ESG 3rd edition by Topco Media

RLD’S

ESG SOUTH AFRICA

ENVIRONMENTAL

Climate change, transparency, responsiveness

SOCIAL

Community, rights, people.

GOVERNANCE

Accountability, disclosure, responsibility

WORLD’S

500

WORLD’S500

WORLD’S

ESG SOUTH AFRICA ENVIRONMENTAL SOCIAL GOVERNANCE

W W W. E S G . C O . Z A

INNOVATIONS | SMART CITIES | THE FUTURE OF WATER | ETHICAL INVESTING SUSTAINABLE BUSINESS THAT CARES FOR THE ENVIRONMENT

WWW.ESGGREENPAGES.CO.ZA

ISSUE NO.3

RSA: R145.00 (INCL. VAT) UK: £10.00 USA: $20.00

PARTNERS

PUBLISHED BY

ISSUE 3

topco media

A TOPCO MEDIA PUBLICATION

ESG-2xadvertorial-ARC.indd 1

2012/08/13 PM 2012/08/07 12:53 1:00 PM

& Exhibition JHB 30-31 Oct

JHB 30, 31 OCTOBER 2012

DBN

10,11JULY 2013

9, 10 APRIL 2013

The way the world is doing business is changing. Join us and get connected

dps-smart cities.indd 2

2012/08/06 4:48 PM

WWW.SMARTCITIES-AFRICA.CO.ZA

About the Event The event will cover a host of local challenges, most notably: inefficient transport services outdated water and waste networks; adapting IT integration; rising pollution levels; an increased demand for energy; and a strain on health and security, education and poor urban management. With a prediction of 70 percent of South Africa's population living in cities in the near future, the motivation for creating smart and sustainable cities and towns has never been more important. Smart city planning is now a worldwide trend and is becoming the norm in countries as different as the USA, China and those in Europe. Smart Cities are also growth and prosperity drivers, creating huge commercial opportunities. Attendees at the Smart Cities Summit already include national and local government as well as a high representation of industry leaders. The challenges are huge however, the challenges are also long-term opportunities of growth for companies that collaborate and help solve them. There is a top line-up of world-class speakers and the MC for the event is media personality and climatologist Simon Gear.

Benefits of Attending • LARGE: We plan on engaging hundreds of industry leaders and opinion-makers. • INCLUSIVE: This will be South Africa’s only event that brings together all the disparate players, including producers, processors, retailers, regulators, governments, associations, unions, consumers, advocates and independent experts. • INFLUENTIAL: You will have a chance to join the public sector in discussing the direction for the African Urban Development. • SIGNIFICANT: Media sponsors ensure reach for the information and opinions presented. • INFORMATIVE: Carefully chosen presenters will share practical information and perspectives. • VISIONARY: This summit will be the most future-focused event on urban planning in Africa.

Key Topics ENVIRONMENTAL SUSTAINABILITY

ENERGY

WATER

SPORTS AND EDUCATION

WASTE REDUCTION AND RECYCLING

ICT RESOURCES AND SOLUTIONS

BUILDINGS

PUBLIC ADMINISTRATION

HEALTH AND SAFETY

MOBILITY AND TRANSPORT

FINANCING

THE FUTURE OF FOOD

Contact Deirdre on 086 000 9590 / deirdre.oneill@topco.co.za

dps-smart cities.indd 3

2012/08/07 8:50 AM

June National Environment Month

GREEN ECONOMY: Does it include you?

As part of Environment Month and Youth Month, South Africaâ&#x20AC;&#x2122;s young people are encouraged to explore fields of study and career options in the Green Economy. GREEN COLLAR jobs contribute towards conserving our natural heritage. This sector also assists to equitably share the benefits derived from innovations in climate change adaptation and mitigation, climate smart agriculture, eco-tourism, bio-prospecting, environmental quality protection and waste management, amongst others. Visit:

www.environment.gov.za or call 086 111 2468

for information on fields of study and careers in the Green Economy.

DEA-advert1.indd 1

2012/06/08 1:22 PM

CONTENTS A-Z Listing of Featured Companies

PARTNERS

Foreword: President Jacob Zuma 4 Thought Leadership: John Oliphant, GEPF

Interview: Edna Molewa – Minister of Water and Environmental Affairs

Interview: Jon Duncan – ESG Analyst, Old Mutual

Publisher’s Letter 9 Editor’s Letter 11 Contributors 11

TRENDS

BRIEFING: N ews you need to know

TRENDS: Street shopping and inspiring ideas

DESIGN: The pick of South African design

INNOVATIONS: Trends and inventions you need 20 SECTOR PARTNER (TRANSPORT & LOGISTICS)

SMART CITIES 23 5 WAYS Cities Will Change How Africa Lives 24 GREEN BUILDINGS The 10 Greenest Buildings in South Africa

CITY GUIDE Smart Grids and Smart People

SECTOR PARTNER (FINANCIAL)

WATER The Future of Water 47

FEATURES

CARS The Hybrid Pushes the Limit 56 WASTE When is Waste Really Waste? 57 FINANCIAL Investigating: SA Open for Business

AGRICULTURE Women feed Africa 84

topco media

ESG SPECIAL FOCUS SOUTH AFRICA 00

ESG-contents.indd 3

2012/08/07 12:24 PM

FOREWORD

HIS EXCELLENCY JACOB ZUMA PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA

IN 1992 IN RIO DE JANEIRO (at what became known as the Earth Summit) Agenda 21 was agreed as a programme of action for sustainable development. It reaffirmed that sustainable development was delimited by the integration of the economic, social and environmental pillars.

The spirit of the conference was captured by the expression ‘Harmony with Nature’ and it laid the foundation for the first principle of the Rio Declaration. State leaders agreed on the urgent need for a deep change in consumption and production patterns, resulting in agreements being reached in the Convention on Biological Diversity and the Framework Convention on Climate Change. Fast forward 10 years to 2002 when we convened for the 10 year review of the Earth Summit hosted in Johannesburg, at the World Summit on Sustainable Development. Ten years on and it was hardly a secret – or even a point in dispute – that progress in implementing sustainable development over the decade had been been extremely disappointing. With poverty deepening and environmental degradation worsening, what the world wanted was not a new debate, but rather a summit of actions and results. The Johannesburg Plan of Implementation (JPOI) captured the spirit and commitment of ‘Making it Happen’ and became the new basis of the global deal that emerged from the Johannesburg Summit. Another 10 years have passed and Rio+20 convened in the context of both old and new emerging challenges. These include a food security and price crisis, climate change, and unstable international financial systems which continue to reverse some of the gains made by developing countries in their efforts to achieve sustainable development. Today Africa lags behind in the implementation of the Millennium Development Goals, Small Island States continue to be vulnerable to adverse weather conditions, workers around the world continue to lose jobs, and many of our children are hungry and sick. The future we want should be the future we make as governments and our partners in this global village. Rio+20 should build on the concrete experience of approximately 20 years of experience, and reinvigorate political commitment and work towards assisting developing countries in their efforts to achieve agreed international developmental goals. We can only build the future we want by promoting sustainable and inclusive growth; protecting vulnerable groups; reducing carbon dependency, reversing ecosystem degradation and moving closer to achieving the Millennium Development Goal of ending extreme world poverty.

4 ESG SOUTH AFRICA

zuma-foreword.indd 3

2012/08/03 1:05 PM

THOUGHT LEADERSHIP

SUSTAINABLE PROFITS CALL FOR A NEW ECONOMIC ORDER JOHN OLIPHANT, HEAD OF INVESTMENTS & ACTUARIAL AT GOVERNMENT EMPLOYEES PENSION FUND (GEPF)

AS THE WORLD’S LEADERS AND DECISION-MAKERS return from Rio+20 after discussing smart measures for reducing poverty, decent jobs, clean energy and a more sustainable and fair use of resources for all, one thing is certain: The 2008 global financial crisis, and subsequent and current economic events, remind us that it’s no longer business as usual. The days of laissez-faireism are over; governments are now seeking an active role in the economy in order to prevent the pursuit of short-term profits at the expense of long-term sustainable investment returns. Quite clearly, the status-quo is untenable. In addition to increasing government action on these issues – institutional investors such as pension funds, insurance companies and their service providers are also committing themselves to a more active ownership approach when investing on behalf of their members and beneficiaries. Asset owners, especially trustees of pension funds entrusted with the life savings of their members, are increasingly required to think more strategically about ensuring investment returns for the long-term. As fiduciaries, we must consider sustainability issues within our investment decisions and adopt an active ownership approach on behalf of the real owners of the assets we

manage, the members of pension funds. In our view as Government Employees Pension Fund, our objective as a defined benefit pension fund is to ensure that our members can retire comfortably and with dignity. We won’t achieve this objective by merely generating short-term financial returns: we also have to ensure the sustainability of returns in the long-term to meet the financial needs of current and future generations of members and pensioners. The investment landscape in South Africa has changed: pension fund trustees and their service providers will soon find themselves having to give account to the new owners of capital – the workers – as to their approach to investing. Regulation 28 of the South African Pension Funds Act now requires pension fund trustees to give serious consideration to the long-term by integrating environmental, social and governance (ESG) factors into investment analysis and investment activities as part of the delivery of superior risk-adjusted returns. Similarly, the Code for Responsible Investing in SA (CRISA) was launched in July 2011 as a voluntary mechanism to help asset owners, asset managers and their service providers’ monitor and report on sustainability issues. From the 1st of February 2012, South African institutional investors are required to publicly report against the application of CRISA’s five principles which seek to form part of an effective governance framework in South Africa. I believe that CRISA, working in conjunction with Regulation 28, the UN-backed Principles for Responsible Investment (PRI) and other best practice frameworks provides an enabling framework for institutional investors, as custodians of their members’ assets, to engage and hold companies in which they invest accountable to the demands of sustainable returns in the new economic order. We look forward to increased public reporting by South African pension funds and their service providers as to their approach to ESG issues within annual integrated reports, websites, member communications, and other publications. The ESG Green Pages is one such publication highlighting how government and business can work together to address sustainability challenges and opportunities. GEPF is committed to playing its part and we call upon government and business to work together to provide the leadership we need on sustainability. For real sustainable profits we need a partnership model between government and business and call on other asset owners to join us in seeking sustainable returns for our members.

ESG SOUTH AFRICA 5

GEPF-foreword.indd 3

2012/08/03 4:06 PM

EDNA MOLEWA –

MINISTER OF WATER AND ENVIRONMENTAL AFFAIRS

THE EXTRA-FINANCIAL THEMES – ENVIRONMENTAL, SOCIAL AND GOVERNANCE are equally challenging for emerging market organisations to manage. It would be self-defeating to elevate one pillar above the rest. The department has seen corporates and big industrial giants collapse, simply because their corporate governance and ethos had diminished. Equally, when social governance and responsibility collapse the financial bottom line shrinks, because companies in conflict with society are companies in conflict with their markets, consumers and workforce. Without environmental governance and a conscience, no sustainable production can take place. Therefore, growth and corporate success must always be viewed from a People, Planet and Prosperity integration. The fundamental objectives of the policies and legislation are to secure sustainability and equitable access to resources. The National Environment Management Act (Act 107 of 1998) notes: “The environment is held in public trust for the people. The beneficial use of environmental resources must serve the public interest and the environment must be protected as the people’s common heritage.” Before 1994, environmental matters had very low profiles in terms of government priorities. That changed rapidly with the advent of democracy and has also seen tremendous progress towards putting South Africa on a path of sustainable development, encompassing economic growth, social development, and the conservation of natural resources and services. After successfully hosting the World Summit on Sustainable Development in 2002, the Department assumed a global leadership role in the promotion of these ideals. Building better communities, creating jobs and fighting poverty is a central part of its global quest for sustainable development. In line with its vision of creating a prosperous and equitable society living in harmony with the natural environment, government’s key strategic priorities in these areas include: • The protection, conservation and enhancement of environmental assets, natural and heritage resources; ensuring a sustainable and healthy environment; contributing to sustainable economic growth,

