Page 7 - AfrElec Week 48 2021

AfrElec COMMENTARY AfrElec

Jaguar Land Rover, Mercedes-Benz, and Volvo. At present, not all the financial institutions
However, the US and China as well as other lead- have announced their short- and medium-term
ing car manufacturers were not part of the deal. commitments. Nonetheless, it is clear that asset
Beyond governments, investors committed to owners and managers will increase expectations
engage with investee companies within the auto- on investee companies with regards to transition
motive manufacturing industry to achieve this plans covering all scopes, as well as climate con-
goal and to promote within all their holdings the siderations on governance structures, remuner-
development of decarbonisation of their fleets ation incentives and capital allocation aligned to
aligned with science-based targets. net zero targets.
It is becoming clear that any financing in the Finally, an important step in the future of
fossil fuel sector on both the supply and demand sustainability reporting was the establishment
side will increasingly come under scrutiny, with of the International Sustainability Standards
the spectre of a ban on new exploration com- Board (ISSB) by the IFRS foundation which will
bined with a drive for zero-emissions vehicles work towards the creation of a global sustaina-
being examples of this trend. ble reporting standard. The foundation already
announced that it will be built upon existing
Glasgow breakthrough standards such as the Task Force on Climate-Re-
An interesting announcement supported for lated Financial Disclosures (TCFD).
more than forty countries was the ‘Glasgow This is a crucial step to the creation of a
breakthroughs’ which aims to steer innovation holistic sustainability reporting disclosures
towards five areas by 2030: framework, although the results will be adopted
Clean power by countries on a voluntary basis and clear
Zero emissions vehicles definition will likely require a number of years
Near zero emissions steel before the framework becomes mandatory. For
Renewable and low carbon hydrogen that reason, financial institutions and business
Sustainable and climate-resilient agriculture should continue reporting under the TCFD,
It is worth mentioning that not all countries which is becoming increasingly mandatory in
committed to the five areas. There also are no several jurisdictions, and keep updated on the
concrete steps on how they will be implemented, new changes on the sustainability reporting
with the UK government inviting “responsible landscape.
ministers to review global progress”.
The EU, US, UK, France and Germany Our view
announced a Just Energy Transition Partner- We are broadly encouraged by the outcome of
ship with South Africa which aims to help South COP26, with enhanced climate ambition having
Africa achieve its decarbonisation targets. The been agreed by the two largest emitters, despite
first phase of the partnership is worth $8.5bn in a backdrop of increasingly tense geopolitical
financing to help the country move away from conditions.
coal-fired power generation. This partnership In the same time frame, onshore wind addi-
may serve as a model for future co-operation tions are set to be almost one-quarter higher on
agreements between developed and developing average than during the 2015-20 period. Total
nations. offshore wind capacity is forecast to more than
The US and China announced an unex- triple by 2026.
pected “Joint Glasgow Declaration” which aims Despite this progress, we are not on track for
to enhance climate action this decade. Key areas 1.5 °C, and more work needs to be done on all
of co-operation include reducing methane emis- areas of climate action, and so we are now enter-
sions, CCS and DAC, electricity transmission ing a period where implementation needs to
and energy efficiency. come to the fore, with substantive progress made
The Glasgow Financial Alliance for Net by the time the next COP takes place in Egypt.
Zero (GFANZ), a group of banks, investors and For businesses, there is no let-up in expecta-
insurers led by former Bank of England governor tions emanating from political, economic and
Mark Carney claimed that $130 trillion of pri- civic stakeholders, and as such the direction of
vate sector finance is now committed to net zero. travel on climate risks is clear. The time for busi-
However, this figure is somewhat misleading, as nesses to act on climate risk is now.™
it represents total assets under management by
member institutions, not capital that is currently Acasta is a specialist climate risk management
constrained to just net-zero investment. Mem- consultancy that works with businesses to help
bers of the alliance have committed to reach net- them understand climate risk and to embrace
zero emissions by 2050, alongside interim 2030 the opportunities presented by the transition to a
targets, across all scopes. lower carbon future.

Week 48 02•December•2021 www. NEWSBASE .com P7