South Africa will be going into COP26 in Glasgow next week with a substantial agenda. The event will be a major global diplomatic and business effort to move the global fight against climate change up a level. Every political and business leader will be arriving to get things done. I am confident those who will be representing us, from both business and government, will be no exception.
South African business has been working hard on the challenge it faces to transition to a lower carbon future. The National Business Initiative has worked hard in charting a path for South African business towards net zero and organised business has been very engaged in debating the future.
BLSA members have had several engagements to work through the measures that need to be made and the implications. This has dovetailed various political processes, particularly the Presidential Climate Commission and the Climate Change Bill, both of which have done much to position South Africa to confront the immense challenge of transitioning our economy. The Department of Environment, Forestry & Fisheries will be the front line of the formal negotiations at the event.
As our business and political contingent arrives in Glasgow, this homework stands us in good stead for some of the difficult conversations to be had. Ultimately, South Africa needs to access finance for the very substantial investments that need to be made to transition, from Eskom to our large industries. That finance is not going to be easy money – we have to be ready to convince both that we are a good credit risk, and that we are serious about reducing our carbon intensity. And we must ensure we are conscious of the social and political consequences in terms of communities and workers that will be affected.
There will be significant pressure at COP26 for South Africa to make firm commitments to targets. As the 12th worst emitter of greenhouse gases in the world, South Africa naturally gets a lot of attention. It is important that South Africa be clear that it will shed this unwanted prominence, but it must be clear too that it cannot be done without global assistance.
We are vulnerable to global measures such as carbon taxes that would disproportionately affect our export-oriented industries with serious consequences for our economy. COP26 is a critical moment to strike the right balance – we are committed to reducing our carbon output and doing our part to confront climate change, but it has to be done in a way that is conscious of our unique social and economic challenges.
I expect COP26 is going to set important new commitments for the whole world. It will play a key part in setting an agenda for all of us in the years to come. This agenda will permeate everything we do, from the strategies of our companies to the structure of our electricity industry and other key economic sectors. We will have to strike a fair balance between carbon reduction targets and social consequences of transition as we go. Global investment support will be critical to ensuring this path is a smooth one, that does not cause social harm and strife along the way.
Business has, particularly in the past year, made big strides in disclosure of carbon intensiveness and there have been stand out examples of big businesses making large strategic commitments to reducing carbon emissions either within their own operations or in those they finance or buy from. This signals the kind of path we are on – it will be critical for all businesses to build climate policies into their DNA. COP26 will be a very important point to signal.
While we do this important work, we will also be dealing with the effects of climate change – on migration, on weather patterns and the resultant impact on food production and damage to property. These are the negatives we have no choice but to confront. But we must also be focused on the positive opportunities that will arise, particularly in the potential of new green industrialisation. From hydrogen to the manufacture of renewable energy components, there is an immense opportunity for South Africa to position itself as a world leader. These possibilities too must be built into our transition plans.
As BLSA we are ready to dive into the work that will need to be done post COP26. It is going to be the most important single issue that business will need to be engaged on, in partnership with government and civil society. I wish all the best to our delegation attending COP26 and look forward to working with them following the event to ensure we optimise our transition to achieve the best outcome for all South Africans.
SA needs another “big bang” moment, I wrote in Business Day — a move that boosts confidence in the government’s reform programme, similar to the provision that allows electricity generating plants to self-generate 100MW. We need to get to a situation where the economy is expanding fast enough to create more jobs than there are new entrants to the labour force, year after year. And it’s urgent.
Disclosing the ratio between highest and lowest paid workers, as required in the Companies Amendment Bill, will do little to address inequality in SA, which is driven primarily by unemployment rather than income disparity of the employed. I wrote in fin24 that the surest way of addressing SA’s triple challenge of inequality, poverty and unemployment is to develop business-friendly policies that promote economic growth and employment.
This is a weekly newsletter from BLSA CEO Busi Mavuso.
BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. In 2017, BLSA signed a contract with South Africa, committing business to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.
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