Gauteng Business News

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GREEN: Sustainability Not a Priority for SA Business


Recent Gauteng Business News

Less than half of South African businesses are seriously considering switching to green energy sources despite their overwhelming dependence on reliable power and water supply to sustain their growth strategy, according to an international study by Grant Thornton.

The Grant Thornton 2014 International Business Report (IBR) entitled “Sustainability: Changing the debate in emerging markets” surveyed 2500 companies in 34 economies and highlighted that South African businesses trying to use sustainable technologies to reduce operating costs will face a number of challenges.

In the IBR survey the supply of energy was identified as crucial for growth among 85% of South African businesses. However only 43% stated that they would endeavour to switch to energy efficient alternatives.

Of the companies surveyed, 74% said the availability of raw materials, particularly water, was vital to growth and 63% said they would consider whether it came from sustainable resources.

The findings make for interesting reading considering the widespread issues that have plagued the country power and water supply ability. Among the most serious recent developments were a double digit increase in electricity tariffs for 2015; continuous power shortages; energy supplier Eskom’s financial crises; and the delay in bringing the Medupi power station online. In addition a recent water supply crisis in urban centres of Gauteng all points to further concerns relating to the securing of a reliable water supply.

Loshni Naidoo Associate Director for Sustainability at Grant Thornton Johannesburg said the challenges facing the energy and water supply would result in substantial increases to operational costs for companies and this further emphasises the importance for businesses to look at sustainable alternatives.

“Even though we are saying the reliability concerns are very high on the list from a South African perspective we are not seeing many companies switching,” said Naidoo. “Electricity supply is more of a concern in South Africa than in emerging economies such as Nigeria, Mexico and Brazil for example but it’s surprising so few South African companies are considering switching to greener energy sources compared to these economies.”

Naidoo said while there had been a shift towards better monitoring and efficient consumption of key resources, such as the widespread corporate buy-in for reducing carbon emissions, the awareness for water and energy supply alternatives had not been as vociferous.

“Whether the low consideration for switching to greener energy is due to the lack of available and viable alternatives or of funding, is an issue that needs to be explored. The report findings do however provide a case for government to incentivise businesses to make the transition to a lower carbon footprint and greener economy,” she said.

The IBR report also revealed that business leaders in emerging markets were more focused on the sustainability of their operations compared with their peers in developed markets.

The report explained that momentum was building towards the United Nations’ Climate Change Conference which will take place in Lima, Peru in December this year. The report said the cost, reliability and sustainability of energy were a priority for the expansion of developing countries’ growth plans.

Some 76% of the surveyed African business leaders, 72% of the Latin American ones and 67% of the South East Asian ones said the cost of energy was important to their growth strategy over the next 12 months, compared to just over half of Europe.

Reliability of energy was also seen as being critical. Businesses in Africa and Eastern Europe cited energy availability as extremely important. As much as 71% of African businesses and 71% of Eastern European businesses cited that energy supply was vital to their growth strategy.

South Africa is one of the main respondents in the report from Africa, being among the largest three economies on the continent. It recognises the need for reliable sources of energy. The report found that South Africa and other African and emerging market countries were too reliant on traditional non-renewable energy sources like coal.

This dependence continues while European and North American countries have and continue to shift to green renewable energy sources.

Grant Thornton global leader for energy and cleantech Nathan Goode said people needed to realise that sustainable business practices actually led to long term cost reductions as opposed to higher costs for operations.

“Sustainability has traditionally been seen as a cost to business; the burden of supporting the common good. However our recent research shows that business leaders are increasingly motivated by the cost management benefits of moving towards more socially and environmentally sustainable practices,” he said.

Goode said that even without a global agreement on lowering carbon emissions, it was encouraging to see businesses promoting sustainability.

“The political leaders of major emerging economies continue to affirm that their number one priority is the eradication of poverty,” he said. “However, the growth of these economies increasingly relies on how they manage access to scarce resources such as water. There is no choice to be made on whether to focus on sustainability or poverty; the two are mutually dependent.”

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