In 2015, at COP21, the international treaty on climate change known as The Paris Agreement was adopted and came into effect in November 2016. This is a legally binding agreement that aims to limit global warming to well below 2°C (ideally 1.5°C) as compared to pre-industrial levels by 2050. Greenhouse gas emissions would need to reach their global peak as soon as possible, and be reduced to half by 2030, in order to achieve climate neutrality by mid-century.
Participating countries were required to submit their Nationally Determined Contributions (NDC) that explain their targets and action plans for carbon reductions, by the end of 2020. South Africa remains committed to addressing climate change based on science, equity and sustainable development. Similarly, the present draft updated NDC seeks to balance the three structural components of mitigation, adaptation and means of implementation/support requirements. The updated mitigation NDC proposes a significant reduction in greenhouse gas emissions (GHG) emissions target ranges up to 2030, with the 2025 target range allowing time to fully implement the national mitigation system, including those elements contained in the Climate Change Bill. It will also allow space for the implementation of IRP 2019 and other key policies and measures, as well as the national recovery from Covid-19. C40 Cities net-zero pledge has seen Cape Town, Johannesburg, eThekwini and Tshwane (among a plethora of other global cities) pledge to make all new buildings net-zero carbon by 2030, and all buildings by 2050. Many of the country’s larger businesses and institutions are already embracing the challenge of achieving net-zero carbon targets, and some have also committed to the pledge. We take a look at some of their journeys COP26 takes place in Glascow at the end of the year.
Nedbank may be considered a veteran in terms of sustainable practices considering its own operations have been carbon neutral since 2010. Its Sandton office building became the first building to receive a GBCSA Green Star rating back in October 2009, and its Menlyn Maine building in Pretoria was the building in the first South African precinct to be developed according to LEED neighbourhood criteria in 2012.
Dr Marco Lotz is Nedbank’s sustainability carbon specialist. He passionately explains the reports, charts and schedules that show Nedbank’s steady improvements in various sustainability categories. Nedbank has consistently achieved its own targets, and continues to monitor its operations, setting even more stringent targets for coming years.
‘Carbon’ is generally used to reference the quantity of greenhouse gases that are released into the atmosphere, but there are a number of greenhouse gases (GHGs) to blame, not just CO2. Lotz explains that in order to have a universal unit of measurement for calculating emissions, the most prevalent and potent GHGs are given a Global Warming Potential (GWP) value. So, CO2, being the baseline, has a GWP of 1. Methane (CH4) has a value of 21 to 23, and Sulphur hexafluoride (SF6), a by-product of the electronics industry, has a GWP of 22 800 to 23 900. The use of GWPs as a type of equivalent measure results in being able to add different, seemingly unrelated, types of GHG pollution together. As an example, the GHG pollution of a box of paper can be added to that of an aeroplane flight.
Nedbank’s strategy in terms of carbon emissions is first to reduce, then optimise, and finally to offset. The idea behind carbon offsets is that a monetary value is assigned to carbon so that the real cost can be internalised. To purchase carbon offsets one can invest in an organisation (usually an environmental cause) and obtain ‘carbon credits’ to offset emissions that cannot be eliminated internally. At this stage, buying carbon credits is still voluntary, but Nedbank has been supplementing its already good statistics with credits for some time. Lotz adds that the point of internalising these carbon costs is that it makes one think carefully before buying or using things, as there is a self-imposed financial implication.
Beyond internal operations, Nedbank also looks at the sustainability of the companies it invests in. “The world is changing,” Lotz says, “banks are now being held responsible for the projects they fund.” He explains that this can be quite complicated as reporting is not uniform and isn’t always externally audited. Carbon emissions are classified in three categories; Scope 1 (Direct), Scope 2 (Indirect – related to purchased energy), and Scope 3 (Indirect – other). Some company reports may exclude Scope 3 while others go as far as including staff commuting into the calculations. Landlords may choose to include or exclude electricity used by tenants. So, Nedbank has to carefully assess every application to confirm that its investments align with its sustainability goals.
The issue of climate change is central to Old Mutual’s Responsible Business Philosophy. In 2015, Old Mutual was a signatory of the Montreal Pledge, a voluntary carbon disclosure initiative that requires members to annually disclose their carbon footprint. Since then, its building in Sandton has received a 5-Star Green Star rating (Office As-built v1.1), and the Mutualpark campus in Cape Town received a 6-Star (Existing Building Performance v1) rating.
