5 minute read
A BETTER PLANET
Over the past decade “sustainability” has become a global buzzword. But the imperative behind the word is more than a tick-box exercise. Adopting ESG criteria should become part of a company’s business ethos rather than be used as just a marketing tool.
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WORDS Mark Boshoff, Nedbank
While its impact is broader, franchising in South Africa is already embracing ESG criteria to ensure the industry becomes a better steward of the planet. South Africa’s franchise sectors such as food, fuel, retail and automotive rank among the world’s top five for economic output as a percentage of GDP.
According to the Franchise Association of South Africa, the country’s franchise industry contributes around 15% (R721-billion) to GDP, putting it on par with the likes of France, Australia, New Zealand and the Netherlands. What’s more, on average the franchising industry contributes 2.7% to the national GDP of nations in which members of the World Franchise Council operate.
Therefore, it makes business sense for investors, shareholders, employees, consumers and society to adopt responsible consumption and business practices collectively. The key climate change principles that franchises should focus on involve identifying and quantifying the risk, as well as resilient strategies that would allow for portfolio tilt, ie moving away from sunset sectors towards new sectors emerging from the climate change movement. Transitioning away from fossil fuels to renewables would be a first step. Another step is to reduce the business’ carbon footprint by lowering transport costs.
These changes would send a clear message that the company is seriously relooking its own operations and activities in line with its sustainability commitments, to ensure perceptions change and that they are seen as a caring rather than an exploitative enterprise. This not only makes business sense, but it would also make an employer attractive to like-minded workers: businesses would be better able to retain employees who are aligned with sustainable business practices, having hired them in line with recruitment policies aimed at identifying applicants who would ultimately foster the company ethos and training them to practise responsible ethics in business and operations.
One of the main legacies of the Covid-19 pandemic is remote working, which forced businesses into changing the way they operate while also showing resilience to overcome unprecedented challenges. This has made the need for sustainability on all fronts clear.
Many fuel and retail franchises have shifted their focus to embracing renewable energy. Solar technology has come a long way and grid-tied solar plants offer cost-effective solutions to forecourts by drawing on renewable energy.
In 2015, the United Nations adopted the Sustainable Development Goals, also known as the Global Goals, as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. However, according to Euromonitor International, a London-based market research company, there are five key trends affecting the global sustainability agenda one must be wary of. They include climate action, circular economy, commodity price volatility, resource security and environmental pollution.
Keeping abreast of these trends as they evolve beyond the pandemic and understanding the link between them, and business performance will help companies identify risks and new opportunities related to sustainability.
As part of the launch of its Commercial Banking climate resilience digital campaign, Nedbank is playing a key role in supporting sustainable business practices for the future, with the emphasis on funding solutions in respect of renewable energy, clean water and sanitation as well as waste management.
Delivering sustainable development finance to the right business at the right time creates a positive change to ensure that not only businesses prosper, but also the people and planet too, and that further harm to our environment is halted and reversed. The franchising sector is primed to play a key role in this regard.
Off the GRID
The economic challenges in South Africa are daunting. When coupled with the impact of loadshedding, there are compelling reasons why SMEs seek out alternatives to the current reliance on a power grid that is not stable.
WORDS Alan Shannon, Nedbank
Right now, a wait-and-see approach is less appealing as many businesses seek to avoid the losses incurred during power outages, coupled with tariff hikes and the additional measures designed to work around these issues. The urgency to act is there and each stage of loadshedding costs the country hundreds of millions of rands, according to the Council for Scientific and Industrial Research. With that in mind, should SMEs make the switch to sustainable options such as solar? There is no doubt that South Africa, with its burgeoning population, represents one of the most attractive off-grid opportunities in the world for mini grids and solar technologies. The country also benefits from some of the most sustained sunlight in the world and many have pointed to renewables as the answer to the country’s electricity woes. South Africa will undoubtedly benefit from a move towards greener technologies and so will the planet. It is, however, a business strategy that must be carefully considered, as the costs and implementation of going off the grid is not a one-size-fits-all approach. Clients are encouraged to assess the options with the same diligence as any other business investment. Going off the grid will undeniably reduce your monthly bill and attract a growing number of environmentally conscious consumers, but the initial investment must be considered. Currently the costs do not deter many businesses from their initial enthusiasm. Factors such as storage or space required for the technology as well as possible downtime for installation must also be considered. Will those incredible solar-powered solutions affect your business insurance cover and costs? This must be explored as well. The result of sustainable solutions must include business sustainability. For large-scale manufacturing plants, there are already a host of success cases, but the same cannot be said for the
SME sector.
With the costs of going off-grid likely to be more than most SMEs can afford, scalable, quality solar PV hybrid solutions still represent great value. They take care of a business’ immediate backup power needs during loadshedding and power failures, while opening the door to scale up in future to solar panels and additional batteries. From a hybrid solution that is more budget friendly, the switch to self-generating power, as costs go down, is largely a better approach for most SMEs already battling other market-related challenges.
A forward-thinking strategy that addresses both the current need and a future aim places a business in a stronger position to provide backup power and build a platform for saving a fortune in electricity costs in the future. It may not be time to go off-grid just yet, but there is every reason to start laying the foundation to reap the benefits.
