Speech by Marthinus van Schalkwyk, Minister of Environmental Affairs and Tourism, at the launch of the South African Carbon Disclosure Report, Johannesburg Stock Exchange securities exchange

We are reaching a pinnacle in awareness and acceptance of the severity of the threat of climate change. Through the efforts of dedicated scientists, society is no longer in a position to doubt the fact that humanity's enduring dependence on fossil fuels will cause irreversible harm to our world.

Last week the Intergovernmental Panel on Climate Change (IPCC) once again confirmed that climate change will affect society, communities and business in far reaching ways, with particularly severe impacts on poor communities. If we continue with business as usual, particularly with energy development and deforestation, the impacts will become worse. The IPCC report also confirmed that we could still do something to limit these impacts if we act now.

I do not want to elaborate on the science tonight. It is well established and unequivocal. So is the economic case for early action.

So what can business expect in terms of government policy and the international climate change regime?

Business can assume that the government will increasingly assess, monitor and regulate greenhouse gas emissions. Industries that previously emitted freely will soon have to come to grips with a carbon constrained world. They can assume that there will in future be a much stricter regulatory framework, a hefty price on carbon, and that the cost of emissions will continue to increase for decades into the future.

In response, business can sit back, do nothing and gradually drop out in the race for competitive advantage. Or business can plan, strategise and reposition itself in a pro-active manner to reduce economic and other risks related to climate change and our response strategies. In the emerging business environment, our industry will need to build its competitiveness on climate-friendly technology, not cheap electricity. Companies whose core business lies in emissions-intensive sectors would do well to think about investment in greater energy efficiency and new technology development, and in some instances even diversifying their activities.

The fact is that, in a carbon constrained world, there will be winners and losers, and it is up to every Chief Executive Officer and Board Chair to rise to these new challenges and opportunities.

In two weeks time we hope to achieve a breakthrough in international climate negotiations when approximately 10 000 delegates from more than 180 countries meet in Bali for the critical next round of talks under the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol.

We are likely to decide in Bali and that is our mandate from Cabinet - to accelerate negotiations with a view to agreeing a strengthened international climate change regime by 2009, at the latest.

Under the Kyoto Protocol, legally binding greenhouse gas emission caps, have, thus far, only been placed on industrialised and developed countries. However, these legally binding caps only apply to developed countries over the period from 2008/12. In international "climate-speak" this time frame is referred to as the Kyoto Protocol's first commitment period. All developing countries, including South Africa, have been exempt from taking on legally binding commitments for this first commitment period up to 2012. We do however; have non-binding commitments to mitigate emissions within our means under the UNFCCC Therefore, the current regime allows South Africa along with others such as Brazil, China and India to continue to grow without a legally binding cap on emissions, at least up until 2012.

This concession to developing nations has seemingly prevented the biggest emitter on the world stage, the United States of America (USA), from joining the Kyoto Protocol and agreeing to legally binding targets. This refusal by the USA to join Kyoto has created a deadlock in the international negotiations of what international climate change regime should look like after the first commitment period in 2012. As a result, there is enormous public and ever increasing political pressure for at least the major greenhouse gas emitters in the developing world to take on similar or comparable legally binding commitments after 2012. The major greenhouse gas emitters in the developing world being targeted include, in particular, China, India, Brazil and South Africa.

It is clear that the focus of the negotiations in Bali in two weeks time will be to break this deadlock. Therefore, it can be expected that after 2012 South Africa will have greater commitments and responsibilities. However, the precise scale and nature of these commitments will be the subject of intense negotiations over the next two years. The trigger to strengthen the international climate change regime would of course have to come from the North, and from our perspective, a commitment by the United States to internationally-agreed and legally-binding emission reduction targets is a prerequisite.

Our domestic process of policy making will also closely interact with the international negotiations over the next two years. In moving forward we will face some tough decisions in South Africa. Clearly, given the current globalising world economy, it would not be economically, socially, environmentally or politically sustainable for South Africa to continue to grow along a "business-as-usual" path, without a carbon constraint. For any country to adopt a "business-as-usual" path is a high-risk approach in the face of rising oil prices and the threat that carbon constraints could be introduced as conditional barriers in international trade.

