SA companies come out tops in Carbon Disclosure Project
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South African companies are leading the world in calculating their carbon emissions and many are coming up with plans to lower the intensity of their operations. These are the major findings of the Carbon Disclosure Project (CDP), released this evening.
The CDP is a global initiative that asks a country’s top companies – in this case the JSE’s top 100 – to give feedback on the carbon intensity of their operations and their plans to curb these. The companies are then ranked according to how they are doing. There are 655 institutions participating worldwide, and South Africa has again been ranked second – 78 out of 100 – in terms of the percentage of companies that responded.
The big shift this year has been with companies reporting concrete ambitions to mitigate their emissions by set dates. In the past many had only accepted that they were polluting and did not have plans to deal with this.
Forty-three of the companies said that they had targets in place to reduce emissions. And 47 said management had monetary incentives related to meeting climate change-related targets.
David Couldridge, an investment analyst at Element Investment Managers, which put the report together, said environmental issues are now an important issue for investors. “This awareness is beginning to persuade institutional investors that the risks and opportunities of climate change need to be integrated into investment analysis and decision-making,” he said.
South Africa, by signing the Copenhagen Accord, has promised to reduce its carbon emissions by 34% by 2020. And with the top 100 companies, and Eskom, making up nearly two-thirds of the country’s estimated 500-million tonnes of CO2 emissions a year, most commentators have said that this is where the change needs to happen.
These emissions are broken down into Scope 1 and Scope 2. The former is the direct emissions from a company’s operations. The latter is from the power generation that is required for these operations. Their combined total has decreased from 235-million tonnes last year to 219-million tonnes this year, an 8% decrease. Some of this, however, is down to some big emitters falling out of the top 100.
SA companies commit to targets
Water and Environmental Affairs Minister Edna Molewa said the country remains committed to its targets and is moving towards meeting them. “The South African private sector has already come a long way in assessing itself in terms of risks and opportunities and taking action in response to climate change,” she said.
This comes in the context of a year where extreme weather events have wreaked havoc on food security and price volatility, which makes finding solutions all that more pressing, she said.
The biggest emitter on the list, Sasol, has strict targets to reduce its annual emission of 65-million tonnes globally. “We have committed to reducing the GHG intensity of all our operations by 15% by 2020, on a 2005 baseline,” it said. In the last year it has lowered its emissions by 200 000 tonnes.
The biggest emitter of all remains Eskom, which voluntarily participated in the project. Its emissions exceed everyone else with 232-million tonnes a year. This represents 45% of the country’s entire emissions.
Another parastatal, Transnet, voluntarily participated and declared emissions of 4-million tonnes. These were set to increase over the next five years as it expanded, but this would lead to less transport on the road and lower the country’s emissions, it said.
The top three companies in the CDP were all in the mining sector. Each company was given a score out of 100 on how good their performance had been over the last year in terms of disclosing their emissions, and putting concrete plans in place to lower them. Exxaro scored 100 and won overall, while Gold Fields came in second and Harmony Gold Mining third.
Six companies qualified for the gold-standard Carbon Performance Leadership Index, up from two last year. They are Anglo American PLC, Barloworld, FirstRand Limited, Gold Fields Ltd, Mondi PLC, and Woolworths. This means they have verified their emissions and have serious plans underway to reduce them.
Other countries are not doing anywhere near as well as South Africa. Last year India only managed to get 46 companies to reply, with a total disclosure of 93-million tonnes. In their mix electricity only accounts for 23% of these emissions.
Of the two listed newspaper groups, Naspers participated in previous years without wanting their information to be public, and this year declined to participate. Caxton was not on the list this year, but last year disclosed 129 000 tonnes.
Integration and finance required
Valerie Geen, director of the climate and energy unit at the National Business Initiative, said: "Globally we are not doing enough and unfortunately we are following.”
A great deal of this comes down to an uncertain atmosphere for investors, as people wait for a global climate change accord to come out of the COP process, she said.
But South African companies were doing well, going toe-to-toe with Fortune 500 companies in terms of disclosure and setting targets. “What we do need to see however is the setting of longer-term targets and a real integration of carbon issues into how companies work here,” Geen said.
There is also a problem for companies to access finance for carbon-related initiatives, she said. “Business is waiting for the signal from government about carbon markets and where they can access mitigation financing. Until then they are having serious issues accessing funding."
The recent approval and financing of the Independent Power Producers is a test case for financing, she said.
Until renewable energy is seriously adopted the overall emissions are going to struggle to change greatly, Geen said. This is because the majority of most companies’ emissions – the Scope 2 emissions – are as a result of the carbon-intensive nature of power production. "For now companies are hamstrung by this," she said.
This is how day-to-day brands have performed in the last year across their global operations: (All figures in tonnes of carbon dioxide and represent the change in Scope 1 & Scope 2 emissions from last year to this year.)
Woolworths: From 367 500 to 295 900 – 20% reduction
Pick ‘n Pay: From 616 000 to 607 000 – 1.5% reduction
Massmart: From 309 000 to 304 000 – 2% reduction
Spar: From 72 000 to 81 000 – 12% increase
SAB Miller: 2 354 000 to 2 193 000 – 7% reduction
Clicks: From 94 000 to 93 500 – 1% reduction
MTN: From 1 123 000 to 944 033 – 19% reduction