6 ESG SOUTH AFRICA

ESG-interview-DEA.indd 2

2012/08/03 12:59 PM

INTERVIEW livelihoods and social cohesion; providing leadership on climate change action; • Promoting skills development and employment creation through facilitating green and inclusive economic growth; and • Creating a better Africa and a better world by advancing national environmental interests through a global sustainable development agenda. The Department of Environmental Affairs is fully supportive of the smart cities initiative which will help major cities including South Africa’s Johannesburg, Tshwane/Pretoria, Durban and Cape Town better understand and tackle the environmental and city infrastructure challenges they are facing and would encourage that the work be cascaded to smaller municipalities as well. The Department believes that actions to address climate change and sustainable economic development paths are linked. South Africa takes a green economic growth strategic approach to identify actions which allow for sustainable development and climate mitigation and adaptation co-benefits. Climate change is considered to be one of the most serious threats to sustainable development, with adverse impacts expected on the environment, human health, food security, economic activity and investment, natural resources and physical infrastructure. This will disproportionately affect the poor who have not contributed to the causes of climate change but are the least equipped to adapt to the potential effects of climate change. The Government of South Africa considered the United Nations Conference on Sustainable Development (Rio+20) to be a critical meeting that should agree on how to facilitate expeditious implementation of sustainable development agenda. Therefore, the conference should build on the concrete and practical experience of approximately 20 years in the implementation of sustainable development agenda as outlined in Agenda 21 and the Johannesburg Plan of Implementation (JPOI). Rio+20 should reaffirm the Rio principles and establish focus principles for operating the green economy concept. Principle seven of common but differentiated responsibility should form

the cornerstone of the implementation of the green economy concept. This will ensure that countries will design their transition within their policy spaces and take into account their developmental imperatives. The following principles are proposed for consideration: • All states should be allowed a policy space to define their own strategies towards a transition to a green economy as per their national priorities and respective stages of development • In order to maintain the balance of addressing poverty while securing the natural resource base, green economy should be people-centred and inclusive, taking into account the needs of the most vulnerable (women, disabled and youth) • Recognising the special capacity needs of developing countries for transition to a green economy, promotion of finance, research, development and innovation, science and technology, and capacity building measure to developing countries should be upscaled • Promote access to green technologies at affordable cost and work ensures that green economy creates new market opportunities, notably for developing countries • All states should build on existing programmes, indigenous knowledge, initiatives in key sectors and promote information sharing of best practices on policies and programmes that contribute towards the attainment of an inclusive green economy • All states should recognise green economy as a means to achieve a sustainable development agenda and integrate its dimensions Therefore, the conference should build on the concrete and practical experience of approximately 20 years in the implementation of the sustainable development agenda as outlined in Agenda 21 and Johannesburg Plan of Implementation (JPOI). To integrate ESG management effectively and efficiently, the Department poses the following questions: What might a more just and sustainable global economy look like in the year 2025? How can the real economic value of sustainability information be unlocked to create a more caring, trusted and sustainable capitalism? What lessons can be learnt from the

past in constructing a new growth model in which the integration of sustainable development factors becomes a normal part of doing business? What role will technology play? What are the roles of government, business and civil society in this context? What existing or new partnerships must be forged? Increased urbanisation of human society has been an uninterrupted trend since at least the industrial revolution. Each year millions of people are lured from the countryside to the cultural, economic, social dynamism of cities. This trend has been accompanied by significant economic growth and expansion. The State of the Environment Reporting (SoER) has a central role to play in evaluating environmental management and its impact on society. Ideally, the central purpose of SoER is to inform policy and planning by providing decision-makers with up-to-date scientific data in relevant and userfriendly formats. SoER is a relatively new aspect of governance in South Africa. A study undertaken by Chantal Will for the CSIR suggests that considerable scope for improvement exists in the extent to which SoER indicators in South Africa are engaged with during the development of policy and planning processes. To make South Africa a sustainable business destination, guidance on policy related matters is a necessity. Areas of guidance include: government policy and experience; national and regional regulation and guidance; regional sustainability and transparency issues; relations to other international CSR and sustainability tools; advancement of sustainability reporting practices for public agencies; and the role of governments as supporters of global public goods development. The Department of Environmental Affairs strives for continued sustainability. In short, over the years it has made real progress in fulfilling its constitutional commitment to ensuring an environment that is not harmful to health or wellbeing. This, and the steps it has taken to integrate its efforts with those of other countries hold great promise for our nation, the region, and the African continent.

www.environment.gov.za ESG SOUTH AFRICA 7

ESG-interview-DEA.indd 3

2012/08/03 1:00 PM

INTERVIEW

EMBRACE THE TREND WITH BOLD AND INNOVATIVE LEADERSHIP NAME JON DUNCAN OCCUPATION AND POSITION ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG) ANALYST Company snapshot: Old Mutual Investment Group South Africa (OMIGSA) is one of the largest asset management groups in Africa, with R472-billion in assets under management (31 December 2011). We offer a comprehensive range of investment solutions to both retail and institutional investors, across the risk/ return spectrum, including pure equity, asset allocation, fixed-income and index-tracking investments as well as alternative assets like property, private equity, infrastructure and socially responsible investments (SRI). Some say sustainability is just another marketing concept? I believe that sustainability is a mega trend that is shaping the competitive landscape in every sector, and that companies able to respond to this trend and innovate early will reap the benefits of stronger growth prospects, enhanced operating efficiencies, stronger social license to operate, enhanced staff retention, lower cost of capital and, ultimately, stronger and longer competitive advantage

relative to their peers that havenâ&#x20AC;&#x2122;t adapted. What does it actually mean? At first glance sustainability appears to be a vague and nebulous concept that is difficult to define; the result is that for many businesses it is an issue that is dealt with outside of core business strategy and management. The risk with this approach is that it is merely seen as a superficial add-on to the business model that adds little clear value. Those businesses that take the time to consult with stakeholders and review material impacts and opportunities up and down the value chain will begin to see the business case. They will also see how integrated sustainability issues actually are with business strategy. To embark on this journey, however, requires bold and innovative leadership. It calls for the visioning of new approaches to the provision of goods and services across all sectors of society in a way that is mindful of the tradeoff between natural, social, human, financial and manufactured capital. What is your role in changing perceptions? My role is to educate and instigate new approaches to understanding risk and opportunity in the investment world. As an analyst within an asset management business, I help our investment professionals see the world through the sustainability lens and to better price the environmental, social and governance risks and opportunities that emerge in relation to the assets they manage. How is climate change affecting business? It is resulting in technological, policy and physical changes that create both opportunities and risks. These vary depending on the sector and geographical location of the business. Some businesses are potentially impacted due to policy changes that place a price on carbon emissions, like the potential impacts on smelters in South Africa. Others may enjoy new growth opportunities from technological innovation to address climate issues (like potential for platinum use in the hydrogen fuel cells), while some may be exposed to the physical impacts associated with climate change (agricultural and water sectors). Businesses with an eye on the future will be considering these issues as they develop their 10-year growth strategies.

What are the changes companies and individuals need to make? The magnitude of many of the sustainability-linked challenges is beyond the scope of any one institution or business. To tackle this challenge will require business leaders to collaborate with their competitors, as well as a diverse set of stakeholders, to find practical solutions to such issues. On an individual level, the sustainability challenge can sometimes seem overwhelming, however it is important not to underestimate the power of individual change at the household and community level. What do you think are the key challenges facing South African businesses and the public sector? The lack of a clear, shared vision for a sustainable and equitable economy is a huge obstacle. Our big challenge is to foster collaboration to ensure we build consensus and capacity around a common goal. While the National Planning Commission has started this process, it will require further buy-in and participation from labour, business and all spheres of government. What is your company doing to change perceptions? OMIGSA aims to lead the investment industry in South Africa by providing investment opportunities aimed at addressing key sustainability challenges in South Africa. We have a robust suite of SRI investments that aim to meet socioeconomic needs and complement the efforts of government, while delivering commercially acceptable gains to our investors. These include investments in housing and infrastructure development, agriculture, alternative energy and schools.

Our commitment to this investment approach is summarised in our OMIGSA Responsible Investment Guidelines, which is publically available on our website: www.omigsa.com/about

8 ESG SOUTH AFRICA

ESG-interview-mutral-fedral.indd 2

2012/08/02 9:40 AM

PUBLISHER’S LETTER & CREDITS

CREDITS Chairman Richard Fletcher Publisher Van Fletcher Editor Sarah Bullen editor@topco.co.za Managing Editor Shaheema Albertyn-Burton shaheema.albertyn@topco.co.za Head Designer Jayne Macé Designer Jess Novotná

PUBLISHER’S LETTER The world as we know it is changing. In the workplace expectations of an employee are totally different to the expectations we had a decade ago. Today employees are expected to have multiple skills sets. An accountant may also manage researchers, compile a presentation and contribute to the company newsletter. They may also have to network their own computer and update their own software. Horizontal structures that have taken the place of hierarchical offices mean that people need to be more innovative and flexible. This is what is making businesses more sustainable and ultimately more efficient. Cities are also rapidly changing. The latest figures show that in Africa there will be an ongoing and unstoppable rural migration to urban areas. ESG, in partnership with Smart Cities Summit, held its first event, (the first of its kind) in Durban, South Africa in July. The success of this has led to the next event planned for Johannesburg on 30-31 October 2012. This one will include internationally experienced speakers sharing what works, and what is needed. These future integrated cities have a clear aim … to create a space where all citizens enjoy the infrastructure. Our next issue, ESG 4, will be distributed at the Qatar COP18 climate talks where we will showcase the innovative solutions South African companies and the private sector are offering. This will include the growth of eco-sustainable tourism in South Africa and a focus on youth development, as well as skills development and education.

Van Fletcher Publisher

Business Development Manager Ross Maltman ross.maltman@topco.co.za Business Development Executive Charmaine Docherty Jason Kuttel Traffic Coordinator Raeesah McLeod Editorial Assistant Shana Genever Studio Manager Candice Hooper Human Resources Manager Janine Salick Financial Manager Haley Fletcher Webmaster Gaywin Walters Distribution Ingrid Johnstone Ursula Davids Printers Paarl Print Contact Details Topco Media (Pty) Ltd Bree Street Studios, 17 New Church Street, 2nd Floor, Cape Town 8001 PO Box 16476, Vlaeberg 8018 Tel: +27 (0)86 000 9590 Fax: +27 (0)21 423 7876 Email: info@topco.co.za Website: www.topco.co.za Disclaimer All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written consent of Topco Media (Pty) Ltd Reg. No. 2007/002190/07. While every care has been taken when compiling this publication, the publishers, editor and contributors accept no responsibility for any consequences arising from any errors or omissions. ISBN: 978-0-9921778-0-5 ESG SOUTH AFRICA 9

Publishers letter and credits .indd 3

2012/08/07 11:49 AM

A-Z LISTING OF FEATURED CLIENTS

ArcelorMittal.....................................................104

New Apostolic Church......................................102

Agricultural Research Council..........................100

City of Cape Town â&#x20AC;&#x201C; Water & Sanitation Department........................................................44

National Cleaner Production..............................40

Old Mutual Investment Group South Africa (OMIGSA)...........................................................74

Department of Environmental Affairs (DEA).............................................2, 22, 88

Department of Agriculture & Rural Development......................................................94

Department of International Relations and Cooperation (DIRCO).........................................42

Garden Cities.....................................................46 Government Employees Pension Fund (GEPF).......................................................78 Greenhouse Peoples Environmental Centre.................................................................61

Mercedes-Benz..................................................62 MN Capital Markets............................................82

Paarl Media........................................................70

Riso Africa..........................................................41

South African Bureau of Standards (SABS)..............................................96 South African Maritime Safety Authority (SAMSA)..............................................50 South African National Biodiversity Institute (SANBI).................................................60 Sustain Our Africa..............................................98

United Nations Development Programme (UNDP)...........................................36 United Nations Industrial Development Organisation (UNIDO)........................................38.

10 ESG SOUTH AFRICA

ESG-contents.indd 2

2012/08/07 12:25 PM

EDITOR’S LETTER & CONTRIBUTORS

CONTRIBUTORS GAVIN DU VENAGE

A Western Cape-based business writer, Gavin specialises in commodities, mining and energy.

