A recent roundtable discussion hosted by the JSE, in collaboration with the NBI and Busa, focused on the role business can play in promoting sustainability and addressing climate change

The JSE, internationally recognised for its focus on sustainable corporate policies and performance, is now participating in a leading initiative in which businesses will decide how they wish to tackle climate change. The aim is for SA businesses to form part of government's national strategy, which is currently being developed.

In November last year the exchange hosted a major debate on the topic among business leaders, on behalf of organisers Business Unity South Africa (Busa) and the National Business Initiative (NBI). The JSE believes it is important for business to formulate a position and to contribute to the national strategy, rather than having its role decided by others.

Government's green paper is expected in early 2010 and will later translate into a regulatory, fiscal and legislative package. For this reason it is critical to get input from business.

Historically, the JSE has taken a leadership role in bringing sustainability issues into the mainstream, most notably through the Socially Responsible Investment (SRI) Index.

This initiative has helped companies and investors understand the importance of the triple bottom line and to act accordingly. It is an evolving index that aims to include criteria that are appropriate for sustainability, including those relating to climate change.

Responses to this exchange-sponsored initiative have persuaded the JSE that business is taking these issues seriously and is ready to take effective action for climate change.

The exchange has also engaged in primary research as to how market instruments can be used to help reduce carbon emissions. The JSE's own research shows that local business has limited knowledge and varying opinions about climate change and carbon trading. For this reason, the JSE aims to play a role in increasing awareness and considering voluntary initiatives that business can participate in. For example, JSE trading platforms can be used to trade products that assist in reducing greenhouse gas emissions and meeting other environmental challenges.

The JSE sponsored a CEO round-table dinner on climate change as its contribution towards establishing a voluntary leadership group of senior business leaders towards a collective response to this environmental issue.

The event, hosted by JSE CEO Russell Loubser and deputy CEO Nicky Newton-King, and chaired by NBI CEO Andre Fourie, was held on 9 November 2009 following a day's workshop attended by climate change managers, sustainability managers, energy managers, engineers and related practitioners from all sectors of business.

Determining a coherent business voice is critical in addressing the challenges posed by climate change and this event was a step in the process of achieving this.

'Business must take a more proactive approach to sustainability, including the matter of climate change,' says Loubser. 'As a credible, world-class capital marketplace and a signatory to the UN Principles of Responsible Investment (seeking to offer the most appropriate and innovative products and solutions to issuers and investors), we would like to play a leadership role in assisting companies in building sustainable businesses, including responses that will, as one of the objectives, also help address the climate change challenge.'

Executives must improve their awareness of climate change and the environmental impact their businesses have, say both Fourie and Busa CEO Jerry Vilakazi. Commonly anticipated effects of climate change include water shortages, weather unpredictability, the spread of certain diseases and increased costs of doing business which may result from having to comply with emissions laws. So business leaders should be asking themselves how these factors will affect their businesses and the communities in which they operate?

But simply understanding the issues isn't enough. Businesses also need to make plans to minimise their impact on the environment impact should determine targets to reduce this.

The debate was addressed by Sir Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment and renowned author of The Stern Review on the Economics of Climate Change. This review investigates the effect of global warming on the world economy and concludes that the benefits of decisive, early action considerably outweigh the costs and proposes that between 1-2% of global GDP should be invested each year on avoiding the worst effects of climate change.

Regarding the business case for climate change Stern says that continuing with 'business as usual' will result in an average global temperature rise of 5% by the end of the century.

He believes SA has the skills, foresight and innovative capacity to take advantage of the opportunities in low-carbon development. These include investment opportunities in the companies and projects that will benefit from the drive towards a low-carbon economy.

He cites the examples of Korea and China as having used the economic crisis as an opportunity to begin 'greening' their economies via their recovery strategies. However, an internationally recognised climate agreement is needed to further boost such investments.

Danish Ambassador to SA, Dan Frederiksen, was looking towards a global deal on how to tackle climate change at the UN's Conference of the Parties that met in Copenhagen in December last year. Such a deal would've included the setting of emissions reduction targets and an agreement on how such actions could be financed.

The JSE debate was preceded by a conference about topics relevant to business' response to climate change, including finance, legislation, actions to date and incentives for industry.

This was aimed at creating a platform for ongoing work in the areas of mitigation, adaptation, finance and technology, the outcome of which could form the basis of businesses' input into the government's green paper which is expected to be ready early in 2010.

The outcomes of the Copenhagen discussions will feed into these ongoing working groups, thereby creating a platform for debate and providing input into the national climate change strategy which is aligned with global agreements and any obligations that SA will need to take on.

Businesses interested in contributing to these groups can contact Barney Kgope at the NBI on 011 544 6000 or kgope.barney@nbi.org.za.