“Old Mutual Alternative Investments (OMAI) strives to be a key participant in Africa’s transition to a low carbon economy, driving the energy mix of invested jurisdictions toward a low carbon outcome. We believe private markets can play a significant role in achieving the positive impact needed against climate change,” says Dean Alborough, head of environmental, social, and governance (ESG) at OMAI. “OMAI, through its infrastructure fund manager – African Infrastructure Investment Managers – is one of the largest equity investors in renewables in South Africa, with 31 large scale renewables investments in wind, solar, hydro and off-grid solutions and just over 2GW of installed renewable power capacity.”
Old Mutual takes its responsibility as stewards of customers’ investments seriously. Old Mutual Wealth is the first investment platform in South Africa to independently rate and publish its own unit trusts in terms of ESG criteria. This was done in collaboration with MSCI and is the start of the journey to creating transparency to help customers invest with purpose. This enables investors to access more information on where their money is invested.
“There is a growing public interest in responsible living, with increased public discourse about climate change, inequality, environmental degradation and governance to name a few,” says Old Mutual’s managing director of unit trusts, Elize Botha. “Subsequently, there is a growing trend internationally of investors using their investments to influence and exercise choice for companies whose values are aligned with theirs.”
Increasingly for investors it’s no longer about profit alone, but unfortunately there are still very few responsible investment options available to the retail investor. There has also been a general assumption that ‘good cause’ investing will never be as lucrative in the long run. However, statistics show that companies with high ESG ratings have proven to be more resilient in times of crisis than companies with lower ratings. Old Mutual Unit Trusts now offers several ESG funds.
Liberty Two Degrees
Liberty Two Degrees (L2D) is a South African precinct-focused, retail-centred REIT (Real Estate Investment Trust). Its portfolio currently includes well-known shopping destinations such as Sandton City, Melrose Arch and Eastgate Shopping Centre. Its Sandton City Precinct, which incorporates Sandton City Shopping Centre, Nelson Mandela Square, Atrium on 5th and Sandton Office Tower, was recently awarded a 6-Star Green Star rating (Existing Building Performance v1). This is the first super-regional retail precinct in Africa to have achieved this. This latest achievement also means that, as a first for the South African retail industry, L2D’s entire portfolio is now GBCSA certified.
L2D was reconstituted and listed as a corporate REIT in 2018, but its green journey began before its newer identity. In 2012, recognising its corporate responsibility to the environment, it started investigating solar installations. By 2018, it was formalising its environmental target. L2D’s over-arching goal is to create spaces for people that are built using three main building blocks; GOOD Spaces, SMART Spaces, and INTERACTIVE Spaces. These blocks are underpinned by the SAFE Spaces building block, which ensures that their environments adhere to the highest standards of hygiene, care and security. L2D’s digital transformation journey forms the basis of SMART Spaces while INTERACTIVE Spaces has a focus on the experiential offerings throughout the business and drives innovation. Both of these overlap environmental targets, but GOOD Spaces is the one that aims to develop precincts as healthy ecosystems that don’t just reduce negative impacts but have positive effects on people and the planet, explains Brian Unsted, the asset management executive heading up GOOD Spaces.
L2D has committed to being net zero by 2030 and this is being undertaken in phases. Net-zero waste is on track for 2021. This includes on-site composting programmes as well as a ban on the sale of plastic bags in all its malls. Net-zero water will follow by 2025, and net-zero carbon should be achieved by 2030. Carbon emissions are being tracked and reduced across the portfolio and renewable power installations are being invested in.
Liberty Midlands Mall in Pietermaritzburg and Eastgate Shopping Centre in Johannesburg already have large solar installations that reduce carbon emissions and reliance on non-renewable energy sources. “The Midlands system was the first system commissioned in early 2019,” says Unsted, “Eastgate Shopping Centre also features three solar tree structures that operate off the grid, are self-reliant and provide a source of renewable energy to the centre, while increasing the public’s awareness of sustainable green methods of preserving energy and contributing to feature lighting and the overall aesthetic in the piazza,” Unsted adds.