BONGANI COKA

EDITOR’S LETTER

WHERE MEN MUST ACT ‘AS GODS’ Consumers drive business behaviour. That is the lesson I got from watching the sustainability revolution over the past decade. Green activism has achieved a lot and it has gone mainstream from the heady days of covert Greenpeace operations and enviro-terrorism. Now being green is pretty mainstream. Activists are no longer wearing gas masks and roaming the seas on a green pirate vessel. These days activists are living in suburbs, shopping at Pick n Pay and sending their kids to school along with the recycling. Now activists vote with their money. And quite frankly, that is proving a far more persuasive method. New consumer activists speak the language of money and power. Companies that don’t visibly demonstrate that they are sustainable are going to hit harder and harder times. Forwardthinking organisations have long sensed this strong trend and have moved to adjust their policies and products. Is it fast enough? Probably not. One of the new breed leaders Steward Brand advocates a brand of neo-environmentalism – a business-friendly take on the environmental dilemma. It says that global capitalism and western-style development is not the problem but the solution. The future lies in embracing new sciences, biotechnology, synthetic biology, nuclear power, nanotechnology and geoengineering. This is where, he says, men must act “as gods”. Compiling this issue of ESG has been an eye-opener in just how far business has come in changing with the times. It’s business Darwinism. Adapt or die. Sarah Bullen Editor

Bongani Coka is the new Productivity SA chief executive who is geared to ensure South Africa leapfrog into the “premier league” of world’s competitive nations through improved productivity. Coka is an accomplished professional with across-the-board proficiency within a number of business sectors ranging from finance, operations, project management, design, execution and control of strategies, stakeholders relations and organisational transformational to leadership and mentoring among others.

LEONIE JOUBERT

Leonie Joubert is a recognized science writer and journalist whose books include Scorched, Boiling Point and Invaded. The Hungry Season: Feeding Southern Africa’s Cities, is due out in September 2012. Joubert has received two Honorary Sunday Times Alan Paton Non-Fiction Awards.

MATABELLO MOLOUNG

Matebello is one of the few black women financial writers in the media industry. She started her journalism career as an intern at Marie Claire magazine 10 years ago. Since then, she’s worked for the Sowetan, SA Press Association (Sapa), The Media magazine and Marketingweb. There, she earned herself quite a following for her boundarypushing column “Out Loud”. Today, Matebello is the co-owner and co-founder of The Writing Project, a specialist corporate writing service agency.

JOCELYN NEWMARCH

Jocelyn is a specialist freelance business writer who still believes she can change the world. This may explain why she is currently studying for an MA degree in development studies. She does sometimes wonder why she chose journalism instead of the restaurant business, since her free time is generally spent in the kitchen. Jocelyn thinks it is likely that she was Italian in a former life and is currently cooking her way through Giorgio Locatelli’s Made in Sicily. (Anything to avoid writing up her thesis.) ESG SOUTH AFRICA 11

EDITOR’S LETTER & CONTRIBUTORS .indd 3

2012/08/07 9:40 AM

NEWS YOU NEED TO KNOW ~ TOP GLOBAL SUSTAINABILITY LEADERS

WHO TOPS THE LIST OF THE COMPANIES WHO PUT SUSTAINABILITY AT THE TOP OF THEIR AGENDA?

Only 40 cents of every US taxpayer dollar spent on food aid actually goes to buying food, according to the Oxfam GROW campaign, which advocates for food justice. Procuring freighting of US food aid on the open market could help feed an additional 3.2 million people in emergencies.

uPuma despite operating in a sector at high risk for human rights abuses, Puma has a strong environment record and demonstrates improvements in supply chain labour standards. vFirstGroup derives more than 90 percent of sales from rail and bus services and the company has made major improvements in reducing its environmental impacts. wNational Australia Bank – Owner of Clydesdale and Yorkshire banks trains staff to understand and identify environmental and social risks when doing business. xGlaxoSmithKline scores well across the board, demonstrating particular strengths in providing drugs cheaply to developing countries. yRoche, the Swiss pharmaceutical company has a strong equal-opportunities policy and operates an advanced code of ethics with strong anti-bribery rules. zNovartis, another Swiss pharmaceutical company, has strong environmental reporting and a good antibribery programme. {Philips Electronics, the Dutch electronics company, has made significant progress on environmental issues, particularly through increasing the energy-efficiency of its products. |Deutsche Börse, the German stock exchange, scores highly for its strong practices in relation to environmental issues, corporate governance and stakeholder engagement. }Novo Nordisk, the Danish pharmaceutical company, has reduced its water use and its all-round environmental, social and governance record is strong. ~Go-Ahead Group, the UK bus and train company, has a strong record on the environment. Erisis is a leading global provider of independent research into the environmental, social, governance (ESG) and ethical performance of companies.

With an expected nine billion people on the planet, demand for food is expected to increase by 70 percent by 2050, according to the Oxfam GROW campaign. CARBON TAX (STILL) APPROACHING

Finance Minister Pravin Gordhan is still waiting to comfirm policy around South Africa’s carbon tax, which is expected to be implemented between 2012 and 2015. ESG suspects that SA corporates may get a reprieve when it comes to taxing carbon – for this year anyway. National Treasury released a carbon tax discussion document in 2010, and last year promised that the 2012 Budget would outline a carbon tax design features and schedule. Given the impact that this tax would have on investors, we don’t think Gordhan will be keen to surprise corporates with an implementation this year, but he will give more clarity. All the same, government faces an uphill battle. Australia’s government managed to legislate a carbon tax last year only after years of negotiation, and despite vocal opposition from its powerful mining sector. Like Australia, South Africa’s economy is coal-based, and Engineering News reports that heavyweight resource companies, including Anglo American, BHP Billiton and Rio Tinto, have made their opposition known. The tax is likely to start at R75 a ton.

12 ESG SOUTH AFRICA

ESG_UPFRONT.indd 2

2012/08/07 8:41 AM

BRIEFING

HOW TO GET HAPPY RESIDENTS: DESIGN BETTER CITIES

CARBON: THE RISK WE’RE NOT THINKING ABOUT

Sustainable investment consultants Sinco and Trucost reckon the JSE’s Top 40 list face a carbon risk which amounts to $974-million – or 0.2 percent of these companies’ revenues. The group accounts for 109 million tons of direct emissions, equivalent to 20 percent of SA’s total. For every $1-million, 541 tonnes of carbon was generated. The highest risk sectors are, of course, resources and oil and gas. Synfuels darling Sasol and Harmony Gold Mining are the two most exposed companies on the list. Companies could also be exposed to carbon risk as a result of their suppliers’ bad behaviour. At the same time, those companies which are relatively more carbon efficient could gain a competitive advantage. Time to have another look at your investment strategy?

Coal accounts for 43 percent of the world’s total CO2 emissions, according to the International Energy Association, while burning oil has a 36.7 percent share of emissions. DESIGN INDABA'S YOUR STREET COMPETITION

Litter-strewn Acre Road in Kensington, Cape Town, is slowly being transformed into a place local residents can be proud of, thanks to the Design Indaba's Your Street competition and a team of determined Capetonians. The once-neglected residential street, which borders vacant land, can look forward to getting a football field with seating made from recycled cooldrink bottles. The structure will also be used for community notices, graffiti, and art, with an open air dance floor or performance space, MediaClub South Africa reported. Lorena Pasquini, Hannah Williams, Mark Henning and Caitlyn ne Francis won first prize and R100,000 for the upgrade. The competition was launched last year, and aims to improve neighbourhoods across the country, street by street. At the time of writing, the winners of the Gauteng and Durban legs had not yet been announced.

Next time you’re buying a house, think carefully about the neighbourhood. That’s the message from researchers at West Virginia University and the University of South Carolina Upstate, who examined the connection between cities and their residents’ emotional wellbeing. Good urban design – such as easy and convenient access to public transport, ease of access to shops, the presence of libraries, parks and sports facilities – promotes the happiness of urban dwellers, the study said. The research examined polling data from 10 cities. New York, London, Paris, Stockholm, Toronto, Milan, Seoul, Berlin and Beijing were all part of the study. Places can facilitate human social connections and relationships. “Not all neighbourhoods are the same. Some are designed and built to foster or enable connections. Others are built to discourage them (eg. a gated model) or devolve to become places that are antisocial because of crime or other negative behaviours… Some neighbourhood designs appear better suited for social connectedness than others,” the authors wrote in Urban Affairs Review, an academic journal on cities. The more respondents felt their city was beautiful, felt it was clean, and felt safe walking at night, the more likely they were to report being happy. Likewise, being able to trust their city’s tap water, and believing that the city was a good place to rear children, was also correlated with happiness.



In order to meet growing demand for energy, particularly in developing countries, the world will have to invest 1.4 percent of global GDP each year in energysupply infrastructures to 2035, according to the International Energy Association. Africa continent generated 101,257 GWh of hydropower in 2009, the latest year in which statistics are available from the International Energy Agency. Its total electricity production amounted to 632,822 GWh in that year, with coal and gas contributing well over half this amount. ESG SOUTH AFRICA 13

ESG_UPFRONT.indd 3

2012/08/07 8:43 AM

MEXICO TO REAP CARBON ROYALTIES

Mexico is the first country in the world to earn a royalty on carbon credits generated from energy-saving light bulbs distributed by Australian company Cool nrg (pronounced “Cool Energy”), said the project’s backers, Bank of America Merrill Lynch. Cool nrg aims to distribute 45 million energy efficient lightbulbs, supplied by Philips, to 6.5 million low-income households in Mexico City, Reuters reported. In total, the project aims to save 16 million tons of CO2 over 10 years. The deal was announced in November 2011. Every ton of carbon dioxide saved will generate a carbon credit which Cool nrg will sell to companies in developed countries who need to cut their emissions. These proceeds will be used to pay a royalty to the Mexican government.

An estimated 1.4 billion people lack access to energy around the world, while 3 billion people rely on traditional biomass fuels for cooking, heating, and other basic household needs, according to the UN Environment Programme.

RENEWABLE ENERGY PRICES WILL SOON COMPETE WITH COAL

Solar and wind power companies are approaching the point where they will not need subsidies to generate electricity at a price which is competitive with fossil fuels, Bloomberg reports. Chinese group Suntech Power Holdings said solar will reach parity with fossil fuels by 2015. Danish wind company Vestas said wind was already in some cases fully cost competitive with fossil fuels. It said fossil fuel prices would continue to rise, increasing the competitiveness of new technologies. New electricity generation from the wind, sun, waves and biomass was worth $187-billion in 2010, compared with $157-billion for added capacity from natural gas, oil and coal. Subsidies for renewables totalled $66-billion worldwide in 2010.

Africa generates 3.1 percent of the world’s energy supply, up from 1.8 percent in 1973, according to the International Energy Association.

THE HEFTY COST OF NATURAL DISASTERS 2011 WAS THE COSTLIEST YEAR EVER IN TERMS OF NATURAL DISASTERS, according to reinsurance firm Munich Re. Global economic losses from natural disasters amounted to US$380-billion.This was nearly two thirds higher than 2005, the previous record year, because of the earthquakes in Japan (March) and New Zealand (February). • There were around 820 loss-relevant events, with 90 percent of the catastrophes being weather related, although nearly two-thirds of the economic losses were due to earthquakes. • Around 70 percent of the economic losses occurred in Asia. • 27,000 people lost their lives in natural disasters, excluding the famine in the Horn of Africa, which was the year’s worst humanitarian disaster. • The year’s most destructive event was the 9.0 earthquake which hit Japan – the strongest earthquake ever recorded in the country, triggering a massive tsunami. 16,000 people were killed, despite protective dykes and an early-warning system. Even without considering the consequences of the nuclear accident at Fukoshima, the economic losses resulting from this event amounted to US$210-billion – the costliest natural catastrophe of all time. “Experts believe that an earthquake of this strength occurs there once every 500 to 11,500 years,” Munich Re said. • By contrast, the 6.3 magnitude earthquake in

Christchurch, New Zealand, which devastated the city, caused $16-billion worth of damage. • Thailand’s floods, which claimed the lives of 800 people, were the worst in 50 years. Approximately 25 percent of the world’s supply of computer hard drive components was impacted, as well as seven major industrial areas. • Tornado season in the United States caused economic losses to total $46-billion, mainly in the country’s Midwest and the southern states. Insured losses, which amounted to $25-billion, were twice as high as 2010, the previous record year for tornadoes. • Losses from North Atlantic hurricanes were moderate, but, said Munich Re, this was purely by chance. Eighteen tropical cyclones were recorded in the season, way above the long-term average (11) and even higher than the average since the mid-1990s (15). The number of hurricane-strength storms (6) was in keeping with the long-term average, but few cyclones made landfall. Economic losses from Hurricane Irene totalled US$15-billion in the Caribbean and the USA.

