Business is a key driver in keeping the global temperature rise below 2-degrees, which is the overall requirement of a new global climate order and the aim of COP17 in Durban.
To achieve this, the world’s governments have to commit to reducing their carbon emissions. The developed world needs to formally commit through a binding agreement and the developing world needs to voluntarily commit and present a plan of action. Both have to put their climate plans into practice without delay if the planet is to avoid runaway global warming.
While COP17 is a government-to-government process, the conference encourages business and civil society to engage in the global debate at specific events during COP. Business needs to have its voice heard to ensure that the global transition to a sustainable, low carbon economy is practically and efficiently rolled out.
No longer ‘save the planet nonsense’
“Businesses that fail to understand the potential impact of the global and local climate change debate are likely to find themselves severely disadvantaged. Environmental and sustainability issues have to become a reality for business – in fact they have become a required reporting requirement under King 3,” Duane Newman, Director of Sustainability and Climate Change at Deloitte, told a media briefing ahead of COP17.
The potential impact of climate change is spelled out in a report issued by the International Panel on Climate Change (IPPC), which states that between 1 and 2 degrees of warming is expected to reduce rain-fed agricultural yields by up to 50% by 2020. This will have a serious impact on food security.
At about 2 degrees of warming, the IPCC warns of impacts, including:
- Tropical forest ecosystems collapsing;
- 40 – 60 million more people being exposed to malaria;
- 10 million people being endangered by coastal flooding;
- Acidifying of the world’s oceans, wiping out much of the plankton upon which the marine ecosystem depends and threatening food security.
The IPCC further says that in Africa, climate change is likely to increase water stress for 75 to 250 million people by 2020.
Business and water security
To appreciate the direct link between business and water security we need look no further than the water production role of the high-altitude grasslands between KwaZulu Natal, Mpumalanga and the Free State, which provide water to the whole of Gauteng, as well as to several of South Africa’s major power stations.
If these ecosystems were not conserved, there would be widespread economic collapse. WWF/The Green Trust recognised this ten years ago when it started funding a project spanning 1.6-million hectares in this region, called the Enkangala Grassland Project. Nedbank continues to support this project, and another in KwaZulu Natal, through its R9-million investment in WWF’s Water Balance Programme. This programme encourages business and industry to take ownership of South Africa’s extreme water challenge by investing in the rejuvenation of critical water ecosystems and by working on ways to reduce their use.
Business and food security
Water security, food security and sustainable agricultural practices will be a core focus of COP17 and of direct consequence to business because if food becomes scarce and prices soar, it directly affects the entire economy. Common assumptions about agriculture need to be challenged to meet Africa’s climate change and business needs.
For example, there is a common assumption that cattle, which are central to Africa’s agricultural economy, destroy natural environments and are little more than methane-emitting culprits of global warning. However, holistic pioneer Allan Savory’s community cattle farming project in Zimbabwe called ‘Operation Hope’ proves the opposite. It shows how free-range cattle can transform degraded grasslands and savannahs into lush natural pastures with increased water and flowing streams. This project was named the winner of the 2010 Buckminster Fuller Challenge – a premier international award that recognises “initiatives that radically advance human wellbeing and the health of our planet’s ecosystems”. Savory is furthering this work through the UN to extend new, sustainable agricultural business opportunities throughout the continent.
Agriculture and food production embraces several ecosystems, including landscapes, water, air and the marine environment.
As President Jacob Zuma said at the Green Economy Summit in 2010: “Ecosystem failure will seriously compromise our ability to address our social and economic priorities. Natural resources are national economic assets … we have no option but to manage our natural resources in a sustainable way. We have no choice but to be eco-friendly. We have no choice but to develop a green economy.”
New business opportunities in the green economy
With COP17 happening in our country, there is no better time for SA business to identify new opportunities in the emerging green economies in South Africa and the continent.
New opportunities are coupled with survival as humanity now has a strictly limited carbon budget that may be emitted in future. South Africa’s carbon budget will be finalised within two years and business in South Africa will need to comply.
Regarding the share of the global carbon budget that South Africa can expect, a range of 0,5%-2% has been suggested, bearing in mind that South Africa contributes about 0,58% of global gross domestic product and 1,29% of global carbon emissions, which equated to about 35Gt last year.
In South Africa, the electricity supply to our cities is a major contributor to our country’s high carbon emissions because our electricity is generated from coal. South Africa needs to rapidly shift to renewable energy, with WWF suggesting that 50% of electricity should be from renewable energy sources such as solar and wind by 2030.
At this stage South Africa does not have enough skilled people to implement all the renewable energy solutions required, and business needs to engage with government, Eskom, labour and NGOs to address how to skill or re-skill people for the new climate regime, and how it should be rolled out.
Renewable energy opportunities
The renewable energy sector offers significant business opportunities. Consider the following example of what the renewable energy sector can offer:
South African company GX Sun Resources has applied to be one of the renewable energy suppliers, and has secured project sites in Newcastle and Thabazimbi. If the application is successful each site will provide 10 megawatts installed capacity, generated from 44 000 solar panels over a 20-hectare area.
