SA Corporate Giants Come Clean? April 11, 2008Posted by Andreas in "The Economy", Climate change, Environment, Global warming, South Africa.
I wrote this for the current edition of The Big Issue. It’s still on the streets so go and buy yourself a copy!
SA Corporate Giants Come Clean?
By Andreas Späth
Some of South Africa’s largest companies made history at the end of last year when they publicly revealed the amount of carbon dioxide their operations release into the atmosphere every year. Twenty-eight of the country’s thirty-eight biggest corporations participated in the worldwide Carbon Disclosure Project (CDP), which included South Africa for the first time in 2007.
Global warming has finally and properly entered our collective consciousness over the last year or so: you can’t swing a solar-powered camping torch in a crowd of primary school kids without hitting a twelve year old who can competently explain the ins and outs of the greenhouse effect. And don’t even think about showing up at your average suburban dinner party without having brushed up on the Kyoto Protocol and international carbon trading (Wikipedia anyone?).
This is a good thing, of course. Even the most ardent eco-sceptics are beginning to thaw and most people are finally listening to what thousands of irate scientists have been trying to impress on us for years: global climate change is the most urgent single issue facing humanity right now. If we don’t collectively take action to reduce the amount of greenhouse gases, especially carbon dioxide, our fossil fuel guzzling civilisation emits, our planet is quite literally toast.
Recently, some of the world’s largest companies, some of them among the Earth’s most notorious emitters of greenhouse gasses, including Unilever, Coca-Cola, Shell, DuPont, Nestlé and General Electric, have joined the fray by pushing governments and the United Nations to enact more comprehensive and stricter targets for global carbon emissions and the implementation of low-carbon technologies. More than 150 of them signed a climate declaration sponsored by the UN that commits them to setting, reporting and implementing in-house carbon reduction targets.
In case you are surprised, they are not doing this out of the goodness of their corporate hearts. As the respected New Scientist magazine pointed out last December, “the biggest and smartest beasts in the corporate jungle figure they can make money from combating climate change. And the tougher the targets the more money they can make”. US office supply giant Office Depot saved US$6.2 million by introducing energy efficiency measures in its shops and warehouses and DuPont estimate that they have saved US$3 billion in the last twenty years as a result of curbing their fossil fuel dependency.
The arrival of the CDP on our shores may herald a rise in environmental consciousness among South Africa’s own corporate giants. Since its official launch in the UK in 2000, the CDP has grown to become “the world’s largest institutional investor collaboration on the business implications of climate change”. Last year saw the participation of over 2600 companies worldwide, controlling over US$41 trillion in assets.
The CDP aims to raise awareness among and provide information to corporate executives, share-holders and investors about the business risks and opportunities presented by global climate change. Via an annual questionnaire, companies are asked to disclose the amount of greenhouse gases their activities emit and to assess how global warming will impact on their business.
South Africa’s participation in the CDP was coordinated by the National Business Initiative and local consulting firm Incite Sustainability. National Business Initiative Chief Executive Andre Fourie points out that “South Africa represents the overwhelming majority of Africa’s carbon emissions, and is high on the list of developing countries to undertake emission reduction commitments after the first phase of the Kyoto Protocol ends in 2012”.
Of the 38 top companies listed on the Johannesburg Stock Exchange to which CDP questionnaires were sent in the beginning of 2007, 28 responded in some way or other. Notable among the local companies that declined to take part or did not respond to the request for information are Barloworld, Kumba Iron Ore, Liberty Life and Mittal Steel.
Although the South African response rate was comparatively high (better than those for the UK, France, the USA, Germany, Canada, Italy and India), what is less impressive is that only 57% of the responding local companies supplied quantitative data on their greenhouse gas emissions (i.e. disclosed the actual amount of greenhouse gasses they emit annually).
So who are South Africa’s biggest greenhouse gas emitters? Sasol tops the log of the major publically listed companies – not a surprising result, since the company’s process of converting coal into oil is extremely energy intensive and releases masses of carbon dioxide. Next on the list are the mining giants BHP Billiton and Anglo American respectively. Together, these three companies account for 83% of greenhouse gas emissions from publically listed companies.
Eskom is not a listed company, but chose to participate voluntarily. With an annual emission rate of 208 million tonnes of CO2 equivalent (i.e. all of its greenhouse gas emissions converted into the equivalent amounts of carbon dioxide), Eskom is responsible for approximately half of the country’s total emissions and contributes 2.8 times more to global warming than the next biggest domestic emitter, Sasol.