14 ESG SOUTH AFRICA

ESG_UPFRONT.indd 4

2012/08/07 8:45 AM

ORIGIN OF THE EARTH’S WATER

GREEN TIMES

GREEN TIMES (GT) IS SOUTH AFRICA’S WEEKLY GREEN NEWS PORTAL FEATURING SOLUTIONS-FOCUSED, PRO-ACTIVE ARTICLES TO INSPIRE AND INFORM CLIMATE SOLUTIONS and a sustainable future as well as an active Green Calendar and Directory. Focused on the development of sustainability thinking, coupled with practical implementation and innovation, GT publishes green news daily (since 2008) on www.thegreentimes.co.za and sends out a weekly, free, national and international newsfeed to subscribers. Through partnerships with the green business sector, GT shares environmental best practice stories and creative solutions to support the education and transformation of our society. The editor, Elma Pollard, also runs an online course for the development of eco journalists, called Write for Earth.

www.thegreentimes.co.za

Given the importance of water, a fundamental question to ask is where water originated. There is no simple answer, but several theories have been advanced to explain its origin. Surprisingly, the latest studies in astrophysics reveal that water is not a natural product of Earth, since Earth was formed with almost no water at all. Even more surprisingly, water may have an extraterrestrial origin, arriving with giant comets and hydrous asteroids during a period of intense bombardment of the inner solar system. These comets probably came from the Kuiper Belt, situated between Neptune and Pluto (about 7,500 million km away) and the Oordt Cloud on the edge of our solar system (about 1 light-year away). Our Moon still bears the crater scars of that period of intense bombardment; in the absence of water and an atmosphere on the Moon, no erosion has taken place, and its craters have thus been preserved. Although the Earth’s gravitational force attracted more asteroids and comets than the Moon, scars of such bombardments are almost absent: as foreign bodies entered our atmosphere, the friction caused by the atmosphere burnt up most of them. Furthermore, water has eroded away most of the impact craters so that they are no longer visible. Comets are some of the most primitive components of our universe and are, in effect, dirty snow-balls of ice that form long characteristic fragmenting tails as they approach the Sun. Because of their remoteness and stability, they can be regarded as frozen remnants of the birth of our solar system. This comet and asteroid bombardment took place about 4.1 billion years ago at a stage when the Earth was still very young. Such bombardments would have dumped water on the young planet, and this was retained on the surface and in the atmosphere because of Earth’s gravity. On the other hand, Mars and our Moon lost most of their water, which evaporated back into space because they had insufficient gravity to retain it. Another important fact that contributed to Earth’s retention of water is its distance from the Sun. The Earth’s surface temperature happens to be ideal for maintaining water in a liquid form, which is an essential property for sustaining life. Planets closer to the Sun, such as Venus, are too hot, and any free water would evaporate back into space. Conversely, a planet such as Mars, which is more distant from the Sun, may retain water, but only in a frozen state. We know that surface water was definitely present on Earth about 3.9 billion years ago and was deposited over a period of about 1 billion years prior to that.

Extract taken from The Story of Life & the Environment by Jo van As, Johann du Preez, Nico Smit, and Leslie Brown, published by Struik Nature, an imprint of Random House Struik. For more information, visit www.randomstruik.co.za

ESG SOUTH AFRICA 15

ESG_UPFRONT.indd 5

2012/08/07 9:41 AM

SA TRENDS BOTANICAL WALL ART

Durban-based photographer and designer Clinton Friedman’s new wallpaper range features more of his signature graphic designs inspired by the intricate designs found in nature. Particularly renowned for his Aloe Prints, Herbarium Pressings and Polaroid Studies, Friedman’s latest ‘Fotografik Botanika’ collection features graphic botanicals, florals and feathers in eye-catching wall coverings that are works of art in their own right. Shown here are the ‘Strelitzia Nicolai’ and ‘Black Modern Museum’.

www.clintonfriedman.com

HOW DOES YOUR GARDEN GROW?

Who says a small living space means you have to make do without growing your own herbs and veggies? We love the new MiniGarden from Terrace Living, which means you can grow flowers, herbs and vegetables on your balcony – or even in your kitchen or living room. The modular vertical gardening system, available in white, grey or black, can be used indoors and out. Each MiniGarden module, has three cavities, a lid and six circular clips, and comes with a range of products needed to build a small garden, including soil, plants, gloves and other accessories. www.terraceliving.co.za

INTO THE FUTURE / REIMAGINING OUR CITIES Sinking the railway lines between the Cape Town and Woodstock stations. It’ll cost billions, but free up some 3-million square metres of central land for creative city design and development. Intersite, the property division of the Passenger Rail Agency of South Africa (PRASA), will complete a feasibility study by 2012. Creating a massive urban park in downtown Joburg by decking over the railway lines into Park Station. The design – by MMA Architects in association with Cohen and Judin, Fiona Garson Architect and Rhizome Management Services – would create a pedestrian-friendly link from the station to the rest of the inner city. According to the Johannesburg Development Agency, which issued the call for proposals, it’s a strategic priority for the city over the next five to 10 years.

upfront-innovation.indd 2

Text & images: Elle Decoration SA

THESE TWO BIG IDEAS COULD CHANGE THE FACE OF OUR CITIES

2012/08/06 9:20 AM

SA TRENDS

LADUMA!

URBAN LENS

Text & images: Elle Decoration SA

A LEADING ARCHITECT DAVID ADJAYE RETURNS TO HIS AFRICAN ROOTS, CAMERA IN HAND. THE RESULT? ONE OF THE FIRST SURVEYS OF URBAN ARCHITECTURE IN AFRICA

Since he showed his knitwear designs at the Design Indaba earlier this year, 25-year-old Laduma Ngxokolo has been overwhelmed with invitations to speak, sell, collaborate and show his work at home and overseas. His range of men’s mohair sweaters with bright motifs inspired by Xhosa beadwork began as a university project for his textile studies at Nelson Mandela Metropolitan University. He designed them for amakrwala, young Xhosa men who are completing their sixmonth initiation program after attending initiation school. As a rite of passage into manhood, their parents give them new clothing, including highquality knitwear by well-known brands such as Pringle. We chatted to him about his plans.

Which structures stood out for you on your travels? The mud city, Djenne, in Mali, which is rebuilt every season. There’s such an immense craft and artisan culture in places like this. On the other hand, you get cities like Tripoli in Libya, a sort of socialist Islamic country with incredible developmental ideas about housing – you’d never say you were in Africa. It also has this rationalist Italian past so you see these beautiful Art Deco buildings all over the city.

So what’s been happening since the Design Indaba? I’m working on getting my designs into production and hope for them to be available by June this year.

What fascinates you about urban life? To me, it’s this wonderful matrix that allows different communities to come together in close proximity of each other and contribute to this ultimately rich city life.

Why mohair? It’s lightweight, sustainable, warm and has a good sheen. And I live in Port Elizabeth, the world capital of mohair, so my line has the potential to boost the local economy.

What were your impressions of Pretoria? I found it incredibly administrative because of all the embassies there, and the homes are all kind of centred around these buildings. Joburg, on the other hand, has the most unbelievable buildings. I love how seconds out of the city, you’re suddenly driving down a tree-lined street.

What has the interest from overseas been? There’s been a lot of interest from European buyers. Li Edelkoort took three pieces for her ‘Talking Textiles’ show during the Milan Furniture Fair, and Trevyn McGowan invited me to take part in Southern Guild next year.

I want to get that sweater

‘Hey bra,

on my body!’

ESG SOUTH AFRICA 17

upfront-innovation.indd 3

2012/08/03 4:03 PM

OVERVIEW

PICK OF THE BUNCH

WE PRESENT OUR SELECTION OF SOME OF THE BEST SOUTH AFRICAN DESIGN. THESE DESIGNS TRAVELLED TO THE MILAN FURNITURE FAIR IN APRIL 2012.

CATEGORY DESIGNER OF THE YEAR /FURNITURE WHO Award-winning designer Gregor Jenkin is known for creating functional objects that are both thoughtful and thoughtprovoking. Each piece is a result of searching for a new way of doing something old; of making the commonplace unusual. THE PRODUCT The distinct shape of this ‘Engrained’ wardrobe is inspired by feed and grain silos, a South African agricultural landmark. It’s made from a sustainable composite of materials including plywood and velcro. WHY WE LOVE IT We admire Gregor’s old-worldly craftsmanship, along with his attention to detail – visible in this restrained yet imposing design. www.gregorjenkin.com

CATEGORY YOUNG DESIGN TALENT OF THE YEAR WHO Twenty-four year old Malawian Raymond Masara, who’s based in Cape Town, has been making waves in the field of furniture design with his steel-rod wire-works. He was labelled an emerging creative at Design Indaba 2011. THE PRODUCT ‘Outdoor Wire Stools’. “The colours are inspired by nature and the twisting represents my childhood – the poverty and pain that I faced growing up in the villages,” says Raymond. WHY WE LOVE IT With their playful lines and bright colours, Raymond’s wire chairs are an exciting and fresh take on outdoor seating.

CATEGORY FABRIC WHO Ardmore is well known for its vibrant use of colour and detailed, energetic ceramic designs. Now, their distinctive imagery and luxurious styling have been translated into a fabric range for cushions, curtains and upholstery. THE PRODUCT The fabric on Ardmore’s ‘Qalakabusha Sofa’ (which means ‘new beginnings’) – a signature piece from their latest collection – which was nominated for the ‘Most Beautiful Object in South Africa’ award at Design Indaba. WHY WE LOVE IT The departure of Ardmore Ceramic Company into fabric design is a welcome extension of what is a distinctive and wellloved South African visual signature. www.ardmoreceramics.co.za

Text & images: Elle Decoration SA

www.raymondmasara.com

18 ESG SOUTH AFRICA

upfront-innovation.indd 4

2012/08/03 4:03 PM

SA DESIGNS CATEGORY LIGHTING WHO Adriaan Hugo and Katy Taplin are the duo behind Joburg-based label Dokter & Misses, who first joined forces in 2004. Their designs are a celebration of pattern and primary colours, which they like to describe as ‘Bauhaus meets Dr Alban’. THE PRODUCT The highly sculptural ‘Tugboat’ and ‘Locomotive’ lamps – constructed from sprayed mild steel and Perspex – were ‘inspired by the stone age, industrial revolution and technological advancement of man’. WHY WE LOVE IT The contrasting use of materials and child-like playfulness of shapes, colour and context.

www.dokterandmisses.com

CATEGORY OUTDOOR WHO Born from a desire to build a pioneering social enterprise, the Indalo Project is a unique South African design partnership. The Xhosa word ‘Indalo’ translates as ‘creation’ or ‘nature’ and captures the essence of this remarkable initiative. THE PRODUCT Created by Cape Town-based design studio Nuno, the shapes of these wet-felted ‘Phatha Bowls’ are drawn from Zulu beer pots and hats, with patterns that reference Zulu and Xhosa beadwork and weaving. WHY WE LOVE IT The use of felt for these biodegradable outdoor planters is perfect for small balcony gardens. www.indaloproject.co.za

CATEGORY FABRIC WHO Award-winning Laduma Ngxokolo exploded onto the fashion scene in 2011. Effortlessly fusing a euro-centric aesthetic with his familiar Xhosa heritage, Laduma strives to educate and elucidate a very particular look that has never been more important – or current. THE PRODUCT ‘Xhosa Time Piece’. Moving away from knitwear, but continuing to be inspired by Xhosa beadwork, Ngxokolo decided to integrate his heritage into a functional object – the clock. WHY WE LOVE IT Laduma finds his inspiration in traditional Xhosa initiation rituals and knitwear designs.

www.africanknitwear.com

CATEGORY TABLEWARE (CRAFT) WHO ‘Wola Nani’ is a non-profit organisation that empowers individuals and communities affected by HIV/Aids. Its skills training and income generation programmes enable 60 independent craft artists to earn a sustainable income by working from home. THE PRODUCT A new range of papier-mâché ‘African Print Bowls’, specifically created for the Indalo Project. Inspired by vibrant print fabrics from Congo, these bold contemporary designs are available in a variety of colours and sizes. WHY WE LOVE IT For elevating the craft of papier-mâché, and the geometric patterns and colours. www.wolanani.co.za

ESG SOUTH AFRICA 19

upfront-innovation.indd 5

2012/08/03 4:03 PM

CATEGORY SEATING WHO Using hand-made natural fibres, textile designer Ronél Jordaan lets her imagination run wild in the creation of rock cushions, pebble carpets, intricate wall hangings and more. All of her pieces are socially and environmentally friendly. THE PRODUCT The organic ‘Ndebele chair’ is covered with hand-felted 100 percent merino wool coils. A foam-covered metal frame gives the piece structure and comfort. WHY WE LOVE IT The interpretation of the characteristic neck rings of the Ndebele women of South Africa – and its transformation of it into a chair. www.roneljordaan.com

DIGITAL DRUM MAKES TIME INVENTIONS LIST A Digital Drum that doubles as a stand-alone computer system has been voted by Time Magazine as one of the top 50 inventions in the world for 2011. The drum was created by the United Nations Children’s Fund (Unicef) and South Africa’s Council for Scientific and Industrial Research. The team was tasked with coming up with an alternative computer learning solution for Uganda, using local materials in simple but robust housing. They used oil drums to design a robust stand-alone computer system that promotes self-learning of computer literacy and information skills, while giving people access to information on health, education and other relevant issues.

