Environmental Sustainability Climate Change
Climate Change is an important issue for South African companies. Not only is South Africa seen as a leading country within international negotiations (and therefore expected to set a strong domestic implementation example) but it is also a country extremely vulnerable to impacts brought about by climate change.
South Africa is likely to experience significant increases in temperatures as well as increased variability in rainfall and an increased vulnerability to Extreme Weather Events. These changes will have diverse impacts on business and society – presenting both risk and opportunity. In addition to mitigating their emissions, business must therefore understand the degree to which they will be required to adapt and determine the time available for developing response measures.
For many years the South African Government, amongst others, has been arguing in international negotiations that the status of adaptation measures should equal those of mitigation. This is not surprising given that developing countries, in particular those in Africa, will bear the brunt of climate change induced impacts. Impacts will threaten the economic and development options of the poor with worst case scenarios limiting the freedom of the individual (through increased poverty, decreased access to food, decent work and health services) and the consequent stability of nations.
Work the NBI is doing in climate change and water disclosure and information from member companies in the insurance sector confirms that some of these impacts are immediate and this is therefore something business needs to address in their current plans and strategies. This will require business to use different design and investment criteria, adapt their business models and design their organisations to be more responsive to variability and change.
The NBI therefore has a package of projects and partnerships that are designed to help our member companies understand the nature of the challenge, build their capacity to respond and ultimately to work collectively with government to develop solutions to climate change and emissions mitigation in South Africa. Our core objectives are to:
The NBI, in this work area, has focussed on financial innovation in the context of development, and especially in the context of South Africa (although we believe much of the research is relevant for other developing countries).
In 2013 we produced two reports on barriers to low carbon finance which identified a range of barriers across categories of policy, the financial services sector structure, skills and capacity and fund design. One of our key findings was that project developers often misunderstand the relationship between risk and capital and approached the wrong sources of funding for their stage of project development. As a result we also produced a low carbon project primer, which was intended to act as a guide to finance for project developers.
The barriers related to structural aspects of the financial services sector, identified in our 2013 work then spawned further work on the structure of South Africa’s financial services sector as it related to development. Furthermore we believe that trying to have a conversation about development and finance at a macro level is less productive than focussing on specific development opportunities. We then launched a project looking at investment opportunities, the finance sector and the economy which we released in 2016.
Fundamental to this work was developing several conversation frameworks for exploring a project finance and economic principles framework that we use to assess the alignment of economic and development policy.