Carpet and flooring manufacturer, Belgotex, has long been leading the way in shifting both its products and manufacturing processes towards a more environmentally sustainable goal. Its ‘green journey’ started way back in 1991 and, since then, its product range has already eliminated harmful VOCs and Belgotex is constantly innovating new ways to incorporate more recycled and environmentally friendly material content.
Belgotex has invested significantly in solar power, resource efficiency and plant upgrades to save energy and reduce GHG emissions. In 2017, the Belgotex factory in Pietermaritzburg, KZN was awarded the very first 6-Star Green Star rating for industrial buildings (EBP), and by 2019, 10% of its manufacturing energy requirements were generated by its extensive solar PV arrays.
Since 2010, Belgotex has been quantifying its carbon footprint and steadily reducing its impact. Terri Clapperton, sustainability officer at Belgotex, explains that the company is currently in the process of developing its circularity and energy strategies, and setting science-based targets for its operation going forward, focussing on reducing GHG emissions and keeping materials in use. Its second phase of solar power installations is already underway, as well as a number energy efficiency and productivity projects whereby IoT (Internet of Things) solutions are being used in its manufacturing process areas. The company’s current studies will provide the data necessary to keep updating its sustainability targets for its buildings, processes and products into the future.
Saint-Gobain was founded over 350 years ago and has developed into a leading brand today, recognised around the world. The group designs, manufactures and distributes innovative materials and solutions for the construction, mobility, healthcare and industrial markets and has over 1 000 manufacturing facilities in 70 countries.
Over the years, much of its R&D has gone into becoming more environmentally sustainable as a business, and creating healthy and sustainable product ranges. The group is committed to reducing VOCs and other harmful compounds from its products, and holds over 900 verified EPDs (Environmental Product Declarations) – standardised life cycle documents certified by a third party.
In 2019, Saint-Gobain committed to being net-zero carbon by 2050. This is a particularly lofty challenge as a large-scale manufacturer, and as a company of its size, with bases in many very different contexts. Its first interim target, in 2025, will include a 20% reduction in Scope 1 and 2 emissions (from 2010), as well as 80% reduction in water discharge and 50% reduction in non-recovered waste.
Its carbon neutral strategy includes optimising and reducing energy use, innovation in its industrial and design processes, transitioning towards renewable energy sources, and new initiatives in transportation.
Earlier this year, Saint-Gobain opened its new headquarters in La Défense, outside Paris. The building is designed to showcase its products and its commitment to environmental sustainability. It is 165m high, 44 levels, and uses over 80 of Saint-Gobain’s materials and solutions. It has been awarded four top certifications, including Platinum LEED, and BREEAM’s New Construction: Excellence.
Netcare operates the largest private hospital, primary healthcare, emergency medical services, mental health and renal care networks in South Africa. It is also the largest private trainer of emergency and healthcare workers in the country. It developed its comprehensive Environmental Sustainability Strategy in 2013. Its initial 10-year plan is well on track and included targeting a 22% reduction in energy intensity per bed by 2023, which has been achieved. It has subsequently added 10-year and 30-year strategies. By 2030, Netcare aims to have 100% of its power supplied from renewable sources, and to achieve ‘zero waste-to-landfill’ status.
André Nortjé is Netcare’s national environmental sustainability manager who oversees a team of engineers dedicated to introducing and evaluating sustainability measures within all Netcare buildings. He explains that Netcare’s energy efficient equipment and green energy technologies ensure that each patient’s carbon footprint, while undergoing hospital care, is being kept to a minimum, and this directly translates to lower healthcare costs. He further explains that “the risks associated with certain initiatives require careful consideration before being implemented.
Supplying reliable energy as efficiently as possible remains challenging”. This relates to the fact that hospitals run at high capacity 24 hours a day, 365 days a year, and that unreliable power means back-up power systems, which are less cost-efficient, need to be used.
Nortje is also excited about another significant ‘first’ for the company. In March this year, Netcare and Standard Bank concluded the African continent’s first sustainability linked bond (SLB). This type of bond allows capital to be raised by a company through public investment in bonds that are tied to the borrower achieving their set sustainability targets. Apart from the benefit to Netcare’s environmental goals, it also gives investors another option for ‘green’ investing.