SA APPROVES 562MW OF WIND PROJECTS

South Africa has approved seven wind projects totaling 562MW as part of its second renewable energy tender. The government awarded 1.04GW out of a total of 1.23GW available. The projects include the 138MW Amakhala Emoyenia project in the Eastern Cape province. Wind also took the largest slice in terms of the maximum capacity available, with the government awarding 417 PV projects. Vestas is the preferred supplier for five of the projects, with the orders covering a total capacity of 297MW. Out of the bids, wind power accounts for just under 30 percent with eight of the projects selected.

RECLAIMING PCC FROM WASTE

South Africa has developed a novel process to reclaim high-quality precipitated calcium carbonate (PCC) from calcium-rich industrial solid waste. High-quality calcium carbonate is useful for various specialised industrial applications such as gastric acid treatment, tablet filling in pharmaceuticals, plastics, paint, adhesives and in pulp and papermaking. The newly developed process involves three steps: Leaching calcium from the solid waste using mineral acid; Neutralising the leachate using ammonium hydroxide; Carbonating the calcium-rich solution to produce high-quality calcium carbonate. www.csir.co.za

AN END TO LANDFILLS?

A new technology developed in South Africa could see the landfills packed with millions of tons of used tyres turned into productive green waste. The plant and its EcoZero technology has been described by environmental consultant Fabio Venturi as “the most advanced waste-to-energy facility in the world.” The system works on a process of continuous controlled pyrolysis. It means that hard-to-recycle waste like used tyres, coal dust and other industrial by-products can be transformed into a diesel fuel and syngas that in turn creates electricity to feed into the national grid. ‘We turn waste into zero waste green electricity with zero carbon emissions.’ says Jeanne Rose, the social-enviro entrepreneur behind Eco2. 20 ESG SOUTH AFRICA

upfront-innovation.indd 6

www.eco2sa.co.za

2012/08/03 4:04 PM

INNOVATION

$8,800

That’s the cost of a “low-carbon, low-cost” house of the future. Designed to sit in low-income housing developments where the need for an

affordable housing solution

is strong, these houses made from tyres and recycled trash is a solution to the high need for housing. www.seed.org.za

LIGHTING OUTDOOR

UPCYCLE FLOWER LAMP

The Consol Solar Jar is literally bottled sunshine – created by fitting a solar panel and solar-powered LED lights onto the lid of a glass jar. When charged in direct sunlight for four to six hours it gives the same amount of light when activated.

Local designers find creative ways to make beautiful things from household goods. These Upcycle Flower Lamps use household olive oil and re-used jars. Handmade by community ceramics, they send out the message – use what you’ve got and do it with care. www.thebotanyproject.com

www.solarjar.co.za

FINDING NEW LIFE FOR SAILS

An exciting brand of recycled bags and accessories made from reclaimed sails is making waves. The Resails bags and gear are made from old discarded yacht sails and are about as cool as they come. The gear is both eco-conscious and edgy and the fashion conscious and sports enthusiasts are snapping it up alike. The brand is run by big wave surfer Mike Schiebach. “Love my jacket,” Tweeted UK style guru Beatrice Hurst after picking up a jacket on a trip. Mike says the idea was a simple one. “There is so much stuff like these old sails just lying around and headed for the dump. We started looking at ways of using what we love and what’s available and making it look cool.” www.resails.com

ESG SOUTH AFRICA 21

upfront-innovation.indd 7

2012/08/03 4:04 PM

DO YOU WANT to

MANAGE, June National Environment Month conserve and protect the environment?

DO YOU WANT to

WORK with either plants, wildlife, air, water, soil as well as people?

DO YOU SEE ENVIRONMENTAL PROBLEMS AS OPPORTUNITIES FOR IMPROVING THE ENVIRONMENT AS WELL AS PEOPLE’S QUALITY OF LIFE? If you have answered YES to one or more of the above, then an environmental career could be right for you! You could be employed as a technician, technologist, scientist, or at managerial level in one of the many careers in this exciting sector! If you have a drive for entrepreneurship and innovation, you could be an inventor or pioneer in the sector, leading your own company and creating green jobs. Fresh young minds like yours are needed to revolutionise the way we travel, the energy we use, minimize our waste as well as sustainably feed our people and build our houses and towns amongst others. To pursue a career in the sector, you would generally need to study certain subjects at Grade 12 level in high school, depending on the specific career you have in mind. Most programmes that are relevant to environmental careers are classified as Science Programmes. Relevant subjects in Grade 12 include Mathematics, Biology, Physical Sciences, English and/or Geography. The required minimum score for each subject is usually adequate achievement. It is however an advantage to have higher scores in your final matric marks, as most universities select students with higher than the minimum scores. Universities and universities of technology will have more information on courses and degrees. Contact the Department of Environmental Affairs for more information as well as the requirements and timelines of the annual internship programme’s intake. The call for applications is usually sent out in September each year.

DEPARTMENT OF ENVIRONMENTAL AFFAIRS Mr Thomas Mathiba. Director: Sector Education, Training and Development Tel: 012 310 3653 Email: tmathiba@environment.gov.za Call Centre Tel: 086 111 2468 Email: callcentre@environment.gov.za Switch Board: 012 310 - 3911 Physical Address: 315 Pretorius street, cnr Pretorius & Lillian Ngoyi Streets, Fedsure Forum Building, North Tower 2nd Floor (Departmental reception) OR, 1st Floor (Departmental information center), Pretoria 0001.

DEA-advert2.indd 1

2012/08/13 8:24 AM

SMART CITIES

BY 2050 UP TO 70 PERCENT OF SOUTH AFRICA’S POPULATION WILL LIVE IN CITIES, AND WE WILL HAVE DOUBLED THE WORLD’S URBAN POPULATION. IBM ESTIMATES THAT GLOBALLY ONE MILLION PEOPLE WILL MOVE INTO THE WORLD’S CITIES EVERY WEEK. WE ARE ADDING THE EQUIVALENT OF SEVEN NEW YORK CITY’S TO THE PLANET EVERY YEAR. THE IDEA OF SMART CITIES ADDRESSES OUR NEED TO TRANSFORM. THE FIRST SMART CITIES CONFERENCE ORGANISED BY ESG AND TOPCO MEDIA TOOK PLACE IN DURBAN EARLIER THIS YEAR AND ADDRESSED THIS CONCERN. OVER THE NEXT SECTION TOP SCIENCE AND ENVIRONMENTAL COMMENTATORS LOOK AT THE ISSUES. ESG SOUTH AFRICA 23

smart cities.indd 1

2012/08/07 9:48 AM

5 WAYS THE SMART CITY WILL CHANGE HOW AFRICA LIVES

 INTELLIGENT

TRANSPORT SYSTEMS

A HIGHLY EFFICIENT AND EFFECTIVE TRANSPORT MANAGEMENT SYSTEM IS A KEY COMPONENT OF A SMART CITY. Building new roads and lanes to deal with rising traffic volumes and traffic congestion is not enough anymore. Cars are getting more intelligent and therefore the roads have to follow suit. And they are. Globally, countries are building intelligence into the roads and the cars – with roadside sensors, radio frequency tags, and global positioning systems. South Africa is on par. The South African National Roads Agency Limited (SANRAL), an agency of the Department of Transport, is in the process of implementing an Intelligent Transport Systems (ITS) project for Gauteng freeways using technology to manage traffic, and to provide road users with traffic conditions on a real-time basis. The new technology will also include a centralised network management centre, closed circuit TV cameras, variable message signs, loops and other traffic detection and information devices, as well as continuous monitoring of the systems and its impact on improved road network operations. With this technology, SANRAL will be able to coordinate and facilitate faster emergency and incident response. Circling city blocks or parking lots looking for a parking space might also soon be thing of the past, thanks to ‘smart parking’. The Airports Company of SA is already using the technology – a bay detection system that comprises sensors above parking bays that activate lights that turn from green to red when a bay is occupied – at its OR Tambo International Airport parking facilities and most world-class parking malls are following suit. The system makes it easy for car users to locate empty bays, saving them time and improving efficiencies and fuel.

Credits: Shutterstock

IMAGINE WAKING UP IN A HOUSE THAT PRACTICALLY RUNS ITSELF, A LOW-CARBON CITY WHERE TRAFFIC CONGESTION IS ALMOST NON-EXISTENT, NEIGHBOURHOODS ARE SAFER, AND YOU CAN JUST USE A SINGLE CARD OR TAG TO DO ALMOST EVERYTHING FROM BUYING GROCERIES TO PAYING YOUR BUS FARE. SOUNDS TOO FARFETCHED FOR AFRICA? IT’S ACTUALLY NOT. MATEBELLO MOTLOUNG LOOKS AT HOW SMART CITIES WILL CHANGE HOW AFRICA LIVES IN THE NEXT FIVE YEARS.

24 ESG SOUTH AFRICA

smart cities.indd 2

2012/08/02 8:26 AM

 SMARTER

BUILDINGS

 SMART

GOVERNMENT

THE NUMBER OF GREEN BUILDINGS IN SOUTH AFRICA, many of them commercial, is on the increase, says the Green Building Council of South Africa. According to the 2010 National Association of Realtors Home Buyer and Seller Survey, 88 percent of home buyers looked for houses that had energy efficient characteristics like central heating and cooling systems when purchasing homes, 71 percent highlighted the desire for energy efficient appliances, and 69 percent wanted energy efficient lighting. Propelling this change in lifestyle is newly introduced energy efficiency building regulations that now make it compulsory for the construction industry to adopt environmentally considerate methods. National electricity provider Eskom is in a massive drive to entice South Africans to save energy and wants to have between five and seven million houses fitted with solar heaters by 2019. This year will also see new and innovative models to South Africa’s housing problem being explored. An example is the pilot Cosmo City where affordable houses made from mining and manufacturing by-products will be built at Cosmo City, a mixed-income settlement in north-west Johannesburg. Sponsored by First National Bank, Sasol, and Tower Technologies, the walls and roof of the houses, which will be 85 square metres in size, will be made of steel. They will take an estimated five days to assemble, saving construction costs and energy use. The technology used utilises 25 tons less cement and the houses will be thermally superior.