The job opportunities in these two projects alone will be significant, including the skilling of solar technicians and repair and maintenance teams, in addition to offering considerable manufacturing opportunities for the low-tech components of the renewable energy systems. The high-tech components such as the solar panels are currently being manufactured in Germany but this could be achieved in South Africa down the line.
Great value in early planning
“We see great value and potential benefits in early planning for the transition to a low-carbon economy,” said Mike Brown CEO of the Nedbank Group and Mark Cutifani, CEO of AngloGold Ashanti in a joint statement ahead of COP17.
“We acknowledge that reducing South Africa’s emissions to stay within our carbon budget will be very challenging, but we believe that the consequences for future generations of unmitigated climate change will be far worse. That is why we urge everyone to join us as we take up this tough but absolutely crucial task.”
Brown and Cutifani are members of the South African Corporate Leaders Group on Climate Change (SA CLG), which is convened by the Cambridge Programme for Sustainability Leadership. It is part of a network of 15 similar groups around the world, collectively known as the Corporate Leaders Network for Climate Action.
Africa’s only carbon neutral financial institution
The Nedbank Group is Africa’s only carbon neutral financial institution and one of South Africa’s greenest companies. It has substantially invested in its sustainability journey over the past twenty years.
The bank is continuously striving to reduce its carbon footprint through reduction targets for electricity, paper, water, waste management and business travel, and by increasing its recycling programme. It also extensively invests in environmental and ecosystem conservation initiatives.
Prominent role at COP17
The Nedbank Group will play a prominent role at COP17 and it will be providing financial sponsorship for various seminars including hosting the National Business Initiative (NBI), thought leadership presentations and collaborative engagements with business, governmental and civil leaders from around the world. COP17 offers an invaluable business stream for participants to meet and network.
South African organised business representatives at COP17 will include Business Unity SA, the National Business Initiative and the CEO Forum comprising 60 top CEOs, initiated by Sasol, Eskom and Impala Platinum. Internationally, business input is mainly channeled through the World Business Council on Sustainable Development (WBCSD) and the International Chamber of Commerce (ICC).
The South African government will be hosting a climate change response exhibition at COP17, including a business pavilion showcasing South African business action on climate change.
The Department of Science & Technology will be showcasing greening solutions, and water and environmental initiatives towards a climate-resilient, low carbon future.
Measure, report and verify carbon reductions
One of the big asks at COP17 will be for governments to agree on ways to measure, report and verify carbon reductions. Should this be achieved it will have direct implications for businesses, with accounting and auditing firms developing and standardising best practice assessments and calculations.
The entire business spectrum will be affected by the global drive to reduce carbon emissions with lending institutions increasing their investment in renewable energy and green projects. Towards this, South African banks are working closely with the Department of Energy to help grow South Africa’s green economy and reduce its carbon footprint.
The carbon footprint is a measurement of total greenhouse gas emissions caused directly or indirectly by individuals, organisations, events or products. The Kyoto Protocol defines the greenhouse gases (GHG) as Carbon Dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs) and Sulphur hexafluoride (SF6).
Good news for business
The good news for business is that in the past, companies would come to the banks with low carbon or green projects and excuse the fact that they need to make a profit from them. Today, business increasingly understands that green is not the alternative to profit; that green needs to be profitable to succeed. At the same time it is critical that all financial institutions play the game equally.
Discussions about the funding required to establish renewable energy projects in South Africa and other developing countries will be high on the COP17 agenda.
Two financing plans for green economic development, focusing on developing nations and the business and the private sector, will be highlighted at COP17. They are the Green Climate Fund and the Momentum for Change Initiative.
The Momentum for Change Initiative will emphasise the role of business and the private sector in climate change mitigation and adaptation projects. According to Christiana Figueres, the Executive Secretary of the United Nations Framework Convention on Climate Change, COP17 will be highlighting visionary projects that can benefit Africa and the urban poor specifically.
The Green Climate Fund will pay for renewable energy projects in developing nations. The US$100-billion a year, starting in 2020, will be capitalised by developed nations.
Opportunities for renewable energy investment partnerships will become increasingly attractive to business, either as profit-making, climate-friendly ventures unto themselves or to offset their carbon footprint and invest in credible carbon credits.
Carbon tax
Down the line, businesses that have not offset their carbon emissions (through more sustainable practices and through purchasing recognised carbon credits) will be called upon to pay carbon penalty taxes.
The carbon tax discussion is very much part of this, and an imminent reality for businesses in South Africa and all over the world. Business needs to participate in the carbon tax debate to ensure they are not overly burdened when carbon tax becomes law. In South Africa, National Treasury is on the verge of introducing a carbon tax.
Business forums at COP17 will discuss all these issues to forge a positive path for business in the new climate era where ‘business as usual’ will assume an altogether different dimension.
