Climate Change – South African Challenges

I was reading through UN Climate Report that came out before in the week, and it was terrifying. It was anything but a great read. As I was reading it and looking around the corporate space in South Africa, the distinction between what’s going on in the corporate space versus that report – my sense, and maybe I’m in excessively jumpy. Huge businesses, pension funds, investors are simply not doing what’s needed.

I think in some of the declarations and public statements from the IPCC (Intergovernmental Panel on Climate Change) and the researchers who composed that report, you genuinely are seeing this undeniably desperate plea. This report is saying that we don’t have 30 or 40 or 50 years to make changes. We have nine years; we have eight years because each extra ton of CO2 that we put into the environment will make climate change worse in the future. In this way, the IPCC’s message has always been” We need to act now.”.

What we hear in the corporate space, not just in South Africa, but it’s prevalent here, is, “Yes, we get climate change. We are worried about it. We’re doing everything we can to tackle it head-on. We’ll get there in 10-or 20-years. South Africa needs time to transition.”

We ought to have begun 10 or 20 years ago, but we didn’t. That is spilt milk now. All we are doing right now is kicking the can further down the road. What we see now is executive teams passing this issue to future generations of executives. The lack of action makes all the talk utterly useless and dangerous. We’ve seen a decent rise in attention to climate risks in the corporate and financial sectors in South Africa in the last few years. Also, we’re getting a great deal of disclosure, a ton of talk about disclosure, a ton of talk about commitment, etc.

However, what is scarcely seen, is planning. A decarbonization plan from every organization, at least from the majors, aligned with the Paris Agreement’s objectives, starting right now. Right off the bat, ‘doing the same old thing’ won’t solve these issues. It hasn’t done anything yet, and there’s no reason to believe that it will now. Continuing as we are will make those issues a ton worse in the coming years. We will remain unattractive globally as long as we stick to coal, failing to develop solid progress plans.

This is a very naïve and dangerous position to take. We’re placing ourselves in a worse position and using the excuse that ‘we need to move slowly because of our socio-economic issues. Those at the lower end of the socio-economic scale are the ones who will hurt the most.

As a small private investor with my portfolio, I wonder, is it simply an instance of me voting appropriately? Maybe I should take a look at the organization and say, “You’ve lost the E in the ESG (environmental, social, and corporate governance), and I will not invest”? I feel we need to start voting with our cash, regardless of how little it is.

Sadly, we are allowing corporates and government to drive the ‘Yes; we have to make an environmental move; however, we need to balance it against South Africa’s socio-economic issues.’ That is an entirely bogus narrative. Don’t be conned that on the off chance that you recycle more or pay somewhat more attention to where you invest, you’ll tackle the issue.

This is an issue that prominent institutional financial backers must tackle. They need customers’ pressure to say: What are you doing about this; we don’t see action? Why are you are not pushing these organizations for plans? Why are you not voting against remuneration not linked to accomplishing environmental objectives? Why are you not voting out directors not competent enough to develop corporate strategies aligned with climate action?

We are simply not seeing any of that happening in South Africa: We see friendly meetings. We see CEOs saying that they are incredibly content with the way Sasol executives’ deal with climate risk. Their clients do not challenge them. That’s the main reason they keep getting away with it.

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