to this growth of inequality is also evident … Our task must now be to translate the evidence and public’s palpable anger at the great divide into sound, practical and transformative policy proposals.”
Tshabalala said this was true in general, noting that recent political changes have “taught us in a very emphatic way there can’t be a sustainable transition unless it is also a just one”.
In the past decade, he had often felt that the term just transition was treated in climate discourse as “no more than a pious aspiration” — as if the transition would automatically be just because it would secure the long-term future of the planet.
“Please don’t get me wrong. Here at Standard Bank, we are convinced as ever of the necessity for the transition towards the low-carbon economy. But to make sure that this transition actually happens, we believe that we all have to focus very intently on making sure that the transition is really just, that it is fair, inclusive and visibly beneficial for all.”
Many countries’ energy policies have shifted from a singular focus on the energy transition to a broader imperative: energy security.
“People want reliable energy that they can afford right now. And they won’t sacrifice that for abstractions like the climate or the future. It is becoming increasingly clear that we need to think both about energy systems and about infrastructure, more broadly. People want to see large-scale public investment directly making their life better.”
Resilience to climate-induced crises such as extreme weather events must be built as people want to see investment making their lives safer.
Referring to Standard Bank’s position, Tshabalala conceded that it has “taken some flak in the past, but we’ve always been consistent”.
“When we say we support a just transition, we’ve always meant it, both the just part and the transition part. Here’s what we mean when we say ‘just’. Our focus is unequivocally on driving Africa’s growth. We make no apologies,” he said.
This means that it supports a mix of renewable and transitional projects. Africa, he said, has a right and duty to use fossil fuels to lift its people out of poverty — a principle recognised in the Paris Agreement.
Here, he cited the controversial East African Crude Oil Pipeline (Eacop), a 1 443 km pipeline designed to transport crude oil from Uganda’s oil fields in the Albertine Graben (near Lake Albert) to the port of Tanga in Tanzania on the Indian Ocean, which Standard Bank is funding.
It is being developed mainly by TotalEnergies and China’s CNOOC, along with the Ugandan and Tanzanian governments.
The pipeline will be the longest heated crude oil pipeline in the world and once operational, it is expected to carry up to 216 000 barrels of oil per day for export to global markets.
But it faces major criticism over environmental damage, human rights abuses and climate impacts.
“Yes, there are environmental costs but these are being minimised and the net effect on the project is worth it, now and into the future. Considering all the facts, which include that East Africa has a right to economic development and that people need energy, they need income, and a healthy and pleasant place to live,” Tshabalala said.
Eacop is an important and “wholly credible element” of Total’s own net-zero transition plan, providing both relatively low-carbon energy and the revenue it needs to make its own transition.
Earlier this year, Standard Bank updated its climate policy and restated its commitment to continuing to reduce the share of its balance sheet that supports upstream oil and gas.
“We set a new and larger target for sustainable finance. We will mobilise more than R450 billion of sustainable finance by 2028 – we are already more than halfway to achieving this target – and we are unwavering in our commitment to achieve net zero in our portfolio by 2050,” Tshabalala said.
He used a tech example to illustrate Africa’s renewable potential. A single ChatGPT query uses 10 times more electricity than a Google search, he noted, and data centres have skyrocketed from 500 000 in 2012 to eight million today.
This growth will continue. “Now ask yourself — or your chatbot — which continent has an effectively unlimited supply of renewable wind, solar and geothermal energy: our beloved continent. We should aim to have as many of these new data centres built here, as possible.”
The case for data centres is particularly strong in East Africa with its abundance of geothermal energy and IT knowledge, skill and talent. The same is true for the Western Cape, which has a lot of IT capacity, along with excellent wind and solar, he said.
“This kind of argument applies generally. Africa offers the world a uniquely attractive combination of renewable energy, relatively low-cost labour and short transportation distances for critical minerals such as copper and the rare earths; the copper belt is right here.”
As the energy transition progresses, Africa can and should aim to build the green data processing and green physical manufacturing centre of the world, he added.
Addressing the summit, Kenyan President William Ruto, said the financial sector can be the engine of resilience, innovation and sustainable growth.
“Africa has contributed the least to the climate crisis yet bears its harshest consequences. Responsibility is not about guilt. It is about opportunity. We cannot change the past, but we can define the future by embedding climate action in every part of development.”
As the global economy shifts to low-carbon and digital production, Africa stands at a crossroads, said Ruto.
“With our resources, we can build prosperity on a green foundation and it is encouraging that our banks are beginning to see this potential. Yet the crisis is real.
“Kenya has endured three multi-year droughts in just 15 years. Last year, Southern Africa faced power cuts of up to 20 hours a day. These are not statistics. They are lived tragedies and resilience is no longer optional; it is imperative.”
Progress, however, is slowed by mispriced risk, outdated narratives and costly capital.
“With the Africa credit rating agency, we can claim our story and assert our strength and sovereignty,” Ruto said.
Financing, however, remains the continent’s greatest bottleneck. To close the gap, the Kenyan president proposed pulling two levers. First, innovative levies for predictable finance, where aviation and shipping charges can fund clean fuels, green ports, resilient infrastructure and logistics hubs.
Second, he called for debt fairness including faster restructuring and debt-for-climate swaps where “unsustainable debt must give way to resilience-linked solutions.
“We must also seize carbon markets, monetising our forests, mangroves and renewables to cut emissions and unlock finance. At the same time, we must industrialise,” he said, noting that Africa’s share of global manufacturing is below 2% and shrinking. “Yet with renewable energy as our anchor, we can leapfrog into climate smart production.”