Innovation

ABSA's commitment to addressing the UN Sustainable Development Goals (SDGs) through innovative financial and environmental initiatives that drive inclusive growth and environmental sstewardship ABSA’s sustainability strategy is centered on impactful innovation across three pillars:

Pillar 1: Financial Inclusion (Supporting SDGs 8 and 10)

Financial inclusion, which is the process of making financial services accessible as well as affordable to all individuals, including low income households and individuals and small businesses, is at the heart of ABSA’s efforts to create wealth in underserved communities. A flagship initiative, the “Chat Wallet,” provides digital banking access to populations without traditional banking infrastructure. Additionally, ABSA offers affordable home loans to low-income earners, allowing them to access stable housing. This program directly supports SDG 10 (Reduced Inequalities) by fostering economic resilience among financially marginalized communities. By pairing financial products with educational resources for small and midsize enterprises (SMEs), ABSA empowers these businesses to grow responsibly and sustainably.

Pillar 2: Diversity and Inclusion (Supporting SDGs 5 and 10)

ABSA promotes gender equality and inclusion through targeted support for women and youth. By lending to women-owned businesses and promoting women in senior management, ABSA advances SDG 5 (Gender Equality) while addressing economic inequalities outlined in SDG 10. In addition to financial assistance, ABSA provides mentorship and financial literacy training to foster a sustainable impact among women and young entrepreneurs, giving them the tools to succeed in their ventures. In addition to this ABSA implemented a B-BEE , which is a broad based black empowerment transaction, increased black ownership by 25% more than the threshold in the South African financial sector charter further solidifying its commitment to diversity,representation and inclusion.

Pillar 3: Climate Transition (Supporting SDGs 7 and 13)

ABSA is committed to tackling climate change by driving renewable energy financing and has set an ambitious target to mobilize R100 billion for sustainable finance by 2025. At the end of 2023, ABSA had already achieved R80 billion, significantly progressing toward this goal. The bank measures its loan book by tracking CO₂ emissions, aligning its finance activities with environmental goals outlined in SDG 13 (Climate Action) and the Paris Climate Agreement. Additionally, ABSA encourages responsible production and consumption in its lending practices to ensure that economic growth supports environmental sustainability. 

As a result of ABSA’s commitment to catering to the needs of the surrounding communities, it has made efforts to transition into a greener financial institution whilst also taking into account the negative impacts of this transition, should it be done irresponsibly and hastily, such as loss of employment, etc. In order to minimize these negative impacts, ABSA has made efforts to do so responsibly. ABSA’s climate strategy a Net Zero target by 2050, with a focus on accurate, scientific measurement of emissions and incentivizing client businesses toward sustainable practices. This initiative supports Africa’s transition to clean energy while maintaining sensitivity to the social and economic needs of countries reliant on fossil fuels. These efforts show ABSA's commitment to integrating sustainability into its core operations setting an example within the banking sector and contributing to a better world (Absa Group Limited, 2023).

Inspiration

ABSA’s innovation in sustainability was largely inspired by its mission to be a force for good within society and align with the evolving expectations of its stakeholders, customers, regulators, and investors who increasingly demand responsible, impactful business practices. The interviewee mentioned that ABSA Group encourages businesses that secure loans from the bank to adopt sustainable practices. This approach aids in facilitating these businesses transition toward greater sustainability.

This focus on sustainable development reflects ABSA’s long-term vision of contributing to a resilient economy while ensuring positive social and environmental impacts. The bank’s commitment is also motivated by the UN Sustainable Development Goals (SDGs), which emphasize the need for urgent action on issues like climate change, economic inclusivity, and resource conservation.

To address these global challenges, ABSA has embraced sustainable finance, advancing climate-linked loans and supporting clean energy projects that align with SDGs 7 (Affordable and Clean Energy) and 13 (Climate Action). The bank recognizes the financial sector’s crucial role in driving such change by channeling capital toward environmentally friendly projects and facilitating equitable growth through initiatives like digital banking for underserved populations and inclusive financing for women entrepreneurs.

Moreover, ABSA’s leadership has emphasized the importance of setting a precedent within the financial industry, aiming to model sustainable practices that other institutions can replicate. By embedding sustainability into its core operations and fostering partnerships focused on reforestation and clean technology, ABSA seeks to lead by example, showing how businesses can contribute effectively to a sustainable future(Absa Group Limited, 2023).