South Africa finds itself in a unique position in the climate change debate. South Africa is currently dependent on coal for energy and is therefore, a carbon intensive economy that currently ranks as the 14th largest greenhouse gas emitter in the world. On the one hand, in order to address poverty and improve the quality of life for all our people, it is crucial that our country proceeds on a strong and equitable growth course and as such we have a responsibility to provide all our people with access to modern energy services. Yet, on the other hand, if we do not solve the global challenge of climate change, the projected impacts of that changing climate in the longer term will have disastrous consequence for our economy and will completely undermine all our current investments in development.

In addition, South Africa also has a constitutional obligation to balance the need for equitable development today with the right of future generations to be able to do the same.

Therefore, in March 2006 Cabinet commissioned a process to examine the options available to mitigate our greenhouse gas emissions. The aim of this Long Term Mitigation Scenario (LTMS) study is to contribute to setting the pathway for long-term climate policy for the country and to inform our negotiating positions. Ultimately this groundbreaking work which is now in its final stretch together with our work on sectoral strategies, the greenhouse gas inventory, our national communications to the United Nations (UN) and our adaptation planning, will inform our deliberations towards a legislative package which will give effect to our policy at a mandatory level.

I am looking to business to work with government in facing up to these new challenges. Government is determined to take responsible action on climate change. Business should respond decisively, not only because it is about bottom line profits, or because of ever-increasing pressure from environmentally-conscious consumers, investors and other stakeholders. Ultimately we are looking to business to also respond because of their moral responsibility as global citizens.

The Carbon Disclosure Project therefore comes at an opportune moment. Business in South Africa should be commended for the robust participation of 74 percent of the Johannesburg Stock Exchange's (JSE) Top 40 companies in the Carbon Disclosure Project.

Important initiatives such as the Curriculum Development Project (CDP) are central to creating awareness amongst business. It is only when companies know their carbon footprint that they can properly plan to mitigate. But reporting on carbon emissions is also about more than that. It is also an indicator of good corporate governance, of accountability, and of taking co-ownership for the future. As Sir Nicholas Stern put it, mitigation is a pro-growth strategy for the long-term. I am confident that our business sector has the vision it takes to look beyond short-term gain to the long-term sustainability of our economy and society.

The support to the CDP by investors who have a staggering US $41 trillion worth of assets under their collective management is indisputable evidence that the strategic consideration of climate change and the management of greenhouse gas emissions are fundamentally linked to companies' long-term performance and economic viability.

I would also like to take this opportunity to challenge those companies that do not yet track, report and manage their emissions, to join these efforts. Understanding the nature and extent of their emissions throughout the full value chain of their activities makes business sense. It will place them in a position to understand their future risks and vulnerabilities in a changing global and domestic business environment. For visionary CEO's and Boards it also holds the potential to unlock new opportunities, new competitive advantages in new products, technologies and processes, and a shift to greater efficiency in existing operations.

I would like to thank the CDP office in the United Kingdom for conceiving of this initiative. The National Business Initiative and its partner Incite Sustainability deserve praise for placing the CDP on the local business agenda. I also congratulate the individual companies that have participated in the initiative for their efforts and would like to encourage them to act on the findings of the report in order to show progress in the second round which will be scaled-up to include the JSE Top 100 in 2008.

In conclusion, the private sector has a pivotal role to play in our global response to climate change. With due recognition to existing efforts, there is a long way ahead for business and government alike. It is only by working in partnership that we will be able to make the kind of progress that is required by the latest scientific findings on climate change. Responding early and decisively is the biggest contribution that business can make.

Finally, special mention is reserved for the "climate leaders" identified in the Carbon Disclosure Report; their leadership is inspiring and an invaluable contribution to society.

Enquiries:
Riaan Aucamp
Cell: 083 778 9923

Issued by: Department of Environmental Affairs and Tourism
22 November 2007