JOHANNESBURG. Cleanliness is definitely not the prime reason to invest on African stock exchanges, particularly not in South Africa.
A survey by the Carbon Disclosure Project the shows that South African top companies are among the worst you can imagine, in fact the higher up they are on the JSE top 40 list, the worse they tend to be.
Not surprisingly the worst listed South African company, from a carbon dioxide point of view, is petro chemical company Sasol, which is a world leader in coal- and gas to oil conversion.
The top companies on the JSE, mining companies BHP Billiton and Anglo American Corporation, came second and third.
The likelihood for these companies to change their behaviour any time soon is not entirely in their own hands. As long as 93 percent of South Africa’s electricity is generated by old school coal power stations the country’s leading electricity consumers will also lead the carbon emission list.
Eskom, the national electricity utility, generates 48 percent of the country’s accumulated carbon dioxide emissions. There is little chance that the utility will change its behaviour as the country is suffering from serious electricity shortage and if Eskom could increase the output it would do so.
The South African government has given Eskom the go ahead to build more coal power stations, not to take dirty old stations out of production, but to add desperately needed capacity. This is motivated South Africa’s massive coal resources, which is economically difficult to ignore. New generation nuclear power stations are also in the pipeline, but without having any material effect on carbon emissions.
Corporate South Africa has become better on reporting their carbon emissions – in particular companies that are also listed on international exchanges – and whatever plans they have to bring emissions down.
But the Carbon Disclosure Project does not believe there will be any change in behaviour within the foreseeable future, but stated there was “a disconnection between awareness of climate change and action on the issue”.
“Although 61% of FTSE/JSE Top 40 responding companies have allocated board level or upper-management responsibility for climate change issues, only eight companies have disclosed clear, company-wide emissions management targets. Only 29% of the Top 40 JSE responding companies report incorporating climate change into investment decisions. All of these are in high-impact industrial sectors,” the Carbon Disclosure Project report said.
The project also suggested that it is very much in South Africa’s own interest to pay attention to gas emissions as climate change will hit the country badly through increased scarcity of water and the effects that have on agriculture and forestry.
Carbon credit trading hasn’t yet taken off in South Africa. There are only some 20 registered so called clean development mechanism projects in South Africa, compared with some 500 in Latin America and China as well as over 600 in India.
The country’s Central Energy Fund (CEF) which decides South Africa’s petrol price on a monthly basis, have set up a carbon credit company, CEF Carbon, with the intention to get the sector going.
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Analysts believe South Africa will face serious curbs on emissions by 2012 under the Kyoto Protocol.
So there will be ample need and massive opportunities for South African and foreign companies to come up with schemes that facilitate trading in carbon credits and that way bring down South Africa’s desperately poor carbon emission performance.
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