IN MANY WAYS, SOUTH AFRICA HAS BEEN AHEAD OF THE GAME in trying to create a smart government through the implementation of the e-Government strategy, which was meant to improve its interaction with its citizens and enable them to access services and information by a mere click of a button from a single portal. This would have been convenient, lessened the need for hard copy forms, eliminated the necessity for physical travel to government departments, and hopefully improved record keeping through computerisation. While the implementation of this strategy has not been as successful as envisaged, due to a number of reasons (among them poor project planning and insufficient investment in ICT infrastructure), South Africa has not discarded this dream. Through the use of smart technology, South Africa now has one of the best tax collection systems in the world, which has made SA Revenue Services one of, if not, the most efficient government-related department in the country. ESG SOUTH AFRICA 25

smart cities.indd 3

2012/08/02 8:26 AM

 SMARTER

PEOPLE

WHAT REALLY MAKES A CITY? ITS PEOPLE. The changes in shape, size, engineering and governance aside, cities of the future will not be any different. So it is the quality of people that is going to increasingly begin to matter. Soon, competition will be intense among cities to attract and retain the best brains in the word that (hopefully) also bring smart ideas and solutions. This is important if the cities are to be economically viable and sustainable. Smart cities are not a one-size fits all design, and shouldn’t be. For many countries in Europe, reducing their carbon footprint is chief. In developing countries like South Africa, this commitment will continue to compete with the country’s pledge to halve poverty by 2015. We need people who uniquely understand the African experience, and develop solutions that speak to its nuances. The quality of services particularly in education will matter more. Last year only 7,000 schools across the country had Internet connectivity – an astonishing 21,000 yet to be catered for. However, government has given the Universal Service and Access Agency of SA a target to establish 400 ICT access centres in under-serviced areas by 2015, that is no less than 100 a year.

 SAVVY

CONSUMERS

ACCORDING TO IBM, SA IS MORE READY FOR THE SMART GRID THAN MOST COUNTRIES. The energy sector is centralised in the national authority Eskom, which should make implementing the technology nationally easy. Eskom has already piloted some 20,000 basic smart meters in its residential demand response programme in Fourways, Johannesburg. Combined with smart appliances, these energy load-limiting meters can also turn appliances on and off according to signals from the grid. You could set your washing machine to operate only when the price of electricity is below a certain amount for instance. With the smart grid, consumers can also have a two-way conversation with the electricity provider. According to the Electricity Regulations Act of 2006, all end-users consuming 1,000 kWh or more a month shoud have had a smart meter system installed by January 2012 – we are off the mark with this target, but the rollout is picking up pace. 26 ESG SOUTH AFRICA

smart cities.indd 4

2012/08/02 8:26 AM

SMART CITIES

THE 10 GREENEST BUILDINGS IN SA

SOUTH AFRICA IS UNDERGOING A GREEN REVOLUTION. GONE ARE THE DAYS WHEN BUILDING COMPANIES AND THEIR CLIENTS QUESTIONED WHY THEY SHOULD GO GREEN. TODAY, THE QUESTION IS HOW BEST TO DO SO AND THE RESULTS SPEAK FOR THEMSELVES. ESG TAKES A LOOK AT THE 10 GREENEST BUILDINGS IN SOUTH AFRICA. BE WARNED, THERE’S NOTHING BLAND ABOUT THESE WORLD-CLASS STRUCTURES.

Vodafone Site Solutions Innovation Centre

THE LAST FEW YEARS HAVE WITNESSED A SWING IN THE CONSTRUCTION Of COMMERCIAL BUILDINGS WORLDWIDE AS THE FOCUS ON SUSTAINABILITY GAINS MOMENTUM. While many cities around the world have had a head start in the construction of green buildings, South Africa is catching up and doing so rapidly. From Johannesburg to Cape Town, the number of buildings that fit in with their urban environments and ecosystem, rather than destruct it, are on the rise with each boasting the latest and most sophisticated in green technology and innovation across design, management, indoor environmental quality, energy, water, transport, materials, emissions, and land use and ecology.

VODAFONE SITE SOLUTIONS INNOVATION CENTRE, MIDRAND, JOHANNESBURG SETTING THE BENCHMARK LOCATED IN THE CONCRETE HEART OF JOHANNESBURG CALLED MIDRAND, the Vodafone Site Solutions Innovation Centre has put South Africa on the map as the continent’s first ever six-star Green Star SA rated building. For starters, the building is carbon neutral, and boasts advanced water and energy efficiency systems in addition to several other building innovations that have been incorporated. It is powered by 292 photovoltaic panels installed on its roof, which deliver 230kWh of solar energy on a daily basis, twice the amount the structure requires. The surplus electricity is fed into the neighbouring building’s grid and later extracted again to avoid battery use. The building also has motion light detection sensors that help minimise energy usage.



ESG SOUTH AFRICA 27

10 greatest buildings.indd 1

2012/08/03 3:37 PM

To ensure that the research and development centre is a pleasant working environment, there’s the mechanical air-conditioning, heating and ventilation system that delivers 2,500 litres/second of fresh air to the office during normal operations, and 1,250 litres/second of fresh air in heating mode. How it works is that the system consists of two rock gambiens that are heated or cooled using air from outside. These retain the heat or cold and are used to regulate the building’s temperature. To say this building is “environmentally ahead of the curve,” as the company puts it, is truly not an exaggeration.

AURECON CENTRE, CENTURY CITY, CAPE TOWN THE TRENDSETTER ONE OF THE FIRST COMPANIES TO INCORPORATE A ‘GREEN LEASE,’ relatively new concept that commits tenants and landlords to operate the building according to its original sustainable design, the 7,402m² Aurecon Centre was the first building in South Africa to achieve five-star status. The headquarters of global engineering firm Aurecon, which has vast experience in the green building space, one of the structure’s key achievements is that it set the benchmark of what going green can entail by paying particular attention to green innovations. Its design accommodates a range of them notably a rainwater-harvesting system, carbon-dioxide sensors; parking for hybrid and car-pool vehicles to encourage efficient transport systems; a central chiller plant which will ensure that energy is not wasted; and an exhaust riser to remove indoor pollutants from printing and photocopy areas. The core of the building is penetrated by natural daylight, reducing the energy need for lighting.

Nedbank Phase II Office Building, Sandton, Johannesburg

28 ESG SOUTH AFRICA

10 greatest buildings.indd 2

2012/08/03 3:41 PM

SMART CITIES NEDBANK PHASE II OFFICE BUILDING, SANDTON, JOHANNESBURG

SANRAL Corporate Head Office, Pretoria East, Gauteng

A ‘CITY’ WITHIN A CITY SOUTH AFRICA’S FIRST AND LARGEST GREEN STARRATED BUILDING, the multi-faceted 45,000m² sevenfloor building Nedbank Phase II building personifies the banking group’s commitment to environmental sustainability and creating a pleasant and healthy environment for its employees. It boasts the Dali Lighting System that enables it to monitor, dim and switch off lights in parts of the building that are unoccupied. Electricity usage is kept to a minimum through the use of use solar heated geysers in the showers, gas in all the kitchens for cooking, and the absence of hot water in the hand wash basins. The building’s Black Water Treatment System is among its most impressive features. The system monitors and controls water usage by partially recycling all the water in the plant based in the building’s basement and reuses it for all non-potable water uses such as toilets saving up to 120kl of water per day. Matching the system is a full economy cycle air-conditioning system that keeps the office park cool by flushing fresh air through the building when outside conditions are favourable. It also circulates cool ambient air through the building in the morning, reducing the energy load on the air conditioners in summer. All the steel used in this project contained an average recycled content of 85 percent, while nearly 79 percent of all waste generated in the building is recycled.

SANRAL CORPORATE HEAD OFFICE, PRETORIA EAST, GAUTENG

24 Richeford Circle, Umhlanga, Durban

IN A LEAGUE OF ITS OWN DESIGNED USING THE THEME ‘THE CONNECTOR’, which plays on the South African National Roads Agency Limited’s task which is to improve road traffic congestion through investing in road networks, this building’s key attribute is its superior levels of indoor environment quality (IEQ). Smart meters are used to measure power quality through analysis of usage patterns and lighting is controlled by using a DALI lighting system that is controlled by C-Bus sensors which allow for dimming of lights and also act as occupancy sensors. HVAC, lighting, fire detection, lifts and alarms are all monitored via the web browser enabling the pro-active management of equipment, maintenance and malfunctions.

24 RICHEFORD CIRCLE, UMHLANGA, DURBAN

Nedbank Menlyn Maine Falcon, Pretoria

RIPPING THE BENEFITS OF EFFICIENT FIXTURES THE 4,167M² DEVELOPMENT INCORPORATES SEVERAL GREEN TECHNOLOGY and innovations that have seen it achieve savings such as 50 percent reduction in the outflow to the sewerage system through the installation of efficient fixtures such as waterless urinals. The offices of Shepton & Wylie, the building has heat recovery wheels that help increase building ventilation, carbon dioxide monitoring and control, and individual



ESG SOUTH AFRICA 29

10 greatest buildings.indd 3

2012/08/03 3:41 PM

40-on-Oak, Melrose Arch, Johannesburg

stored on the roof. The water, after being treated, is used and reused for drinking and non-drinking purposes such as irrigation, inside and outside the building. The building’s goal is to become climate positive. It is working toward reducing on-site greenhouse gas emissions to zero.

VILLA MALL IN PRETORIA

Villa Mall in Pretoria

comfort control every 30m². It’s fully functional building management system enables it to monitor usage of resources efficiently and be able to pre-empt and prevent emergencies.

NEDBANK MENLYN MAINE FALCON, PRETORIA AFRICA’S FIRST GREEN CITY NEDBANK MENLYN MAINE FALCON IS ONE OF 17 GREEN CITIES worldwide that’s partnered with the Clinton Foundation’s Climate Initiative whose core focus is identifying and advancing solutions to core issues driving climate change. Dubbed Africa’s first green city, this multipurpose city focuses on recycling as an essential and sustainable approach to fighting climate change. Other key features include storm water tanks with a carrying capacity of 90,000 litres and a further 20,000 litre capacity that is

AN EXCEPTION TO THE RETAIL LABEL THE FIRST SHOPPING CENTRE IN SOUTH AFRICA THAT HAS SUSTAINABILITY as its premise, the Green Star design rated Villa Mall promises to be a real trendsetter particularly when it comes to energy efficiency. The retail is a significant gobbler of the commercial property’s share of electricity. However, Villa Mall promises to be an exception. Scheduled for completion this year, it promises to have the largest solar photovoltaic array, situated on the roof of the parking deck, which will be the largest in the country on a building with approximately 2 megawatt peak power. It will also boast rainwater capture and recycling, therefore minimising the amount of clean water required for its maintenance.

NEDBANK RIDGESIDE, UMHLANGA, DURBAN MODERN, EFFICIENT, AND EFFECTIVE THE FIRST OFFICE DEVELOPMENT IN KWAZULU-NATAL TO BE FULLY CERTIFIED and the second in South Africa, the Nedbank Ridgeside’s efficient water management system is what continues to earn it major points. The 6,500m four-floors building has an efficient central air-conditioning plant that is complimented by the installation of carbon dioxide sensors that serve to ensure continuous monitoring and adjustments of fresh air into the building. Perhaps an obvious thing to do, Villa keeps its consumption of portable water through a combination of water re-used particularly for irrigation and the existence of water metres

30 ESG SOUTH AFRICA

10 greatest buildings.indd 4

2012/08/06 9:18 AM

40-ON-OAK, MELROSE ARCH, JOHANNESBURG REPRESENTING THE NEW URBANISM Located in the prestigious Melrose Arch precinct, 40-on-Oak is the first ever four-star Green Star Rating (for its design) multi-unit residential development in South Africa. Unique attributes includes natural cross ventilation, grey water recycling, LED lighting, and gas powered water heating. The overarching objective: to give its future residents “a seamlessly integrated environment that supports the New Urbanism principles” on which the area is built upon. The development also comprises an integrated building management system, and high-end technology plus automation to each apartment. Adjacent to the M1 freeway, the R400-million 40-on-Oak is due to be completed in October 2012.

AURECON, LYNNWOOD, PRETORIA

Nedbank Ridgeside, Umhlanga, Durban

which are connected to the Metre Monitoring System to support proper facility management of the resource. The result: savings of up to 90 percent of drinking water. The four-star rated building also uses water-wise plants for landscaping, further reducing the demand and use of water.

