Last week this newspaper printed a scathing letter from Just Share executive director Tracey Davies on the apparent endorsement of “vested interests in the fossil fuel industry” (“Vacillating climate change stance is confusing”, May 8). It was in reference to the praise heaped on SA asset managers climbing back aboard the coal investment train as a result of Thungela’s resurgent share price.
Davies was in no way wrong to have done so, but her letter stopped short of unpacking just how disappointing corporate action on climate change in SA has been on the whole. In February, I wrote a column highlighting asset managers’ lacklustre performance as reviewed in Just Share’s SA asset manager climate risk survey, but the apathy that is apparent in the financial services sector is mirrored in corporates across the board.
In 2021, the Intergovernmental Panel on Climate Change (IPCC) published a report that said stabilising the climate requires that we reduce greenhouse gas emissions more than 50% by 2030 and achieve net-zero emissions by 2050. At about the same time, the Science-Based Targets Initiative (SBTi) launched the SBTi Net-Zero Standard, which provides the world’s first framework for corporate net-zero target setting.
Over the course of the year, the SBTi experienced an exponential increase in corporate climate ambition, with more than 2,200 companies covering more than a third of the global economy developing Paris-aligned net-zero targets. Since the start of the year the number of SBTi signatories has grown to 3,662, with about half having approved targets that align with the emission reduction requirements of a stable climate.
Of this, a whopping 11 companies come from SA, only two of which (Harmony and Telkom) have made SBTi-approved net-zero commitments. As the 12th-largest source of greenhouse gas emissions in the world and the fifth-highest carbon emitter per unit of GDP, this performance is underwhelming, to say the least.
At the global level, limiting the temperature increase to 1.5°C will require an investment of $3-trillion a year to 2050, according to the IPCC. In SA, push factors such as Eskom’s persistent energy chaos and a series of droughts should be driving climate-aligned investment strategies, but the release of the seventh “National Greenhouse Gas Inventory Report” ahead of COP26 in 2021 shows that emissions have actually increased 10.4% between 2000 and 2017.
It is no secret that in recent years sustainability and climate change reporting have become commonplace among JSE-listed companies, but the gap between rhetoric and outcome is rapidly forming a canyon. This shows in the release of the 2022 update on ESG/Sustainability Assurance in SA by Integrated Reporting & Assurance Services. Of the 281 JSE-listed companies reviewed, only 20% obtained Independent Third-Party Assurance over the ESG/sustainability content in their annual reporting, giving CEOs plenty of room to make empty promises on climate action.
This point was reinforced by the recent Climate Action 100+ Net Zero Company Benchmark report (covering more than 50% of global assets under management), which finds that despite exponential increases in net zero commitments, the vast majority of capital allocation budgets are fundamentally misaligned to the scale of the action required. In fact, only 17% of the report’s high-priority companies were found to have robust, quantified decarbonisation strategies in place to reduce their greenhouse gas emissions.
To combat exactly this mismatch between public relations and action, UN secretary-general António Guterres launched the Expert Group on the Net-Zero Emissions Commitments of Non-State Entities in April. The group has been tasked to develop stronger and clearer standards for net-zero emissions pledges by nonstate entities — including businesses, investors, cities and regions — and speed up their implementation.
Given that the climate crisis is no longer about far-off generations but actually something we will almost all live to see ourselves, we can ill afford to have companies set emission reduction targets without strategies to deliver on them.
• Maguire is carbon project manager at Climate Neutral Group SA. He writes in his personal capacity.
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