This, 2022, has been the year in which ESG or Environmental, Social and Governance sustainability as a goal, action and practice took on much greater significance for businesses around the world.
Highly conspicuous impacts of climate change, more ESG regulation, shareholder and customer demands, a spotlight on greenwashing, a greater push for renewables, and growing pressure to set net-zero commitments have all been key drivers of ESG policies and action globally and in South Africa.
As many of us prepare to take a well-deserved rest, I’d like to take this opportunity to briefly highlight some of the transformative commitments, actions and achievements of our clients, leaders in sustainability. I will also discuss major ESG drivers in 2022 and 2023, and share more about how the GCX team will be supporting our clients to navigate the complex ESG landscape in 2023.
Our clients and impact
It is our great privilege to use 120+ years of collective sustainability experience to be a trusted guide and partner on the sustainability journeys of many of South Africa’s leading companies. We’re therefore honoured to have been joined this year by some of South Africa’s leading financial services, retail and real estate companies.
Our DASH real estate client base has a collective market cap of ZAR 225b+ and now includes a major share of SA’s largest property leaders. Our DASH platform, as of 1st December 2022, manages the following:
- Global Assets: 1K+
- No. of Tenants: 17K+
- Sectors: Office, Leisure, Industrial, Healthcare, Development, Hotel, Retail, Marine, Specialised
- GLA: 12M m2+
Our clients have been making significant strides, and GCX is now a leader supporting positive sustainability performance in this sector. Here are a few highlights:
Attacq embeds ESG and sets ambitious carbon reduction targets
Attacq Limited, a real estate investment trust and JSE-listed company, recently released their integrated report for the 2022 financial year end and we are proud to be party to and witness their progress and commitment to sustainability.
Driving sustainability from the top is critical, and so Attacq has tasked three senior management team (exco) members with the responsibility for ESG. They’ve also taken immediate actions based on the science-based target set by the GCX team to reduce carbon emissions by 2030. As a result, Attacq reduced its carbon footprint against the 2019 baseline by 8.04%, and improved energy and water efficiency across their portfolio.
Growthpoint sets its sights on net-zero
We congratulate Growthpoint Properties for setting five-year science based targets, with the aim to achieve carbon neutrality by 2050 and with all buildings directly controlled by the company to operate at net zero carbon by 2030.
Liberty Two Degrees (L2D) leads the green building charge
JSE-listed real estate investment trust Liberty Two Degrees (L2D) has received Green Star ratings by the Green Building Council South Africa (GBCSA) for its entire retail portfolio, a first for the industry.
GCX clients are making global climate action commitments
GCX has been supporting and guiding many of SA’s largest companies to lead the global charge on sustainability and world-class ESG transformation.
Ten of the 31 South African companies that have joined the We Mean Business Coalition (WMBC)(wemeanbusinesscoalition.org), a network of over 7,000 of the world’s leading businesses committed to taking climate action, are active GCX clients. These include Woolworths, Spar, Pick n Pay and Nampak. Emira, Attacq and Growthpoint, also members of the WMBC, for instance, are drawing on our consulting expertise and/or using the GCX DASH platform to drive action on the science based targets they’ve set and for measuring performance. Emira was the very first company in Africa to set such targets with our support.
We Mean Business Coalition (WMBC)
Six GCX clients are among the companies comprising the UN Global Compact’s Africa Business Leaders Coalition, which at the recent COP27 climate summit outlined their climate action commitments. We congratulate Discovery, Woolworths, Netcare, PnP, Datatec and Alexander Forbes for their sustainability leadership.
Leading companies in South Africa’s real estate sector have been making significant strides, and GCX is now a leader driving sustainability performance in this sector.
What was new in 2022
New DASH social and governance indicators
You cannot manage what you don’t measure, and the rising pressure on companies to set more ambitious ESG targets and goals and improve their ESG ratings, has led to an even greater demand for data, benchmarking and automated reporting tools.
Our data intelligence platform, DASH, already delivered data confidence and business intelligence to drive environmental sustainability decision making but has now been configured to include a very comprehensive list of social and governance indicators. The addition of these categories is a game changer for GCX clients who can now track performance of their entire ESG profile at a granular level on an annual basis.
ESG risk metrics for automated trade
This year, we also partnered with Traydstream Limited, the London based fintech to incorporate ESG risk metrics to the Traydstream automated trade document checking solution for banks and corporates. The partnership ensures Traydstream’s clients have the ability to assess ESG information at a transactional level, allowing them to better understand the ESG impacts such as carbon footprint and human rights, and ESG risks.
Drivers of sustainability in 2022 and 2023
As mentioned, the drivers of corporate sustainability locally and globally are wide ranging. Some include:
- Intensifying pressure on companies to set science based net-zero targets with many aiming to achieve net-zero by 2050.
- Shareholders are demanding that companies identify and disclose climate risks, with more tools and practices emerging to help companies assess and put in place actions to mitigate risks.
- Global action on climate change is seeing governments and corporate leaders setting targets to reduce carbon emissions and to transition to renewable energy.
- Sustainable finance in the form of green bonds, social bonds and ESG-linked loans are linked to sustainability KPI’s and preferential interest rates.
