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By Sharon Kimathi, Energy and ESG Editor, Reuters Digital

Hello!

Today’s newsletter focuses on Africa’s new energy bank aimed at expanding oil and gas projects, while an investor climate action group calls on big fossil fuel firms to improve their low-carbon transition plans.

But before we jump into it, please note that there will be no Sustainable Switch Climate Focus tomorrow as we’re off to enjoy the Easter Break. We’ll be back in your inbox on Tuesday, April 2.

Now, back to the proposed Africa Energy Bank which will focus investment on oil and gas projects across the continent. The bank is set to start operations later this year with an initial $5 billion authorized capital base, a senior official said.

Also on my radar today:

• Who is Sam Bankman-Fried, the crypto mogul facing decades in prison?
• Finnish unions extend strikes over labour reforms by another week
• Jane Goodall’s 90th birthday wish? More time to get out the conservation message

Two gas flaring furnaces and a woman walking on sand barriers are reflected in a pool of oil-smeared water at a flow station in Ughelli, Delta State, Nigeria. REUTERS/Afolabi Sotunde 

The bank, a partnership between Afreximbank and the African Petroleum Producers Organization (APPO), is meant to help plug a funding gap in Africa amid pressure on major banks from environmental groups to shift investment dollars away from climate-warming oil and gas projects.

“Africa should set up its own financing capability so that we can still develop this strategic sector, that is the rationale,” Zakaria Dosso, managing director of Africa Energy Investment Corporation (AEICORP), the investment arm of APPO, said.

He told Reuters that Ghana on Friday deposited just over $20 million to AEICORP, becoming the third African country to pay after Africa’s top two crude oil producers, Nigeria and Angola, each deposited $10 million last year to help fund the bank.

It is envisaged that each African member country will contribute a minimum of $83 million for a total of around $1.5 billion, while Afreximbank and APPO as founding members of AFE are expected to match this amount. The outstanding $2 billion will potentially be sourced from other investors, including Middle Eastern sovereign wealth funds.

The expansion of fossil fuels in Africa comes as the world’s leading investor climate action group said the current low-carbon transition plans of 10 of Europe’s and North America’s biggest listed oil and gas companies were not good enough under its risk assessment.

Climate Action 100+ said the companies, including Exxon Mobil, and Chevron, were assessed using its sector-specific Net Zero Standard for Oil & Gas framework by the independent Transition Pathway Initiative (TPI) Centre. 

The other companies included in the analysis were TotalEnergies, ConocoPhillips, BP, Occidental Petroleum, Eni, Repsol, and Suncor Energy.

While several companies are targeting net-zero emissions by 2050, a lack of detail on their planned use of carbon capture technology meant it was hard to tell how they would get there, CA100+ said.

On the issue of fossil fuel production, which the International Energy Agency says will need to be reined in to hit the world’s climate goals – a move acknowledged at the COP28 climate talks in Dubai in November – few firms appeared to concur.

Each company was assessed using indicators and sub-indicators under three broad themes – Disclosure, where companies are rewarded for providing information about their activities; Alignment, which tests their climate ambition; and Climate Solutions, which tracks their investments in greener activities.

The aim of the Net Zero Standard for Oil & Gas (NZS) framework is to assess to what degree the disclosures and strategies of companies in the sector are aligned with the Paris Agreement on climate.

Overall, the companies met just 19% of all the NZS metrics. European companies performed the best, led by TotalEnergies, BP, and Eni, with North American companies were weaker across all three themes.

The hope is that the analysis will be able to help inform engagement by asset managers with the boards of the companies, as the season for annual general meetings picks up pace in the weeks ahead, said Jared Sharp, Project Lead for Net Zero Standards, TPI Centre.

Former Boeing CEO Dave Calhoun stands after being acknowledged by former U.S. President Donald Trump at the White House in Washington, U.S. REUTERS/Kevin Lamarque

Tom Steyer, co-executive chair of U.S.-based investment platform Galvanize Climate Solutions, which published The Missing Link: Aligning Executive Compensation with Climate Action report, shares his thoughts on linking executive pay to net zero goals:

“Recently, corporate emissions reduction goals have been framed as a political issue rather than seen for what they are – liability management. 

“In addition to the risk posed by fines and litigation, the reflexivity of climate pledges means that companies could also miss out on revenue opportunities. By rewarding efforts to meet net-zero pledges, executives are seeing synergies with their total shareholder return (TSR) and profitability goals – they go hand in hand. 

“Whether corporations are looking to lead on the climate transition or simply to minimize legal and reputational risk, we believe that executive compensation structures that reward meeting specific emissions abatement objectives could represent a powerful mechanism for meeting climate goals. 

“This report presents a framework that boards, management teams, and institutional investors can leverage to help deliver on emissions reduction goals and help protect the best interests of their organizations and shareholders. 

“One goal of issuing the research was to push companies and boards to get ahead of this before it’s too late – we believe it’s still okay to be a brown company as long as you are ready to get serious about what you need to do to change.” 

Record production. Booming exports. Rapid job growth. Soaring CEO pay and shareholder returns.

Almost no matter the metric, the U.S. oil and gas industry has flourished under President Joe Biden, even though his administration has pushed hard to transition the U.S. economy toward a carbon-free future to fight climate change.

The profits of the top five publicly traded oil companies, for example — BP, Shell, Exxon, Chevron, and TotalEnergies  — amounted to $410 billion during the first three years of the Biden administration, a 100% increase over the first three years of Donald Trump’s presidency, according to data compiled by Reuters. Click here to read the full Reuters analysis.

A newly arrived young female manatee cow named Unai swims in the manatee tank at the Paris Zoological Park in the Bois de Vincennes in the east of Paris, France. REUTERS/Abdul Saboor

A Paris zoo has welcomed a young manatee cow from a zoo in central France, hoping it will breed with one of its males and help secure the future of the species that has been threatened by pollution, a loss of habitat, and injuries.

The Parc Zoologique de Paris hopes that the two-year-old female, which it named Unai, will mate with one of its three male manatees aged 15 to 35, as part of a Europe-wide programme to breed the species in captivity.

Also called “sea cows” because they graze on underwater vegetation, the docile mammals live in the shallow waters of the Caribbean, on the southeast coast of the United States, and in certain estuaries and rivers in French Guiana.

The threatened species has seen its numbers dwindle to less than 10,000 amid a loss of habitat, injuries from contact with the propellers of ships, and pollution, conservationists say.

Today’s Sustainable Switch was edited by Tomasz Janowski

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