When, a couple of years ago, environmental conferences were held and issues of the Earth discussed, men in suits carrying briefcases were few and far between. But as climate change and environmental politics edged itself higher on to the world agenda, things have changed dramatically. These days the environment is one of the first issues discussed at many financial institutions’ annual meetings and the environment has become an economic commodity.
“The environment is now mainstream in business,” said international corporate banking giant ABN AMRO South African chief Simon Penney last week at the launch of the corporate carbon disclosure project (CDP). “This was not always the case. But we now take this issue very seriously.”
He said the bank now even screens its clients. “If they are engaged in businesses we don’t agree with, we do not deal with these companies.” He added that these included oil, gas, nuclear, gambling, animal testing, building dams and logging.
South African banks, too, are realising that climate change will be a big factor in doing business in the future. Banks such as Absa and Nedbank are already planning how to deal with clients who have big carbon-footprint liabilities such as Sasol, and how to encourage them through financial means to become more environmentally friendly.
But critics are still distressed that South African financial institutions and corporates are doing too little.
“Any person managing money on behalf of others for the long term is being neither prudent nor loyal to the interests of their client if they ignore the impact that climate change could have on the economy and companies in which they invest,” said William Frater, director of Frater Asset Management. He was worried that so few South African money managers are disclosing their carbon footprint initiative.
Duarte da Silva, chairperson of another South African financial corporate, Macquarie First South Securities, said climate change would affect everyone, including financial institutions and their clients.
“Therefore it is a no-brainer that we should get involved,” he said.
Financial institutions and corporates are becoming more aware of the exciting business opportunities in climate change, Jonathan Hanks, managing partner of Incite Sustainability, said.
“Climate change is about business,” he said.
He said there was huge scope for South African businesses to take climate change seriously and build it into their business. That was also the thinking behind getting the country’s top-40 companies to participate for the first time in the global CDP.
“There is therefore a real need for investors and policymakers in this country to have access to reliable information on climate change,” he said.
This will be the first year that South Africa will participate and, along with Brazil, South Africa is the only other developing nation to do so.
The project was originally launched in the United Kingdom in 2000 as the world’s largest institutional investor collaboration on the business implications of climate change. Last year, the project included 2100 companies worldwide that disclosed their carbon footprint and this year it is expected to top 2600.
According to the National Business Initiative CE, Andre Fourie, the CDP has become one of the premiere global indicators of corporate commitment to measurable environmental sustainability.
“South Africa represents the overwhelming majority of Africa’s carbon emissions.”
The global report will be launched in New York in September and the South African CDP report in October.