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SA corporates are getting the climate change message

Posted by Laura Grant on November 19, 2008
Posted in Business

The results of South Africa’s second annual Carbon Disclosure Project survey show encouraging evidence that companies are beginning to respond meaningfully to the challenge of climate change, the minister of environmental affairs and tourism, Marthinus van Schalkwyk, said in a speech at the CDP report’s launch on Wednesday.

He said that the companies that responded to this year’s survey “understand that it would not be economically, environmentally or politically sustainable for South Africa to continue to grow our emissions along a business-as-usual path”.

Other points made in his speech include that:

  • The sample size had more than doubled from the Top 40 companies listed on the JSE Securities Exchange last year to the Top 100 companies this year.
  • The response rate this year of 59 percent is apparently better than the global average of 55 percent. (Brazil’s Top 75 response result was 83 percent and India’s Top 200 result was 19 percent.) See Engineering News
  • 75 percent of responding companies disclosed their greenhouse gas emissions, which the minister said was a sizeable increase on last year. Even though in several instances the disclosure was only on a “partial basis”, he said there was signs of an “emerging commitment to improved monitoring and reporting on greenhouse gas emissions”.
  • Carbon-intensive companies dominate South Africa’s disclosed greenhouse gas emissions. The three largest emitters (excluding Eskom, the national electricity utility) – Sasol, BHP Billiton and Anglo American – account for two-thirds of the total reported greenhouse gas emissions of companies that responded to the survey.
  • Electricity consumption constitutes 41 percent of the total reported greenhouse emissions. (About 90 percent of South Africa’s electricity is generated in coal-fired power stations.)
  • Awareness of and engagement in government policy on climate issues appears to have increased significantly since last year’s report. Many senior executives across different sectors had been engaged in the process of formulating the government’s Long Term Mitigation Scenarios, which were released earlier this year
  • Companies acknowledge that an escalating price on carbon will be part of the future business environment.
  • Only 23 percent of companies disclosed specific, company-wide greenhouse gas emissions reduction targets. “If South Africa’s emissions are to peak and then decline, companies will need to demonstrate a significantly higher level of ambition” in this area,” the minister said.
  • Most of the companies have developed, or are implementing, formal systems for measuring and reporting on their emissions, but gaps remain in their governance systems for climate change, and in the nature and extent of executive board oversight on this issue, he said.
  • South African investors do not appear to fully appreciate the business implications of climate change, nor are they exerting a meaningful influence on the corporate sector on this issue.

The minister also said: “Not only does proper tracking and reporting [of greenhouse gas emissions] make business sense, but it is only when companies know their carbon footprint that they can properly plan to mitigate. It is also an indicator of good corporate governance, of accountability, and of taking co-ownership for the future.”

Companies need to be prepared for an era when the reporting of GHG emissions will be mandatory, he added.

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