ABE CAMBRIDGE: Big business has enormous climate-change agency

When business leaders prioritise sustainability initiatives it’s easy to think SA’s socio-economic problems must be the priority for action and funding. It seems reasonable to feel it is somehow amoral to focus on “luxury” or distant issues such as the natural environment and climate change, when confronted by poor educational outcomes, poverty, unemployment, food insecurity, social protests and poor health services. 

This sentiment affects how companies use sustainability funds. A 2021 survey that included some of SA’s largest companies found that of the R10bn-plus spent on corporate social investment (CSI) measures in 2021, 95% of companies spent on education, with almost 40% of all funding allocated to education alone. The other top issues receiving corporate support were social and community development (17%), food security and agriculture (10%), and disaster relief (largely Covid-focused, 9%). More than 80% of companies rated a “moral imperative” as one of the top reasons for CSI spending, and more than half of them said it was their top reason. 

These findings correspond to PwC’s 25th Annual Global CEO Survey in 2022. It found that while 60% of SA CEOs were moderately, very or extremely concerned about climate change risks, only 20% had made commitments to carbon neutrality or net zero. Possibly, this is because business leaders rightly feel a “moral imperative” to focus on social issues and view climate change as somehow separate. 

Yet climate-related disasters demonstrate that climate change is a social, business and economic threat, just as much as an environmental one. Recent droughts across Southern Africa and the KwaZulu-Natal floods in April highlight the interplay between the climate, society, business and the economy. 

According to the Western Cape government, the provincial drought from 2015 to 2017 led to a 19% drop in export volumes and R5.9bn of losses in the agriculture sector in 2017/2018 alone. About 30,000 people lost their jobs during that time. The department of trade & industry reported that the floods in KwaZulu-Natal affected 826 businesses, cost the economy R7bn and affected more than 31,000 jobs. Vodacom reported that much of its infrastructure was damaged, including 400 cell towers. Research institute Polity estimates that 36% of natural disasters in Africa over the past 40 years were in Southern Africa, at a total economic cost of R640bn.

Drying trend

Droughts and floods aren’t one-off events: climate models show that as temperatures rise beyond 1.5°C of warming, Southern Africa will experience a drying trend, with more frequent droughts and floods, heatwaves and associated water scarcity.

There is clearly a need to take action to ensure business continuity. We do not operate in a bubble — we are at risk and will bear the brunt of these effects, as will our employees, suppliers and customers. This is confirmed by global insurer Zurich, which highlights that the direct effects of climate change on business include operational losses, social upheaval, power and water cuts, and delays in insurance payouts. Secondary effects are harder to measure: supply and demand issues, insecurity and instability, global trade barriers and trade restrictions.

The good news is that the scope for preventive action or mitigation is wide. At the recent COP27 climate summit the Africa Business Leaders Coalition (ABLC), which includes some of SA’s top companies, notably Naspers, Old Mutual Absa, Bidvest, Clicks, Investec, Sappi, Santam and Vodacom, outlined commitments to take climate action. 

In its COP27 climate statement the coalition, formed under the UN Global Compact, stated: “ ... the multiple effects of climate change are disproportionately more damaging to Africa than any other part of the world. Climate action is integral to solving the continent’s most-pressing issues, and the private sector has a critical role.” The coalition also highlights that climate change presents a $3-trillion investment opportunity by 2030. 

Commitments by the aforementioned businesses include setting targets and making plans to drastically increase the share of renewables in their energy use. They also committed to develop resilience plans to increase their capacity to adapt to climate change, and to build resilience by accounting for climate risks in their business and supply chains. Other commitments include the development of company-level just transition plans, decarbonising their operations and value chains, and to operate in ways that meet fundamental responsibilities in environmental and other areas.

Enormous agency

The private sector’s impact can be huge. Consider this: if SA’s 10 largest companies invested just 1% of their annual profit to supply schools with solar power and battery backup, by 2025 every school in the country could be solar powered and protected from load-shedding. This action would yield significant social, economic and climate benefits for all involved.

While the ABLC comprises large corporations, increasingly there are tools, skills, technologies, knowledge and resources available to enable companies of all sizes to take action. Start somewhere — the key is to act. 

It doesn’t matter what the impetus for action is — whether it’s tapping into the $3-trillion climate change opportunity, the energy crisis, environmental sustainability demands from shareholders, evolving company values, or new and dire climate warnings from the latest climate conference — the starting point is to realise that SA’s business leaders have enormous agency and, like our social woes, the climate crisis cannot be addressed without this powerful constituent.

For any business wanting to create more just, stable, prosperous and healthy societies, and a stronger economic environment, climate action cannot be ignored. Business leaders wield the vision, power and resources to act and help mitigate the worst effects of climate change, and thereby reduce the social fallout, such as food insecurity, instability, job losses and more.

SA’s private sector has an opportunity to lead the necessary and urgent action to create the sort of future we owe future generations. 

• Cambridge is CEO and founder at Sun Exchange.