A significant contribution to the Just Transition in South Africa should come from private sector finance, according to head of the Presidential Climate Finance Task Team Daniel Mminele.
He has said there are many opportunities for public sector finance to leverage off the private sector and crowd in additional investments.
Mminele was the keynote speaker at the JSE in Sandton where the bourse released its sustainability and climate disclosure guidance as part of its efforts to promote transparency among listed companies on their environmental, social, and governance (ESG) disclosures.
The JSE’s sustainability disclosure guidance aims to be a reference document that uses a basic set of metrics in established global standards for locally listed companies to provide disclosures.
The JSE has released its sustainability and climate disclosure at a time when around the world, companies are under pressure to help reduce global GHG emissions by half by 2030 and aim to achieve “net-zero” emissions by 2050, which means releasing no more carbon into the atmosphere than is removed.
Investors and investment vehicles are placing increasingly strict conditions on companies with reference to sustainability and governance.
Mminele said markets had a powerful role that they can play in ensuring sustainable development and driving the necessary shifts.
Last year, the country was allocated R131 billion ($8.5bn) by France, Germany, the UK, and the US, as well as the European Union (EU) to accelerate South Africa’s transition from high carbon to low carbon economy.
"We are currently working with our partners on how best this fund would be deployed to meet the needs of our energy transition, the just transition. We have also been clear that this $8.5bn is just a component of what will ultimately be required to fund the just energy in South Africa, and that a significant contribution should come from private sector finance," he said.
He said the Glasgow Financial Alliance for net-zero, indicated that over $4.13 trillion capital commitments had been secured to support the transformation of the global economy for net-zero and commitments from over 450 firms across 45 countries.
"The alliance estimates that $100 trillion is needed for net-zero throughout the next three decades," he said.
Mminele says initiatives such as the JSE's will assist capital markets in assessing both suitability and climate change risks and opportunities and making capital allocations decisions accordingly, with real-world impacts.
“This launch is not a destination but marks a milestone on the continuous journey around most of the work that still lies ahead,” he said.
JSE chief executive Leila Fourie said “It is our hope that the JSE Sustainability Disclosure Guidance will help to improve business leadership, performance, accountability, and transparency across the entire sustainability ecosystem.”
Just Share executive director Tracey Davies says the acronym ESG (Environmental, social, and corporate governance) is a reflection of the attempts as a society to take a huge and complex human and ecological problems and render them manageable and measurable, somehow incorporating them into existing ways of acting and thinking.
And the noise around ESG and limitations in that approach have really escalated in recent months. “This business as usual approach with an ESG overlay is causing us to lose sight of the real purpose of ESG-related disclosures and integration,” she said.
She says sustainability disclosures should be the tool to help understand the difference between those two types of businesses.
"I am really pleased the JSE has called it the sustainability disclosures rather than ESG disclosures," she said.