SA falling behind on ‘going green’

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Johannesburg: Many South African companies are losing sight of their carbon footprint reduction programmes in the midst of the market turmoil. South African companies are asking themselves whether it is better to start developing a carbon management strategy now or to wait and see what transpires with impending climate change regulations, analysts say.

“They’re wondering whether to lead or become fast-followers,” says Paul Devine, senior manager in Deloitte’s climate change solutions group. “It makes sense to get ahead on reducing carbon emissions, especially if you’re already investing to improve energy efficiency. The incremental cost of creating a carbon strategy is trivial in comparison to its value potential.”

Recently, the Group of Eight (G-8) leaders — Canada, the UK, France, Germany, Italy, Russia, Japan and the US — agreed at this year’s summit in L’Aquila, Italy to keep the world’s average temperature from rising by more than 2° C above 1900 levels. That is the level above which, the United Nations says, the earth’s climate could become dangerously unstable. The G-8 countries also agreed to cut greenhouse-gas emissions 80% by 2050 as they strive for a worldwide deal, long in the planning, at Copenhagen in December.

SA’s greenhouse-gas emissions rank in the top 20 in the world, contribute 1,8% to global emissions and are responsible for 42% of Africa’s emissions. Under the Carbon Disclosure Project, the highest carbon emitters include companies such as Sasol , BHP Billiton and Anglo American. No regulations exist in SA for companies to report on greenhouse-gas emissions, but that is expected to change by 2012. The government wishes to stabilise emissions between 2020 and 2025, with absolute reductions starting 10 years later.

Earlier this year the government promised to assist businesses that took up the environmental challenge with tax incentives and savings. Madeleine Schubert, a tax expert at Shepstone & Wylie, says the government acknowledges the high cost associated with going green and saving energy. By trying to create a tax friendly environment for taxpayers within a greener environment, it has in effect joined the green movement, Schubert says.

Duane Newman, lead director of Deloitte’s climate change solutions group, says although some companies are attending to their carbon footprint, they are not taking proactive steps to reduce emissions. A carbon-neutral status is realised when a company has a net carbon emission that is zero. A specialised audit is required before a company can reach such a status.

Companies are also not raising consumers’ consciousness around buying “green products”, says Newman. In overseas jurisdictions such as the US and the UK there is a conscious drive around “green products”, he says.

Newman says the government has been appointed with the task of getting companies to change their attitude. “However, this is difficult and the policy makers often have to use either a ‘carrot’ or ‘stick’ approach,” he says. In the “carrot” approach, the policy makers offer companies incentives and other rewards to change their conduct. On the other hand, the “stick” approach penalises companies if they do not comply with the laws, explains Newman. He thinks the government should use a combination of both incentives and penalties.

Newman says incentives and projects need to be built into the company’s decision-making process. Carbon emission regulations will be coming into effect and any plan for the future has to factor that in, he says. Some countries are becoming protectionist and will use the law to keep the polluters out of their market, he says. For instance, border carbon adjustments are being proposed in a number of jurisdictions. Import fees will be levied by carbon-taxing countries on goods manufactured in countries without taxes on carbon.

Newman says sustainability should be seen as part of a company’s strategy.

Devine says the adoption of a carbon management strategy can reduce a company’s carbon footprint and prepare it for lifecycle emission standards. By doing so, it will also send a signal to consumers that the company is taking its environmental responsibilities seriously, Devine says.