The reason for this is that Eskom produces nearly 90% of South Africa’s electricity by burning the country’s relatively abundant and cheap coal, and doing so quite inefficiently: its carbon emission intensity of 960 grams per kWh of electricity generated is third highest amongst regional electric utilities, behind those of the former USSR and China.
While the South African CDP report notes that most of the responding companies intend to “look into” activities to mitigate their impact on climate change (e.g. the use of renewable energy sources), it also points out that few have actually invested resources and finances in this area. While more than half have appointed upper management level staff to deal with issues related to climate change, only eight out of the 38 have declared targets for managing future carbon emissions.
Most (82%) of the local corporations responding to the CDP questionnaire consider climate change to be a commercial risk. The availability of water as a result of global warming, for instance, is of particular concern to mining companies that require large quantities of water for their processing plants and for cooling deep level mines. Possible future droughts have obvious business implications for food retailers such as Pick ‘n Pay and paper giant Sappi. According to the report, “Bidvest subsidiary Namsov Fishing Enterprise and Namibian Sea Products was disclosed as being at risk as fish stocks shrink and migrate due to changing ocean conditions” and Sanlam anticipates that the short term insurance industry may be detrimentally affected by an increased frequency of natural disasters expected due to climate change.
An even larger percentage of respondents (89%) think of climate change as representing new business opportunities, including investment possibilities in environmentally responsible financial vehicles, as well as renewable energy and cleaner transport options. MTN is investigating new developments in communication and “tele-working” technologies that could save both travel and time and therefore energy and money, while Pick ‘n Pay are evaluating more energy-efficient business practices, including internet ordering and smart delivery systems.
The CDP report concludes that much remains to be done and emphasises that for climate change “to be effectively addressed in South Africa […] there will need to be close collaboration and partnership between business, government and civil society organisations”.
While it is encouraging to see an increase in consciousness and concern about global climate change among South African corporations, the CDP raises a number of pertinent issues. For one, the fact that a company publicly discloses its carbon footprint and commits itself to reducing it does not necessarily make it “green”. Let’s not forget that these companies are massive carbon emitters in the first place and often contribute to environmental degradation in other ways – think acid rain, mine and ash dumps and polluted soil and groundwater.
Secondly, the CDP process is entirely self-reported and not independently verified. Considering the crucial importance of dealing with global warming effectively, the need for an unbiased and independent entity to monitor the amount of greenhouse gasses emitted by South African corporations on a regular basis is obvious. Furthermore, carbon emissions should not only be monitored, they should be regulated. We need national targets and legislation for drastic overall emission reductions – a process in which government should surely be taking the lead.
Although the willingness of some of our biggest companies to publicly disclose their carbon footprint needs to be applauded, the sincerity of at least a few remains questionable. It is disturbing to note, for example, that of the ten local companies given the highest marks in terms of “climate change disclosure practices” by the CDP, four (Anglo Platinum, Pick ‘n Pay, SAB Miller and Sasol) are still listed as members and financial backers of the Free Market Foundation, a policy organisation that continues to publish articles denying the reality of global warming on its website (www.freemarketfoundation.com).
What is perhaps most urgently needed from us as a country, however, is a fresh approach to how we choose to lead our lives and organise our society. An increasing number of progressive environmentalists, among them Patrick Bond, the Director of the Centre for Civil Society at the University of KwaZulu-Natal in Durban, and George Monbiot in the UK, are urging that what is really needed to avert the threat of global warming is as near a complete reduction of our fossil fuel addiction as possible, as soon as possible. Their new rallying call is for us to leave fossil fuels (and other non-renewable resources) in the ground.
As a country, South Africa is characterised by a frivolous and hedonistic attitude towards global warming. Bond makes the shocking point that we have “an emissions output per person per unit of GDP twenty times worse than the US”. Yes, the industrialised countries of the developed world are to blame for much of our current climate predicament, but we had better clean up our own backyard and soon, or such accusations will sound increasingly hollow and hypocritical.
SA’s Top Ten Carbon Emitters:
The first South African Carbon Disclosure Project report can be downloaded from the National Business Initiatives website (www.nbi.org.za) and the submissions from some of the participating South African companies are available to the public on the CDP website (www.cdproject.net).
SA’s Most Conscientious Climate Change Companies:
On the basis of their response to a questionnaire, the Carbon Disclosure Project ranks companies according to their “climate change disclosure practices”.
1. BHP Billiton
2. SAB Miller
3. Anglo American
4. Old Mutual
6. Pick ‘n Pay
8. MTN Group
9. Anglo Platinum
10. Harmony Gold