Just three out of 15 major SA companies surveyed by a prominent environmental rights organisation have disclosed what effect climate change will have on their business.
A report released by the Centre for Environmental Rights (CER) on Monday assesses how these companies report on climate change, as well as the quality of their disclosures.
The companies assessed were Eskom, Sasol, Anglo American, South32, Gold Fields, Exxaro, African Rainbow Minerals, ArcelorMittal SA, PPC and Sappi, as well as major lenders Absa, FirstRand, Standard Bank, Nedbank and Investec.
The report comes as pressure is mounting on companies and lenders to play their part to mitigate climate change.
Already companies engaged in carbon-intensive activities are feeling the pressure from lenders, insurers and government policies and carbon taxes.
Meanwhile, poor and marginalised communities, many of which are in Africa, are most vulnerable to the adverse effects of climate change such as drought and floods.
Business strategy
According to the CER report 10 out of the 15 companies assessed had identified climate change as posing a material business risk while only three – African Rainbow Minerals, Anglo American and South32 – have set out the short-, medium- and long-term effects to their businesses, strategy and financial planning.
And only South32 and Anglo report on the scenarios they use to inform their strategies.
The report found that eight of the 15 firms have set targets to reduce their emissions, while only one bank, Nedbank, discloses its concentrations of credit exposure to carbon-
related assets.
Only Nedbank and Standard Bank have a partial policy in place on funding coal mining and coal-fired power.
As there is no law in place to enforce disclosures on climate change risks from SA companies, the CER assessed companies against the voluntary recommendations of the Group of 20 Financial Stability Board’s task force on climate-related financial disclosures (TCFDs).
The ability of companies to respond to climate risk is crucial to manage the economic, environmental and human rights risk posed by climate change, said Leanne Govindsamy, head of the CER’s corporate accountability and transparency programme.
"These risks, and companies’ plans to respond to that risk, must be fully disclosed so that investors, communities, civil society and the media can have robust engagements with and about corporations that do not display a willingness to reduce emissions and manage risks associated with the continued reliance on coal, in particular," Govindsamy said.
Most companies said they recognise the importance of dealing with climate change issues. Many said they already report in accordance with TCFD recommendations, or are busy aligning with them.
Sasol welcomed the report, while Anglo American said that it had strengthened its disclosures. PPC said its environmental strategy is an integral element of the overall strategic planning that the company announced last week.
CER report
Sappi said it is a signatory to the Paris Pledge for Action in support of the COP21 Paris Accord on Climate Change.
ArcelorMittal said it is actively piloting several low-carbon steelmaking technologies but this will need a more supportive policy environment to remain competitive.
Gold Fields said its efforts are not recognised in the CER report as its policy was published after the CER deadline.
FirstRand, which has published a coal policy, and will publish one on fossil fuel in 2019, said its efforts are also not documented in the report.
Investec said it has been reporting in terms of the Carbon Disclosure Project for the past 10 years and annually publishes its direct energy targets.
Standard Bank said it is part of a pilot programme in which major global banks are testing the effect of climate change on their lending portfolio, while rival Absa said it will align with the TCFD as soon as it finalises its policy on funding coal-related projects.
Govindsamy said progress has not been fast enough.
"We can no longer talk about climate change as some sort of possibility. The climate has changed," she said.
"The consequences are being felt, all because corporations are not moving quick enough to respond to warnings which are decades old."
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.