ABEL SAKHAU: Africa must take a proactive role in driving its sustainability agenda

As I sit at Jomo Kenyatta International Airport in Nairobi, Kenya, reflecting on the Africa Impact Summit 2024, I am filled with hope. The potential for African business leaders to significantly influence global sustainability is immense. It’s time for us to shift the narrative from merely discussing how African countries and businesses can capitalise on environmental, social and governance (ESG) considerations to tangible, sustainable positive outcomes.

As the chief sustainability officer of the Sanlam Group, I firmly believe African business leaders have the power to shape the design and execution of sustainable projects and initiatives for our continent and its people.

Sanlam is committed to partnering with all African business leaders to call for positive outcomes in executing ESG programmes in Africa. We are not shy about putting resources towards this mission, and the launch of the second annual Sanlam ESG Barometer report is a testament to this.

Researched by Krutham and published in partnership with Business Day, the 2024 Sanlam ESG Barometer will be launched during a live-streamed conference on August 1 — click here to register.

This report unveils compelling insights into how listed companies on the JSE (SA) and Nairobi Securities Exchange (Kenya) drive ESG integration and performance. It underscores the imperative for Africa to drive change from within, leveraging its unique challenges and opportunities to shape ESG programmes that resonate globally.

The report emphasises ESG additionality, highlighting how companies are actively redirecting capital to foster a more sustainable future. Unlike traditional ESG approaches that avoid investments in firms with poor ESG profiles or high ESG costs, ESG additionality evaluates firms based on their potential for enhanced sustainability through strategic investments. This method encourages the allocation of capital to projects that not only meet ESG standards, but also generate significant social and environmental benefits.

Key outcomes of the 2024 Sanlam ESG Barometer

The Sanlam 2024 ESG Barometer highlights several notable achievements and areas requiring urgent attention. African countries are making significant strides in renewable energy adoption, water conservation and community-led social initiatives.

However, the report also identifies persistent challenges, including limited access to sustainable finance, regulatory inconsistencies and socioeconomic disparities that hinder progress. 

Key findings include:

1. Integration of the UN’s Sustainable Development Goals (SDGs): About 90% of surveyed businesses have integrated SDGs into their ESG strategies. South African companies prioritise socioeconomic issues, while Kenyan firms focus on climate change.
   
   
2. Proactive ESG adoption: Despite limited regulatory pressure, around 60% of companies are adopting new progressive disclosure practices, such as the standards set by the International Sustainability Standards Board (ISSB), which are not yet mandatory in SA or Kenya.
   
   
3. Financial materiality: Nearly one-third of respondents consider ESG integration crucial for financial sustainability. This practice not only attracts investors, but also enhances overall business operations.
   
   
4. Investor influence: Investors play a significant role, with 70% of companies identifying them as key stakeholders in ESG strategy development. However, there is a notable difference in investor responses — only 10% of South African companies faced exclusion owing to poor ESG performance, compared with 40% of Kenyan firms.
   
   
5. Client demand: Less than 20% of companies see customer demand as a primary driver for ESG integration, indicating that market pressure remains relatively low.

Despite these advances, the 2024 Sanlam ESG Barometer reveals that access to sustainable finance remains a significant barrier. Many African nations struggle to secure the necessary funding to implement and scale up their ESG initiatives. Additionally, regulatory frameworks across the continent vary widely, creating inconsistencies that impede cohesive and effective ESG strategies.

Driving change on the African continent

The Sanlam 2024 ESG Barometer emphasises the critical need for Africa to take a proactive role in driving its sustainability agenda. African leaders must advocate for tailored ESG programmes that address the continent’s specific needs and circumstances. By doing so, they can ensure that global ESG standards are inclusive and reflective of Africa’s unique context.

One of the report’s central themes is the importance of local leadership in shaping and executing ESG initiatives. African leaders are uniquely positioned to understand and address the socioeconomic and environmental challenges their countries face. Their active involvement is essential in crafting solutions that are not only effective, but also culturally and contextually relevant.

The Sanlam ESG Barometer calls for increased collaboration between African nations, international partners and private sector stakeholders. By fostering partnerships and sharing best practices, African countries can build robust ESG frameworks that support sustainable development and economic growth.

Elevating African voices

A crucial aspect highlighted by the Sanlam 2024 ESG Barometer is the need to amplify African voices in the global sustainability dialogue. African leaders and experts must be given platforms to share their insights, experiences and innovations. This inclusivity will enrich the global ESG landscape and ensure that the continent’s perspectives are considered in shaping international sustainability standards.

I believe Africa has a wealth of knowledge and experience in dealing with environmental and social challenges. By elevating collective African voices, we can contribute significantly to the global sustainability agenda and ensure our unique perspectives are integrated into worldwide ESG practices.

Sanlam will continue to increase the reach and depth of the annual Sanlam ESG Barometer to ensure more voices are included across the continent. 

• About the author: Abel Sakhau is chief sustainability officer of the Sanlam Group.

This article was sponsored by Sanlam.