Collaborative response needed to ensure sustainable future
by Faria Kapfudzaruwa,
2014-06-09 15:22:55.0
SOUTH Africa is warming up faster than global averages, according to monitoring results from the Council for Scientific and Industrial Research (CSIR) released in April. It is a development that could threaten food security, social development and diminish natural economic systems, yet initiatives from government and business to address this have mostly fallen short of the response that is needed to ensure a sustainable future.
Recent research from the University of Cape Town Graduate School of Business shows only 12% of South Africa’s biggest companies have started to address climate change. Based on a survey of the top 100 JSE companies, supplemented by interviews with organisational drivers, these "visionary" organisations were found to have implemented comprehensive strategies that focus on partnerships with state, civil society and industry associations.
They are mostly large, multinational firms, which possess the required resources to engage in comprehensive mitigation and adaptation contributions, and are largely within the energy-intensive sector, where their operations are directly affected by the impact of climate change.
These "visionaries" respond to climate change at the international, national and local level mostly through collective engagements with nonstate actors and international agencies, such as the United Nations (UN) and the World Business Council for Sustainable Development.
The survey identified a further 10% of companies as "efficiency drivers", or those organisations taking some steps to mitigate climate change. These are companies that engage in strategic partnerships to set and implement rules on energy efficiency, for example, the Energy Efficiency Accord (EEA), where energy efficiency targets are set in a collective decision process with the government and industry associations including the National Business Initiative (NBI).
The next cluster was revealed as the "emergent planners" group. Making up 17% of those surveyed, they represented companies that have started to self-regulate by internally implementing standards and guidelines such as greenhouse gas accounting and sustainability reporting. This is a step in the right direction, but it is still far from a working framework.
Most concerning was the study’s revelation that 61% of South Africa’s leading companies are "laggards", or companies that do not display any recognisable climate change efforts. These firms include the banking and financial services sector, which have less pressure to contribute to governance because of the low negative externalities of their operations. Those that make any contributions mostly focus on mitigation efforts and are described as primarily cosmetic initiatives.
A similar but more pronounced pattern was found in Kenya. Of 45 companies on the Nairobi Stock Exchange analysed as part of the study, more than 84% fell into the "laggard" cluster and there were no "visionary" organisations at all.
These results shed light on the level of climate change governance contributions made by the private sector in areas where the state often has limited capacity to develop and/or implement climate change policies. In many instances national and local government agencies in these regions are overwhelmed by other socioeconomic priorities and have limited capacity to enforce commonly binding rules of climate change. This is particularly concerning in the sub-Saharan region because it is one of the areas that are forecast to be severely affected by the impact of climate change. Droughts and high temperatures will threaten businesses in this region. At the same time, it is one of the fastest-growing regions in the world.
Bottom-up initiatives by business to address climate change can be effective, but they are still too few and far between. The fact that a large number of companies in South Africa and Kenya are still nonresponsive to the issue indicates that stronger state action is still required to drive the firms that do not face sector- or company-specific pressures. The University of Cape Town Graduate School of Business research reinforces the argument that governments should still be at the centre of decision-making in climate change governance as they have the power to develop and enforce regulations.
However, if the state is to play an important role in climate change governance then its capabilities need to be enhanced. In South Africa, as illustrated by the National Climate Change Response Strategy and the introduction of the carbon tax, the state has taken significant steps towards enforcing binding decisions on climate change. However, the government still has limited capacity in implementing these policies as can be seen with its difficulties in enforcing many environmental regulations in recent years.
Other actors, such as civil society and academia, have a role to play and can support corporate responses to climate change with technical and financial resources.
Climate change is a wicked problem meaning that it is continuously evolving with multiple stakeholders and power imbalances, characterised by complexity and scientific uncertainty that is unlikely to be solved by conventional methods. It is not something that one entity acting alone will be able to tackle and demands a collective response.
It is evident that, despite limited capacity, the state is key in providing and enforcing rules that will drive the "laggards" in business to step up to the climate change challenge. However, interrelated organisational and issue-specific drivers, which are often independent of the government, require that other actors need to be engaged in business efforts to tackle climate change.
We are facing a critical future. The UN’s Intergovernmental Panel on Climate Change third panel report released in May states unequivocally that the effect of climate change on natural and human systems is accelerating. In such circumstances, no one can afford to sit on the sidelines.
• Faria Kapfudzaruwa is on the faculty of the University of Cape Town Graduate School of Business.
