Conceptual framework for carbon footprinting in the South African banking sector

Abstract

The rationale of embarking on this study is based on banks being at the center of all economic activities and mainly in charge of screening and funding economically viable enterprises. Although, deemed lesser polluters, banks are the “padling power” behind heavy carbon emitting activities through their lending and investment business. This study embarks on conceptualizing how banks in South Africa are putting systems in place to quantify and benchmark carbon emissions that cause climate change. A content analysis of the carbon footprint reports, sustainability reports and public literature on the banks activities is used in developing this Conceptual Carbon Footprinting Framework. A carbon footprint benchmark case is constructed using the leading banks in carbon disclosure performance index (CDPI) and carbon disclosure leadership index (CDLI) that are featured in the Global 500 Carbon Disclosure Project (CDP). The conceptualized benchmark model is used as a checklist to analyze the carbon footprint process models of South African banks. The major finding for this study is that both the CDP Global 500 banks and the South African Banks have an improved internal carbon footprinting system that is based on the GHG protocol whilst the measuring of carbon emissions in their external systems (products, services, lending and investment portfolios) is shallow or nonexistent. Premised on this finding, a conceptual framework that is holistic of both internal and external banking systems is recommended in order to have a holistic approach in measuring the carbon emissions that come from banking activities with national, international climate policies and environmental regulations being taken into consideration.