CELEBRATING GREEN-MINDED DESIGN AND CONSTRUCTION An established player in the green construction field, engineering firm Aurecon set a new record when, faced with an office location that is next to Moreleta Spruit, its project had to come up with a solution to prevent storm water run-off from the building from harming the near-by spruit. And it did. It created a natural filtration system from various plant species which it affixed to the building’s northern car park façade, creating a new benchmark in innovative green solutions. The first green-rated office building in the City of Tshwane, building’s other characteristics include high performance glazing, extensive external shading, insulated wall panels, and an insulted roof. It also has a monitoring system to Aurecon to track energy usage.

Aurecon, Lynnwood, Pretoria

ESG SOUTH AFRICA 31

10 greatest buildings.indd 5

2012/08/03 3:50 PM

SMART GRIDS AND SMART PEOPLE

NEVER BEFORE IN HUMAN HISTORY HAS THE NEED FOR CITIZENS OF THE WORLD TO ADOPT ALTERNATIVE LIFESTYLES EVER BEEN SO URGENT. THE RESULT: THE BIRTH OF ‘SMART CITIES’ GLOBALLY WHERE SMART PEOPLE USE SMART TECHNOLOGIES TO CREATE HEALTHIER, SAFER AND MORE SUSTAINABLE NEIGHBOURHOODS. MATEBELLO MOTLOUNG LOOKS AT HOW SOUTH AFRICAN CITIES COMPARE.

JOHANNESBURG PROVING THAT SIZE DOESN’T MATTER JOHANNESBURG FACES THE CHALLENGE OF WANTING TO BE A WORLD-CLASS CITY BUT POOR MANAGEMENT OF INFRASTRUCTURE AND RESOURCES IS A REAL CHALLENGE.

In a nutshell: Johannesburg might be South Africa’s most populous city with 3.8 million people, but coincidentally it is also the greenest with stringent air quality control and monitoring policies aimed at reducing pollution and an increase in the number of green buildings. According to the 2011 EIU African Green City Index commissioned by global electronics and electrical engineering giant Siemens, the city boasts the lowest greenhouse gas emissions per capita among the country’s major cities; the lowest per capita electricity consumption, and the second-highest amount of green space. It has 10 million trees and 231m² of green space per person against an index average of 74m² per person. A few years ago, Johannesburg embarked on a cleanup campaign to restore the inner city to its former glory. The campaign has been a relative success. Today, what were no-go zones have been transformed into cultural precincts such as Newtown and business hubs housing the headquarters of some of the country’s largest banks and mining companies. Last year, the city launched the Growth and Development Strategy 2040 (GDS 2040), which details how Johannesburg intends to be an efficiently run and sustainable metropolis. Part of the strategy is to become a smart city, though like most cities in developing countries, poverty alleviation is the overarching objective, which explains the absence of how exactly Johannesburg intends to be a smart city . That said, the city is aware of this need and is paving the way. It has a robust strategy aimed at reducing the

environmental impact of energy consumption. To date, it has spent more than R5-million of donated aid to install solar water heaters in 700 low-cost houses in Cosmo City, a mixed-type housing development. Plans are underway to extend the scheme to other particularly poor parts of the city. To ease pressure off the energy grid and avoid traffic congestion during power cuts, the Johannesburg Road Agency has been installing solar power traffic signals since 2009. However, it is the city’s two major transport projects – the Gautrain Rapid Rail system and the Rea Vaya Bus Rapid Transit system – which are its largest carbon emission intervention initiatives to date and Johannesburg’s most sophisticated public transport initiatives. The high speed Gautrain travels between Sandton, Pretoria, and the OR Tambo International Airport, which is one of the busiest traffic routes in the city. The Rea Vaya provides affordable public transport for residents of Soweto, the city’s largest township. All the Rea Vaya buses run on low-sulphur diesel and operate along a 25km route daily.

“It has 10 million trees and 231m² of green space per person.”

32 ESG SOUTH AFRICA

city-guide.indd 2

2012/08/02 8:41 AM

SMART CITIES

Plans are also underway to introduce e-tolling in the city as part of having a smarter public transport system that includes technology systems to monitor traffic and CCTV cameras to guarantee residents’ safety on the roads. KNOWN FOR Its public transport system which is undergoing integration at present to increase adoption. The objective is to get at least 80 percent of the city’s residents including motorists to use public transportation. WORKING ON Reducing its carbon emissions, reducing electricity costs, adopting efficient water management systems and improving its waste management through the introduction of bylaws that make it compulsory for residents and businesses to recycle waste. About 244,000 tonnes of waste are dumped illegally every year in Johannesburg and the city is rapidly running out of landfill space. THINGS TO WATCH The expansion of the Rea Vaya system to the rest of Johannesburg’s surrounding townships and the conversion of landfill gas from several sites into electricity to power city homes.

CAPE TOWN DECLARING WAR ON CLIMATE CHANGE CAPE TOWN INTENSIFIES ITS BATTLE AGAINST CLIMATE CHANGE

In a nutshell: Of our country’s major cities, Cape Town has the most robust environmental policies of the four major cities. These are underpinned by the Energy and Climate Change Action Plan, which outlines 11 targets for the ‘Mother City’ to achieve its objective: be an energy efficient, low-carbon green economy. Top on the list is reducing the city’s electricity consumption by 10 percent by 2012, followed by a target to source 10 percent of its energy from renewable sources by 2020. At present, only 2 percent of the power the city consumes is renewable. To meet its targets, Cape Town is focusing on three areas: renewable

energy, energy efficiency, and transport efficiency, and has 130 or so projects that are underway already as a result of the plan. These include a drive to install 300,000 solar water heaters across the city by 2015, retrofitting public buildings with energy efficient lights, and developing the Integrated Rapid Transit (IRT) System. On completion, the multi-billion rand IRT will provide Cape Town with a sophisticated transport system that includes a rail plan, a bus rapid-transit (BRT) system, improvements to conventional bus and minibus operations, cycle ways and bicycle parking, and upgraded pedestrian and urban spaces. Cape Town faces a challenge to find a balance between its environmental protection efforts and the prevailing economic and social development needs of its growing population. It has updated its development guidelines to address urban sprawl, for instance, and is encouraging the adoption of green building and design methods to preserve the eco-system. Driving public awareness about the importance of adopting smart living habits is another significant aspect to Cape Town. The city holds workshops to train the public and its employees on the importance of living smartly. These tips are compiled in the Smart Living Handbook that’s updated annually and is made available electronically on the city’s website. The city’s officials have also put forward a proposal for the building of a Smart Living Centre that will not only include exhibits and educational activities for the public relating to sustainability but an organic farmers’ market and a recycling centre as well. Cape Town also has a climate change think tank tasked to design programmes and interventions aimed at understanding and preparing for climate change.



ESG SOUTH AFRICA 33

city-guide.indd 3

2012/08/02 8:41 AM

KNOWN FOR Cape Town has the highest literacy rates among the major cities, the highest internet connection rate per capita, and the highest percentage of houses connected to services infrastructure. It also has stringent environmental protection policies evident from the city’s abundance of green spaces; a relatively low percentage of people living in informal settlements; and a relatively efficient public system. WORKING ON Adopting smart energy efficient living habits, enforcing development guidelines to prevent urban decay and promote more sustainable eco-friendly designs and construction habits, while creating a low-carbon and efficient public transport system. THINGS TO WATCH The increase in the number of green buildings.

DURBAN CREATING A CITY EVERYONE WANTS TO LIVE IN

DURBAN’S OBJECTIVE IS TO CREATE A CITY THAT IS NOT HARMFUL TO HUMAN HEALTH. In a nutshell What Durban do you want to live in? That’s the question the city is asking its residents as it embarks on efforts to transform it into a carbon neutral zero-waste city by 2050. Host to the 2011 United Nations Climate Change Conference, better known as COP17, the ever-green city of eThekwini, has introduced several initiatives to improve all aspects of the city from culture and accessibility to safety and environmental sustainability under the Imagine Durban programme. The plan is an integrated, long-term planning strategy that is part of a global campaign, led by Sustainable Cities, a

Canadian non-governmental organisation, to improve urban environments and reduce carbon emissions. In Durban’s case, the city is working on making the Moses Mabida Stadium, one of the 2010 FIFA Soccer World Cup stadia, as energy efficient as possible, and promote the efficient use of natural resources through public awareness and demand management schemes. With an estimated 22 percent of the city’s 3.5 million people living in informal settlements, Durban has introduced a Spatial Development Framework plan to combat potential urban decay. To meet its growing energy demands, Durban has also begun to generate, though on a limited basis, power from local waste by-products. Mobility and accessibility is another focus area of the city as it aims to integrate its transport system. Durban has the longest public transport system comprising an extensive bus system of 1,400 routes and some 200 operators and an extensive mini-bus taxi system. It has introduced People Mover, a new passenger bus network that is servicing areas previously not catered for by existing transport providers. The city is also upgrading its main bus system. In 2011, it spent R180-million on a fleet of 124 new low-carbon emission buses and also launched a smart cards system

Special

Early bird special

R7 700

for bookings before 15 September.

& Exhibition JHB 30-31 Oct

SA IS HOSTING A SMART CITIES SUMMIT IN JOHANNESBURG 30,31 October 2012

16 ESG SPECIAL FOCUS SOUTH AFRICA

city-guide.indd 4

www.smartcities-africa.co.za

2012/08/03 9:31 AM

that will replace traditional bus coupons. This should be fully operational by 2015. Durban is also spending an additional R16-million or so, in the construction of cycle lanes on the bridge over the Umgeni River next to the M4 northern freeway and along the beachfront to the Botanic Gardens. The last few years have also seen Durban intensify its efforts to be a smart city through increased investment in rolling out ICT infrastructure. The city plans to take advantage of the opportunities brought about by SEACOM, the undersea cable South Africa has invested in to improve broadband penetration in the country and the continent. KNOWN FOR Sound environmental policies, an extensive public bus transport system, and a significant informal settlement population. WORKING ON Establishing bylaws to create penalties for pollution, the promoting of low-emission industries, and improving its water, energy and waste management. THINGS TO WATCH There are longer-term plans to have a fully integrated public transport system, so that bus and taxi routes match up with train stations.

PRETORIA SURPRISINGLY AHEAD OF THE GAME FOR A CITY AS SMALL AS PRETORIA, THE CAPITAL IS ACUTELY AWARE OF THE IMPORTANCE OF GOING GREEN TO IMPROVE RESIDENTS’ WAY OF LIFE.

In a nutshell The administrative capital of South Africa, Pretoria is the least densely populated of the country’s major cities with 2.3 million residents. It is administered by the city of Tshwane, which is the first metropolis in South Africa to establish a Clean Development Mechanism (CDM) desk to drive green economic initiatives. In 2005, Pretoria introduced an integrated environmental policy aimed at diversifing the city’s energy supply by encouraging energy efficiency through fostering cooperation between government, business, labour, communities and other stakeholders. The capital’s goal is to reduce the impact of conventional coal-based energy generation on the environment. Like all other cities in South Africa, over 90 percent of Pretoria’s electricity is coal-generated with renewable energy accounting for less than 2 percent. However, the city is working hard to change that. Over the past three years, it has installed more than 15,000 solar geysers in a number of communities in the metropolitan area and has begun installing green technologies in a number of its municipality buildings. It is retrofitting its Pretoria West and Rooiwal power stations to reduce carbon emission

and be more energy efficient. Plans are also underway to create of a 20MW solar energy farm where the electricity generated will be fed directly into the grid resulting in very low transmission loss. Long term, the city of Tshwane wants Pretoria and other neighbouring areas to boast public solar car parks which will have efficient solar power and heat producing devices at carports to supply energy to electrical vehicles, street lights and traffic lights. The vision is for each public building’s car park to resemble your typical petrol station. The city is also working closely with Nissan SA on their planned rollout of the Nissan Leaf, which is the world’s first affordable zero-emission car, a medium-sized hatchback that comfortably seats five adults and has a driving range in excess of 160km. KNOWN FOR Its growing population, which the city is trying to accommodate, its environmental conservationist nature, historical buildings, a good public transport system, and the changing population demographics. WORKING ON Developing its own integrated rapid public transport network, alternative sources of energy, and developing renewable sources of energy across the city. THINGS TO WATCH The construction of solar parks and solar farms, and the adoption of electric vehicles. But that is in the long-term.