Picture: THINKSTOCK
SOUTH Africa is warming up faster than global averages, according to monitoring results from the Council for Scientific and Industrial Research (CSIR) released in April. It is a development that could threaten food security, social development and diminish natural economic systems, yet initiatives from government and business to address this have mostly fallen short of the response that is needed to ensure a sustainable future.
Recent research from the University of Cape Town Graduate School of Business shows only 12% of South Africa’s biggest companies have started to address climate change. Based on a survey of the top 100 JSE companies, supplemented by interviews with organisational drivers, these "visionary" organisations were found to have implemented comprehensive strategies that focus on partnerships with state, civil society and industry associations.
They are mostly large, multinational firms, which possess the required resources to engage in comprehensive mitigation and adaptation contributions, and are largely within the energy-intensive sector, where their operations are directly affected by the impact of climate change.
These "visionaries" respond to climate change at the international, national and local level mostly through collective engagements with nonstate actors and international agencies, such as the United Nations (UN) and the World Business Council for Sustainable Development.
The survey identified a further 10% of companies as "efficiency drivers", or those organisations taking some steps to mitigate climate change. These are companies that engage in strategic partnerships to set and implement rules on energy efficiency, for example, the Energy Efficiency Accord (EEA), where energy efficiency targets are set in a collective decision process with the government and industry associations including the National Business Initiative (NBI).
The next cluster was revealed as the "emergent planners" group. Making up 17% of those surveyed, they represented companies that have started to self-regulate by internally implementing standards and guidelines such as greenhouse gas accounting and sustainability reporting. This is a step in the right direction, but it is still far from a working framework.
Most concerning was the study’s revelation that 61% of South Africa’s leading companies are "laggards", or companies that do not display any recognisable climate change efforts. These firms include the banking and financial services sector, which have less pressure to contribute to governance because of the low negative externalities of their operations. Those that make any contributions mostly focus on mitigation efforts and are described as primarily cosmetic initiatives.
A similar but more pronounced pattern was found in Kenya. Of 45 companies on the Nairobi Stock Exchange analysed as part of the study, more than 84% fell into the "laggard" cluster and there were no "visionary" organisations at all.
These results shed light on the level of climate change governance contributions made by the private sector in areas where the state often has limited capacity to develop and/or implement climate change policies. In many instances national and local government agencies in these regions are overwhelmed by other socioeconomic priorities and have limited capacity to enforce commonly binding rules of climate change. This is particularly concerning in the sub-Saharan region because it is one of the areas that are forecast to be severely affected by the impact of climate change. Droughts and high temperatures will threaten businesses in this region. At the same time, it is one of the fastest-growing regions in the world.
Bottom-up initiatives by business to address climate change can be effective, but they are still too few and far between. The fact that a large number of companies in South Africa and Kenya are still nonresponsive to the issue indicates that stronger state action is still required to drive the firms that do not face sector- or company-specific pressures. The University of Cape Town Graduate School of Business research reinforces the argument that governments should still be at the centre of decision-making in climate change governance as they have the power to develop and enforce regulations.
However, if the state is to play an important role in climate change governance then its capabilities need to be enhanced. In South Africa, as illustrated by the National Climate Change Response Strategy and the introduction of the carbon tax, the state has taken significant steps towards enforcing binding decisions on climate change. However, the government still has limited capacity in implementing these policies as can be seen with its difficulties in enforcing many environmental regulations in recent years.
Other actors, such as civil society and academia, have a role to play and can support corporate responses to climate change with technical and financial resources.
Climate change is a wicked problem meaning that it is continuously evolving with multiple stakeholders and power imbalances, characterised by complexity and scientific uncertainty that is unlikely to be solved by conventional methods. It is not something that one entity acting alone will be able to tackle and demands a collective response.
It is evident that, despite limited capacity, the state is key in providing and enforcing rules that will drive the "laggards" in business to step up to the climate change challenge. However, interrelated organisational and issue-specific drivers, which are often independent of the government, require that other actors need to be engaged in business efforts to tackle climate change.
We are facing a critical future. The UN’s Intergovernmental Panel on Climate Change third panel report released in May states unequivocally that the effect of climate change on natural and human systems is accelerating. In such circumstances, no one can afford to sit on the sidelines.
• Faria Kapfudzaruwa is on the faculty of the University of Cape Town Graduate School of Business.
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