Overall impact

The various sustainability innovations by ABSA have brought forth both immediate and long-term impacts on environmental, social, and economic development. In the immediate term, ABSA's climate-linked financing and inclusive financial services have provided the much-needed financing for clean energy projects while expanding financial access for marginalised groups like small businesses and women entrepreneurs. For instance, in 2023 alone, ABSA Developed Financed Emissions Targets for our Fossil Fuels Portfolio and developed financed emissions targets for our Fossil Fuels Portfolio. ABSA issued over KES 60 billion in sustainable financing, which includes KES 36.9 billion in inclusive finance to support the SMEs, which helped many small enterprises thrive during the challenging economic conditions.

Long-term, ABSA is committed to sustainability; such a commitment will contribute to systemic economic resilience and the restoration of the environment. On the other end, its ambitious goal to have 10 million trees planted by 2032-up to 700,000 that were already planted in 2023-should go a long way in making a difference in carbon sequestration and local ecosystems, furthering Kenya's overall goals with respect to forest cover. Further, digital and financial inclusion campaigns by ABSA, including the Timiza banking platform, have set the stage for continued economic empowerment through providing millions of under-served Kenyans with access to banking services. It also furthers sustainable economic growth and reduced inequalities, by way of accessible financial services for the under-served.

Evidence for impact may be witnessed in increased green energy projects, business growth in communities that have been beneficiaries of such sustainable financing, deployment through digital banking solutions, among others, reflecting how this innovation in inclusive finance has helped increase financial literacy and independence for underserved populations toward lasting economic transformation (Absa Group Limited, 2023).

Business benefit

These meaningful impacts that have emanated from its practices have helped the company in a number of ways, owing to a commitment to sustainability-focused financial innovation. ABSA provides an avenue for climate-linked and inclusive finance, significantly expanding the market through channeling into sustainable financing of more than KES 60 billion in 2023. This involved funding renewable energy projects, climate-smart agriculture, and clean construction, which positioned ABSA in the frontline of environmentally responsible finance and opened new market avenues within Kenya's emerging green economy.

These efforts have trickled down to the employees, too. The focused drive on sustainability and community impact at an organization enhances employee retention because individual values align with the goals of the company, driving a purposeful work ethic. Further investment in employee wellness, digital upskilling, and career development makes ABSA an employer of choice and improves job satisfaction and longer retention for its workforce.

Furthermore, sustainability commitments by ABSA have captured new investment interest. The various collaborations it has entered into with institutions of environmental and social impact have placed it as a very attractive partner for impact investors, opening up new avenues of funding for future projects focused on sustainability. Inclusive banking for the under-served through its digital platform, Timiza, has further complemented revenue growth by expanding ABSA's customer base, tapping into millions of new users in underserved areas(Absa Group Limited, 2023).

Social and environmental benefit

With its sustainability innovation, ABSA brings huge benefits into society and to the environment through financial inclusion and care for the environment. Through channeling billions into climate-linked inclusive finance, ABSA has been able to support renewable energy projects, green building, and climate-smart agriculture, helping local communities seek alternative ways of living. This commitment helps realize critical sustainable development goals, notably the United Nations Sustainable Development Goals of Affordable and Clean Energy and Climate Action, so important to long-term resilience in the face of climate change. Carbon emissions are reduced in such projects while offering economic empowerment through responsible environmental industries.

ABSA's emphasis on inclusive finance has also opened up economic opportunities for various kinds of marginalized groups-in particular, small-scale enterprises, women, and rural entrepreneurs. With its Timiza digital platform, ABSA advances financial inclusion among under-served communities by allowing households to achieve financial independence, access credit for businesses, and generally raise the quality of their lives. This approach further reinforces SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reduced Inequality), since it empowers those levels of society that are possibly cut off by mainstream banking. In turn, it empowers local economies and job creation to further an equitable society.

By furthering environmental protection and social equity, through this innovative approach, ABSA boosts the resilience of the communities and responsibly develops the economy. The commitment to reforestation projects and sustainable finance that ABSA leads within the financial sector is a positive example of how business practices aligned with sustainability can foster positive impacts in view of both society and the environment (Absa Group Limited, 2023).

Interview

Mbombo Luhembe, Group Head of Sustainability Analytics