- Executive bonuses linked to ESG performance have led companies to invest more aggressively in sustainability.
- ESG ratings used as a proxy by equity analysts to make investment decisions.
Locally, multi-faceted crises, new regulation and voluntary initiatives are all key drivers.
Energy, waste and water crises
ENERGY CRISIS: The energy crisis in South Africa has sped up businesses’ transition to renewables at an exponential rate. Renewable energy is no longer only a sustainability solution, but also one that makes business sense and is critical for business continuity as I argued in this Business Insider SA article recently.
While the energy crisis is felt more keenly and is more widely reported on, South Africa is also facing concurrent waste and water crises.
WASTE CRISIS: Most of the large metros have less than ten years of landfill space left. All companies that generate waste need to mitigate business continuity risks as there is a strong possibility that there will in future be no destination for their waste. Companies need strategic roadmaps to achieve zero-waste-to-landfill before landfills close. GCX uses data analytics as our beacon to drive these improvement programs. Our subsidiary, Zero Waste Technologies, provides the deep subject matter expertise and innovative engineering to ensure our clients are able to confidently set and achieve these targets.
WATER CRISIS: Furthermore, with a Day Zero scenario having moved from CT to Gqeberha as well as water restrictions recently affecting Gauteng, companies need to press on with their net zero water ambitions as well, targeting these areas in the near term. GCX DASH clients are more confident than others to now have a better handle on their water consumption and discharge than before, with anomalies in data being identified as they happen.
New compliance and regulation
GREEN BUILDINGS: New regulations were due to come into force this month that require all non-residential buildings (factories and manufacturing excluded) to submit and display an Energy Performance Certificate (EPC) or risk a R5 million fine, five years in prison, or both. The implementation of the EPCs has been delayed for five years to give companies time to prepare. GCX is able to help companies track certificates and energy performance once they have been issued.
As I noted in a recent Positive Impact Africa interview, changing regulations such as the EPC requirement, are also changing the role of facility managers who are often required to meet ESG targets that are being set at group level. This is a dramatic change from a decade ago when FMs performed a maintenance function and simply hoped nothing expensive broke.
WASTE: New Extended Producer Responsibility requirements have been causing much consternation in the sectors where they are relevant. Any company that adds packaging to their product will now be responsible for the safe and sustainable disposal of that packaging once the product is consumed. The regulations put the responsibility for the impact of a product at the end of its life cycle on the producer of the packaging.
The SA Plastics Pact is a voluntary initiative that aims to create a circular economy for plastics packaging in conjunction with other local initiatives.
GCX focus and offering in 2023
In 2023, our team will continue to deliver world class, fit for purpose, ESG technology and advisory services to our clients. In addition, we will expand our support on the social aspects of ESG, expand our data intelligence services and offer industry benchmarking and advisory services for clients in the built environment.
Deeping our support for the ‘Social’ in ESG
We will extend our service offering to support clients on the social aspect of ESG. To this end, we’ve partnered with AVD Consulting, led by Lisa Domoney who has over 20 years of social impact experience working with retailers in the UK and US on improving labour standards in global value chains.
With AVD, we will partner with major retailers to build ethical trade roadmaps, and ensure policies and practices align with companies’ own ESG targets, regulation and international frameworks. We will also supply companies with the tools and due diligence to address risks, help build internal capacity to manage the social impact of business, and facilitate stakeholder engagement across product categories and supply chains.
Data
Accurate and timely data is the key determinant of ESG success. In 2023, we expect an uptick in demand for our project tracking module, which models and tracks clients’ decarbonisation and net-zero targets. By having visibility into potential savings, budgets and ROI’s at all levels of the enterprise, companies are able to navigate their way to net zero with more confidence.
Industry benchmarking
Every sector and issue have their leaders and laggards and I’ve highlighted many of the achievements of South Africa’s sustainability leaders. But what about the laggards; do they know they’re lagging behind and losing out on critical benefits that impact long term business performance?
Industry benchmarking helps businesses understand how they are doing against their peers. While data is critical for reporting on ESG matters, so is understanding how a business is performing against their local and international peers. Effectively addressing issues can give companies an advantage over competitors, both in reputational and financial terms.
In 2023, GCX will launch its industry benchmarks for the South African real estate sector. We’ll provide clients a reliable, dynamic and anonymised benchmark for energy, water and waste at asset and tenant levels. Having listened to the market, this will definitely be a game changer to drive performance at every level of a real estate enterprise.
Watch this space!
From net-zero to net positive
Looking back on what can only be described as a formative year in global sustainability, I am deeply grateful to the GCX team and to our clients for their ongoing passion, commitment and world-class work to achieve sustainability transparency, accountability and justice.
It is only through taking responsibility ourselves, as business leaders, employees and consumers, that we will effect the change that is needed in order to leave a positive legacy for future generations.
This blog post illustrates that this journey is highly rewarding, but fraught with complexities. GCX is committed to being a trusted guide and partner, and to help large companies move beyond reducing negative impacts to having a net-positive impact on the planet. As the client successes I’ve highlighted show, this is both achievable and necessary – there is no planet B.
Wishing those who celebrate, Happy Holidays, and to everyone reading this, the very best for a sustainable 2023.
