Why ESG Demands Better Corporate Citizenship

  • The Covid-19 pandemic has forced the business community to engage in an economic ‘reboot’ that has a different trajectory from our past.
  • The impact has resulted in the shift of the energy landscape making it critical for organisations to adapt in order to remain sustainable.
  • As a leading audit global provider Deloitte’s 2022 Future of Energy report, points out that the future of energy is changing rapidly, with increased pressure from stakeholders to reduce, avoid and diversify energy as an input into operations.

Energy can be a significant cost contributor for most organisations. Companies should not only consider the financial impact of energy but also its long-lasting social and environmental impact. We all must move faster and farther on sustainability initiatives. Companies require energy programmes that reduce energy cost, intensity and most crucial greenhouse gas emissions.

Under the World Energy Council’s 2022 theme of #EnergyForHumanity, we are reminded that energy is a story about humanity: people’s lives and the evolution of society. Over time we have adapted our use of energy to provide for our needs allowing us to pioneer new frontiers and now more than ever transformation is needed. We all have a role to play in addressing global sustainability. The United Nation’s Sustainable Development Goals (SDG) call for action from all countries to promote prosperity while protecting the planet. Closer to home, the National Development Plan is committed to investing in energy infrastructure to provide reliant and efficient energy.

For stakeholders, sustainable value creation requires a proactive approach to energy solutions in the short to long term. This task requires organisations to not only tick the necessary boxes. It is no longer sufficient to comply with the outlined environmental regulations. Today’s challenge is broader and more demanding. By personalising our energy footprint we make a cognizant effort to improve our environments, enabling us to build a better future. Harnessing better energy sources is not just about protecting our planet, it is about protecting future generations.

Treading lightly

By no means a new imperative, the need to minimise corporations’ energy footprint remains as urgent as ever. SDG 7 calls for affordable and clean energy. This can be aided by practices and technologies that conserve energy, raise energy efficiency and provide renewable energy. Investing in wind, solar, and thermal power, improving energy productivity, and ensuring energy for all is vital if we are to achieve SDG 7 by 2030.

Climate change is altering our energy generation and energy needs, making our world an even more uncertain place. It has also brought the way we generate and consume energy under the spotlight. We have recently seen radical mind-shifts on the energy front on the world stage, in particular SDG 13 on climate action, but is the progress moving fast enough? Energy efficiency and the evolution of renewable energy sources are vital.

There is pressure from the state and investors for companies to adhere to strict conditions concerning sustainability and governance. Due to environmental, social, and government (ESG) – based assets on track to reach US$53 trillion by 2025, globally investors are demanding companies demonstrate their ESG credentials or they operate in line with the United Nations’ SDG.

Opportunities for sustainable investment are ripe in Africa, renewable energy is now cheaper than fossil fuels although the average cost of reducing carbon emissions in emerging markets and developing economies (EMDEs) is half the cost in advanced economies. Investments in clean energy are held back by costs of capital being up to 7 times higher in Africa, and perceived risks for investors.

Action required now

If South Africa is to meet its 2050 net zero emissions target businesses will have to take on the responsibility to adopt practices that reduce their carbon footprint approaches. While this is an ideal aspirational goal for the long term, it means nothing without short term targets and initiatives which can be measured. Not only do companies need a proactive approach to find innovative ways that are measurable to reduce their absolute levels, we too as individuals have a crucial role to play.

Author: Zamokuhle Aja-Okorie – Managing Director, OAO Investments

Zamokuhle is a storyteller that is passionate about bringing innovative environmental and digital solutions to her partners and customers in particular those who have experienced a cyberattack and forging stakeholder relations. As a business and marketing strategy consultant, she advises multinational companies and SMMEs on their strategies. She is zealous about raising female leaders that are wealth conscious. She is a devout wanderlust, a bon vivant, lover of life, family and is God’s vessel.

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