by Edwin Ritchken

A commitment to sustainability

PPC Clean Business International Conference Speech

The Clean Business International opening speech was steered by Edwin Richken, advisor to the Minister of Public Enterprises
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Our country unfortunately is also amongst the highest per capita carbon emitters. The bulk of Greenhouse Gas (“GHG”) emissions in South Africa continues to come from the energy sector, which contributed 78% of South Africa’s total Green House Gases in 1994, and more than 90% of carbon dioxide emissions.

In this energy-intensive, coal-dependant, high emission context, we have adopted a proactive approach towards South Africa playing its part in combating the global challenges associated with climate change. We simultaneously recognise our pledges to the South African public on job creation and economic growth.

Our policy objective is therefore to make a fair contribution to the global effort to stabilise greenhouse gas concentrations whilst being careful not to impose undue burdens on our population and economy in the context of  the levels of South Africa’s poverty.

 At the COP 15, President Jacob Zuma conditionally committed South Africa to achieving a 34% deviation below the ‘business as usual’ (BAU) emission trajectory by 2020, and 42% deviation by 2025.  

This commitment is conditional upon Annex One countries providing appropriate and adequate resources to support our mitigation efforts. In pursuit of this goal and the green economy, South Africa has finalized its National Climate Change Response Paper. This White Paper serves as Government’s vision for an effective climate change response and the long-term transition to a climate resilient and low-carbon economy and society. Two key objectives include:

 

•          Making a fair contribution to the global effort to stabilise greenhouse gas concentrations.

•          Effectively managing unavoidable climate change impacts through interventions that build and sustain South Africa’s social, economic and environmental resilience and emergency response capacity.

As the shareholder ministry of major South African SOC, DPE has completed  a process of defining a policy to guide State Owned Companies in our portfolio in their engagement with the climate change and green economy challenge. This has been completed just prior to South Africa’s hosting of COP 17.

I am pleased to launch this Framework today. The overarching objective of the Framework is to optimise the impact of the SOC on the reduction of carbon emissions and development of the Green Economy without compromising SOC financial viability. There are four key design principles informing the policy: 

Firstly, the SOC need to focus on optimising the overlap between  commercial, economic, developmental and environmental objectives whilst carefully managing areas where these objectives conflict;

Secondly, it is expected that over time, climate change, broader environmental and green economy considerations will be integrated into the heart of SOC planning, procurement and operational processes - however this will be an on-going process or learning and continuous improvement, rather than a big-bang. 

Thirdly, each SOC requires flexibility in the way it responds to the challenges of climate change given the diversity of sectors within which the SOC operate.

Finally, the development of the green economy requires a high level of collaboration across SOC and between SOC and government and the shareholder will have to play a facilitating role in this regard.

The focus of the policy is thus to start the process of integrating climate and green economy considerations in the SOC planning processes  and to facilitate a high level of collaboration between the SOC and government to enable the efficient implementation of green economy initiatives.

As a starting point, the Policy aims to ensure that the SOC begin a process of systematic and continuous learning around how to engage with the opportunities and risks associated with climate change.

As a result, the policy requires that each SOC will develop and submit a strategic plan around how the SOC will engage with the climate change arena.

The SOC climate change response plan must have the overall objective of optimising the impact of the SOC on the reduction of carbon emissions and development of the Green Economy without compromising SOC financial viability.  

Over time, it is expected that this will be integrated into the standard SOC planning cycle.  The overall objective of the plan will be to optimise the impact of the SOC on the reduction of carbon emissions and the development of the green economy.  

The plan will need to provide an outline of the concrete initiatives that the SOC will take to achieve these objectives in the context of the risks and opportunities related to climate change that they are facing.

In addition, the plan needs to provide an outline of how broader government support and resources can be used to accelerate or enhance the implementation of the plan. Through our monitoring of the implementation of the plan, the Department will be able to track the SOC impacts and learning process related to the climate change challenge. 

I recognise that the policy has not set targets relating to SOC emission reduction or for the investment they promote in green economy initiatives. As a starting point, we would like the SOC to set their own targets based on what they believe they can achieve. In this way, we can demand a high level of accountability.

It is notable that Transnet has already reported on their carbon foot-print in their annual report and has tied their management incentives to reducing these impacts. This suggests that the SOC are engaging in both the letter and the spirit of the policy.

I want to briefly concretise the policy in order to illustrate how SOC emission reduction activities can catalyse green economy initiatives which will require a high level of SOC and government collaboration.

SAA intrinsically operates in the global market and is consequently extremely vulnerable to policies in countries that it operates that impose penalties and taxes on carbon emissions.  

In the short term, SAA is exploring the implementation of a voluntary carbon offset project that can support the development of forestry in the region.  Indications are that SAA will require that bio-fuels make up half its fuel supply by 2022 in order to avoid future penalties.

This will create a pressing demand for an extremely large quantity of bio-fuels which can form a base-load against which a fully vertically integrated bio-fuels industry can develop in South Africa and in the region. SAFCOL, an SOC that has considerable experience in forestry, has been developing intellectual property which can support this process.  

The DPE has convened a supply chain and a technical working group involving the SOC and relevant government Departments and agencies to specifically develop a strategy for meeting aviation bio-fuel requirements.   

 As part of our commitment to sustainable development, today we the DPE and the SOC in our portfolio have signed onto the UN Global Compact. The UN Global Compact is the world’s largest voluntary corporate citizenship initiative.

Companies join the UNGC so that they can share the conviction that business practices rooted in sustainability principles contribute to a more stable and global market and help build prosperous and thriving societies.  

An outstanding feature of being a member of the UN Global Compact is that it not only commits the company as a whole, but specifically its leadership to prioritising sustainability issues.

The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption, thereby advancing sustainable development. By doing so, business as a primary driver of globalisation can help ensure that markets, commerce, technology and finance advance in ways that benefit economies and societies everywhere.  

To maintain the company’s status of being a responsible corporate organisation a “Communication on Progress” (COP) report is required annually by the UNGC.

 The DPE takes pride in ensuring that our SOC play a leadership role in the  transition to a low carbon economy and that they are committed to broader sustainable development objectives and philsophies.  

We hope that all South African businesses will follow our example.

About Edwin Ritchken

Edwin Ritchken is the strategy advisor to the Minister and Director General of the Department of Public Enterprises.

In this post he has been responsible for advising on overarching shareholder strategy, directing the development of the Competitive Supplier Development  Program for State Owned Enterprises and for the development of the defence related industry strategy.  

Prior to assuming this position, Edwin was the transport industry specialist in the department with responsibility for assessing the strategies and structure of Transet.

Edwin is also strategy consultant of eight years experience specialising in the economics and politics of industry and enterprise development and transformation.

Edwin has a Bachelor of Economic Science (Computer Science), a Bachelor of Arts (hons) and a Phd in Political Studies from the University of the Witwatersrand.

 

 

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