In Part 1 of this three-part series, Sweet looks at global and local developments requiring organisations to take drastic action against climate change.
Increased awareness around the impact of climate change (think rising sea levels, rampant wildfires, global warming and extreme weather conditions) brings with it mounting pressure on organisations to apply an “adapt or die” approach to their future business practices.
Concerns around the nature and impact of climate change are not new but this past year has shown a significant increase in societal pressures around this pressing issue, including from the younger generation.
On the home front, the South African government is slowly expanding its climate change regulatory net, but continues to battle many competing considerations.
December 2019 saw the media awash with news reports of the COP 25 summit held in Madrid while the latest UN Emissions Gap Report 2019 found that global emissions must be reduced by 7.6% each year for the next ten years to meet the 1.5% Paris Target1. Gretha Thunberg, who is fast becoming a household name, returned to Davos this year and emphasised that we have 8 years to use the remaining global budget of less than 340 gigatons of CO2 in order to stay below 1.5°C. Her mission is representative of many young activists frustrated by the slow pace of global political and country-specific action.
South Africa, for example, has made a number of international commitments to a just transition to a lower carbon economy, but as is the case with most environmental matters, the government has to juggle many opposing concerns, not least its dark political history and attendant socio-economic divides.
The recently published Integrated Resource Plan provides an excellent example of these competing concerns. Activists have demanded the inclusion of more renewable energy, and government has confirmed its commitment to clean coal in the short to medium term. Yet coal is argued to generate huge employment which, given the recent unemployment statistics, is desperately needed. It is also said to be a cheap energy source. However, some would argue that the cost is high in other respects, given the health, water, and environmental implications of coal mining, making it a difficult balancing act.
Other forms of state-mandated regulation are also struggling to take hold. In September last year, the Ministry of Forestry, Fisheries and Environment published draft amendments to the 2017 Greenhouse Gas Reporting Regulations in terms of the National Environmental Management: Air Quality Act. Significantly, in confirming that reporting must take place at facility and at group level, the draft Regulations will evidently require even greater transparency from and reporting obligations on data providers, with the proposed amendments seeking to provide that “whilst reporting shall be done at facility level and also aggregated at data level, the threshold to trigger registration is applicable at data provider level”.
Another example is the Climate Change Bill. First published for comment in 2017, it still remains a draft with many of the mechanisms provided for only likely to be finalised a while after it is promulgated.
Carbon tax moves forward
Despite other challenges in the South African economy, there have been some positive developments in the carbon tax space. The Carbon Tax Bill was signed into law and the Carbon Tax Act commenced on 1 June 2019. In December last year, the Carbon Offset Regulations were finalised and two draft Regulations have been published for comment. It is intended that these will be finalised in the first quarter of 2020.
Industry has often being seen to be trying to thwart the carbon tax yet, more recently, corporate South Africa appears to be accepting the stark realities posed by climate change or possibly the massive reputational risk associated with not being seen to taking measures to address the risk.
Even with potentially good legal grounds to challenge the Carbon Tax Act, there has not yet been any formal challenge or request to delay the tax’s implementation or application. This is despite not only the significant economic implications through pass-throughs to consumers, but also the fact that at least two of the mechanisms provided for in the Act to reduce overall liability, have not been finalised.
Against this global and country-specific backdrop, climate change activists and institutions are looking for alternative ways to bring about the necessary momentum for change, especially since more traditional tools take time: time which they argue the world does not have. This puts immense pressure on organisations to ensure that they are responsive to the threats and impacts of climate change.
Written by Justine Sweet, Environmental author who consults on content for LexisNexis South Africa’s Lexis Library, Lexis GRC and Lexis Assure solutions.
Look out for Part 2 of this three-part series in which Sweet looks at the mounting pressure for environmental disclosure faced by organisations.