Absa under fire for TotalEnergies financing in Cabo Delgado

Absa shareholders raised concerns about the bank’s financing of TotalEnergies’s $20bn (R325bn) liquefied natural gas (LNG) plant in Mozambique and nearly half snubbed the bank’s remuneration implementation report at its AGM this week.

The project in Cabo Delgado, which resumed in January after a five-year stoppage due to an Islamic insurgency, has been tarnished by allegations of human rights violations arising from efforts to quell the insurgency.

Lars von Danwitz, a senior sustainability analyst at ÖKOWORLD Lux SA with about €2.5bn (R47bn) in assets under management, said with construction resuming in 2026, ÖKOWORLD was worried about the bank’s continued involvement in the project.

“We have yet to see sufficient evidence that the bank independently monitors these specific risks or reconciles its ongoing involvement with the Equator Principles,” he said.

Lead independent director Nonhlanhla Mjoli-Mncube said the bank was aware of the reports. “Absa’s strategy has been very clear that we do want to balance both the environment and the social as a pan-African bank. It is important that when we look at each project, we balance the two,” she said. Mjoli-Mncube said the bank conducted due diligence, including human rights issues, when making any investment decision.

For us, paying a full year [salary] for only six months of service is not justifiable

—  Lars von Danwitz

Absa CEO Kenny Fihla said Absa strived for covenants on governance and human rights that reflected its values. “We acknowledge that there is a limit to the extent to which we can go beyond our role as a bank and force government and other entities to behave in a particular manner,” he said.

Von Danwitz also sought clarity on the pay structure. Fihla, who joined the group in June 2025 from Standard Bank, received R148m in financial 2025. His remuneration included short-term incentives (STI) based on the group’s performance, and a share-based buyout to compensate for his loss of unvested deferred awards after resigning from Standard Bank.

Only 56.63% of shareholders voted in favour of the non-binding advisory vote on implementation of the remuneration report.

“Paying a full-year short-term incentive for only six months of service violates the principle of pro-rata remuneration and effectively rewards the executive for time not spent at the firm. We believe the remuneration committee’s justification for this payout is insufficient and undermines the necessary alignment between executive performance and pay,” he said.

But the bank said its policy was in line with standard industry practice.

Rose Keanly, chair of the remuneration committee, said that when an executive joins a new organisation, they should be in the same position that they would have been if they had stayed in their previous post.

She said when it came to the 2025 STIs, the choice was between adding a six-month STI to the buyout for Fihla or a full-year Absa STI, on the basis that he had led the organisation to achieve its financial targets and market guidance.

“We chose the latter; we thought it was better aligned to the interest of the organisation and shareholders. What I can confirm is there was no financial advantage to the CEO and there was no additional cost to Absa as a consequence,” she said.

Absa reported better financial results in 2025 compared with a year earlier, including a 12% increase in headline earnings to R24.bn and an 8% jump in NAV to R172bn. This resulted in a 15% return on equity from 14.8% a year earlier.

Based on the rise in headline earnings, the remuneration committee sanctioned a R4.14bn STI pool.

But after the advisory vote on the remuneration report, which failed to reach the approval level of 75%, Absa said it would consult with dissenting shareholders. “As a result of there being more than 25% of the votes exercised against the non-binding vote ... shareholders will be invited to raise their concerns or recommendations on the remuneration implementation report,” it said.

In terms of sustainability, Fihla said Absa was assessing the availability of data to help set realistic emissions targets. “A lot of what we are doing today is dependent on the availability of data, the disclosure of the companies and our ability to ensure that the information can be audited,” he said.

Mjoli-Mncube said: “The quality of the data we need is important. Scope 3 emissions are largely dependent on the availability and quality of data, which is outside of Absa’s control, but it is something we’re working on and is something we continue to monitor.”