Focusing on a just transition will help to curb the effects of climate change on the African continent.
Africa has made a small contribution to climate change, yet it will be the most affected. So said panellists in a Finance Indaba session entitled “How ESG is driving business: Sustainability delivers value.”
With African countries facing widespread effects of climate change disasters caused by large emissions and pollution from the rest of the world, companies have been urged to look at sustainable ways to decrease their carbon footprint.
The South African Independent Power Producer Company, together with the Department of Mineral Resources, has embarked on renewable energy projects to help South Africa limit its carbon footprint.
“We have recently signed a renewable deal with EDF Renewables, a French company, and are currently busy with projects that will bring about R10 billion worth of investments in renewable energies of electricity: 1,000kW from solar and 1,600kW from wind power to limit emission from coal,” said Dzunani Makgopa, head of finance and corporate service at Independent Power Producers’ office.
Dzunani added the IPP office was constantly looking for sustainable ways to help power utility Eskom to decrease its footprint and get renewable power back to the grid through IPP bidders.
For Dzunani, the world’s energy poverty encouraged many countries to rely on burning fossil fuels, which contributed to the detrimental effects of climate change. She advised attendees to choose sustainable ways of doing business, and support the climate through recycling and mining companies to use renewable companies for their power use.
Effects of climate change
Weighing in on the effects of climate change, Sean Doherty of Transaction Capital said it was important for companies to take climate change seriously.
For Sean, South Africa has already begun facing the impacts of climate change. He mentioned that the KwaZulu-Natal floods early this year were a result of climate change impacts, and added that Transaction Capital recognised the imperative for sustainable development in order to build a prosperous and resilient society.
“We acknowledge that our most impactful influence is to manage and reduce the carbon emissions in our financed minibus taxi portfolio,” he said.
“The physical effects of climate change and environmental degradation, as well as the transition to a low-carbon and more circular economy, present both financial risk and certain opportunities to the group. Furthermore, we recognise that our investment decisions and capital allocation have both social and environmental impacts,” he said.
Just Transition challenge
“Funding Africa’s transition to net zero by 2050 is one of the most pressing issues that Africa and the world must address,” said panellist Arno Daehnke of Standard Bank.
Countries across the world will meet in Sharm el-Sheik, Egypt, in early November to discuss how developed countries will help developing countries finance their transition to carbon zero.
Arno said Standard Bank was targeting a cumulative amount of between R250 billion to R300 billion to mobilise sustainable finance across all banking products by the end of 2026. “This includes R50 billion to finance renewable energy over the next three years, and underwriting a further R15 billion for renewable energy over the same timeframe,” he added.
Arno mentioned that Africa faced a challenge from developed countries, who undermined the amount of money Africa needed to enable the just transition. He notes that after attending a conference in Scotland, he realised that developed countries have very poor estimates of what we need to address to the African continent to enable a just transition.
For Arno, countries that ignored ESG initiatives “placed Africa in large financial burdens, which will leave the continent in further debt”.