ESG SOUTH AFRICA 35

city-guide.indd 5

2012/08/03 4:07 PM

SUSTAINABLE ENERGY FOR ALL (SE4ALL INITIATIVE)

THE UNITED NATIONS DEVELOPMENT PROGRAMME (UNDP) SHARES ITS LATEST INITIATIVE, SE4ALL.

IN SUPPORT OF THE INTERNATIONAL YEAR OF SUSTAINABLE ENERGY FOR ALL declared by the United Nations General Assembly, the Secretary General Ban Ki-moon launched the Sustainable Energy for All initiative to identify and mobilise action by stakeholders from government, business, civil society, academia and the development community on the three objectives of ensuring universal access to modern energy services, doubling the global rate of improvement in energy efficiency, and doubling the share of renewable energy in the global energy mix, all to be reached by 2030. With this initiative, the UN aims to mobilise its development partners including governments, donors, the private sector and civil society to commit new and major investments and financing to transform the global energy landscape. It also seeks to facilitate development enabling policies, regulatory frameworks and energy investments in developing middle income countries to support the achievement of the targets of the UN’s Sustainable Energy for All initiative. Given its capacity as the lead development organisation of the UN, UNDP is supporting the publication in a Report on ‘Universal access to energy: Getting the framework right’. This report is the unique outcome of the collaboration among

experts focused on addressing key issues emanating from Africa and Asia, two regions of the world where lack of access to energy cripples the daily lives of the poor. A copy of the report will be available on the UNDP website in due course. To achieve global objectives related to energy access, energy efficiency and renewable energy, SEFA will catalyse major and new investment opportunities to speed up the transformation of the world’s energy systems as a significant mechanism to address climate change issues poverty achievement of MDG’s after Issues. SEFA will achieve this by collaborating with its partners – donors, governments, private sector and civil society – to mobilise financing from donors and the private sector, and provide support in the development of enabling policies and regulatory frameworks that encourage investors and improve technical capacities within host countries. Through consultations with national governments, the initiative will seek firm national commitments that include targets and milestones, and actions from both the public and private sector. SEFA will support the implementation of innovative energy service delivery solutions and the development of structures for public private partnerships (PPP) that could help mitigate risks involved with such innovations. Within the SEFA framework and action plan, South Africa is counted as a ‘high performance’ country which has already made substantial progress and could potentially reach universal access with specific, well-defined inputs. The support provided to the countries will be technical assistance concentrated on acceleration and scaling up of sustainable energy services, aligned with existing planning or programming, and focused on: i) Additional resource mobilisation; and ii) Capacity development to leverage sustainable energy to achieve green economic growth in all sectors of the respective national economies, e.g. health, education, employment, etc. The above actions are expected to be country-led, with strategies and action plans that have clear goals and targets, i.e. specific investment proposals, cutting across sectors, involving multiple stakeholders including governments, the private sector and civil society, and embedding sustainable energy strategies within broader national development strategies. Universal access to modern energy services was seen as a priority issue at Rio+20, and global commitments on reaching this milestone are likely to follow. To this end, during the Rio+20 Summit held in June 2012, SEFA unveiled a robust action plan for attaining universal access to sustainable energy, with targets and milestones, technologies and financial resources, institutions, and business models. As such, SEFA, Rio+20 and similar international initiatives represent strategic opportunities for South Africa and southern Africa to meet their commitments

36 ESG SOUTH AFRICA

ESG_advertorial_UNDP new.indd 2

2012/08/03 12:32 PM

ADVERTORIAL

to reach their populations with sustainable energy and ultimately steer towards sustainable development. The South African government has committed to pursuing low carbon development by having 27 percent of its energy demand met by renewable energy by 2030. This entails increasing the share of RE in its energy mix to 10,000GWh of South Africa's power, deriving 42 percent of new generation capacity from RE, and reducing its energy intensity through cross-sectoral energy efficiency measures. In line with these commitments and to fulfill the targets of the 2010 South African Renewable Energy Policy, the government launched the South African Renewable Initiative (SARi) to scale up RE and secure long-term, international and domestic funding and expertise for the country’s RE industry. Further, the second phase of the Integrated Resource Plan (IRP-2) for Electricity 2010-2030 forecasts RE resources to produce 9 percent of electricity by 2030. The government’s national commitments have been taken up by the KwaZulu-Natal Province mainly influenced by the fact that the province hosted COP17 and as such several commitments were reached as outcomes related to COP17 and SEFA in particular. The KZN Provincial Planning Commission (PPC) has therefore proposed an ambitious agenda which aligns with SEFA goals and includes: i) Providing 100 percent energy access in KZN Province by 2030, i.e. an additional 600,000 households or some 3 million people; ii) Implementing a number of significant renewable energy and energy efficiency projects; and iii) Establishing renewable energy manufacturing hubs. The government recognises the challenge of reaching unserved and underserved communities with sustainable energy and has supported the implementation of the iLembe Community Energy project which was showcased and launched during the COP17 in December 2011, under the SEFA theme in collaboration with the KZN Province. This set the stage for a COP17 Legacy Project that would encapsulate all the compatible elements of SEFA into an integrated community-based pilot project. This would therefore be the epicenter for learning-by-doing as well as generating knowledge for scaling up.

The South African national and provincial governments have since reinforced the intention to use iLembe as the starting point and platform from which to scale up energy access and renewable energy, and to promote energy efficiency more broadly at a national and regional level. They have also selected additional entry points to kick-start and support SEFA initiatives in KZN province which proposed, through KZN PPC, five flagship projects related to its sustainable energy objectives namely: • Richards Bay Biomass-to-Energy Project; • iLembe Mini-Grid Project; • Donnybrook Timber Hub; • Department of Public Works Building Electricity Saving Initiative; and • KZN renewable energy innovation centre and manufacturing hub. The conception and implementation of these activities would be done in conjunction with UN agencies and other support systems identified. In conclusion, achieving Sustainable Energy for All is essential for reaching the Millennium Development Goals, while at the same time growing economies and safeguarding the environment. South Africa (Department of Energy, Eskom), in collaboration with UNDP undertook a Rapid Assessment and Gap Analysis on the Energy situation in the country as part of its commitment to the Sustainable Energy for All initiative. The overall aim of the Rapid Assessment exercise was to establish the country’s status in terms of three SE4ALL objectives; an analysis of the energy sector strengths and weaknesses in specific areas relevant to the sector such as policy, planning, institutions, finance, monitoring (data and accountability) capacity and partnerships. The rapid assessment and gap analysis will also provide a basis for an Action Plan that may follow as part of the SE4ALL activities in the country. It is hoped that the gaps identified by the Rapid Assessment will be addressed through further consultations with stakeholders through various roundtables. Taking the National Gap Analysis forward, UNDP together with the Government of South Africa and other relevant stakeholders, is planning to undertake roundtables on energy issues at municipal level in order to identify the needs and build capacity in accordance.

www.undp.org.za www.facebook.com/undpsouthafrica www.twitter.com/undpsouthafrica

ESG SOUTH AFRICA 37

ESG_advertorial_UNDP new.indd 3

2012/08/06 9:20 AM

INDUSTRIAL ENERGY EFFICIENCY IMPROVEMENT IN SOUTH AFRICA ENERGY IS ESSENTIAL FOR INDUSTRIAL DEVELOPMENT, ECONOMIC GROWTH AND PROSPERITY. However, issues such as climate change, energy security and scarcity, industrial competitiveness and price volatility are challenges to which businesses are exposed to on a daily basis. Time and again energy efficiency within industry has been demonstrated to be cost effective while having a positive effect on productivity. Energy Efficiency is highly cost-effective and smart: smart from a government perspective and smart from a business perspective. However, the successful upgrading of industrial energy efficiency at country level requires sustained support of policy-makers and their constituencies. Energy Management Systems (EnMS) and Energy Systems Optimisation (ESO) Three decades of national and international experiences with industrial energy efficiency programmes have shown that increased energy efficiency in industry is achieved through changes in how energy is managed in an industrial facility, rather than through installation of new technologies. Energy Management Systems (EnMS), through toplevel management engagement on an ongoing basis, provides structured and systematic approach on how

to integrate energy efficiency into the company culture and daily practices. Based on the well-known “PlanDo-Check-Act” Deeming’s cycle, EnMS provides; a framework for understanding significant energy uses; action plans to continually improve energy performance; and documentation to sustain and demonstrate energy performance improvements over time. Energy Systems Optimisation (ESO) considers an industrial energy system as a whole, not just the individual components of which it consists, analyzing both its supply and demand functions along with their interactions. This is because the presence of energy-efficient components in industrial systems, however important, provides no guarantee that energy savings will be attained if the whole system is not properly designed and operated. While efficient components may bring gains between 2 and 5 per cent, ESO can attain average efficiency gains between 15 and 30 percent; very often with payback periods of less than one or two years. The Industrial Energy Efficiency Improvement in South Africa Project (IEE Project) The IEE Project was established after the power crisis in South Africa in 2008 that exposed the country, and the

38 ESG SOUTH AFRICA

ESG-2xadvertorial-unido.indd 2

2012/08/02 9:14 AM

ADVERTORIAL

economy, to acute power shortages. It is a collaborative initiative between the United Nations Industrial Development Organiation (UNIDO), the South African Government through the Department of Trade and Industry (the dti), and the Department of Energy (DoE), the Swiss State Secretariat for Economic Affairs (SECO) and the UK Department for International Development (DFID). The IEE Project is being implemented by UNIDO and is hosted by the National Cleaner Production Centre of South Africa (NCPC-SA) under the Council for Scientific and Industrial Research (CSIR). The IEE Project promotes the sustainable transformation of energy usage practices in South African industry through the widespread introduction of the EnMs and ESO concepts. It has the goal of enhancing national energy security, contributing to job creation and reducing national greenhouse gas emissions. The Project currently focuses on five key industry sectors which have the potential to generate significant reductions in the overall energy intensity of the country. These are agro-processing, chemicals and liquid fuels, metals processing and engineering, automotive manufacturing, and mining. The objective is to contribute to the national energy demand reduction target of 15 percent by the year 2015 for mining and industry, and 12 percent for the country as a whole. The project is facilitating the implementation of the new South African ‘Energy Management Standard SAN/ ISO50001’ under the framework of the recently released international Energy Management Standard ISO50001 which provides policy as well as market-driven tools to enable and support trade, disseminate best-practices, stimulate innovation, increase quality and productivity, and facilitate access to new customers and markets. SANS/ ISO50001 aims to enable South African companies to develop management policies for more efficient energy usage, set targets and objectives to give effect to the policies and review their effectiveness, make use of relevant data to enhance the understanding of energy use and consumption, measure results and ensure continual energy efficiency performance improvements. South Africa has also been the first country in the world to develop and release a National Standard for the Measurement and Verification of Energy Savings (SANS 50010). This standard will enable companies to qualify for government’s energy efficiency financial incentives. The IEE Project aims to create an enabling environment for energy efficiency in South Africa so as to facilitate the implementation of energy efficiency through EnMS and ESO. The project is working closely with a number of government departments to support the creation and harmonisation of appropriate policy frameworks. The (IEE) Project is also delivering a set of training workshops and has developed targeted training material on EnMS and ESO. The workshops are regularly delivered in Gauteng,

KwaZulu-Natal and Western Cape by UNIDO internationally acknowledged experts with extensive practical experience on the subjects of EnMS and ESO. The IEE Project will also soon introduce training for auditors to certify companies to the standards SANS/ISO50001 and SANS 50010. Lastly, the project has recently started a programme of offering energy audits and ESO audits to willing industrial enterprises across South Africa. For more information about the IEE Project in South Africa, its EnMS/ESO training programme and how it can help your business, please visit: www.iee-sa.co.za For more information about possible partnership opportunities with UNIDO please visit: www.unido.org

The United Nations Industrial Development Organisation (UNIDO) is the specialised agency of the United Nations mandated to promote and accelerate sustainable industrial development in emerging countries and economies in transition. In the area of Energy and Environment UNIDO promotes the concept of Green Industry through sustainable patterns of industrial consumption and production along the value chain, cleaner technologies and processes in order to de-link economic development from environmental degradation.

ESG SOUTH AFRICA 39

ESG-2xadvertorial-unido.indd 3

2012/08/02 9:14 AM

ADVERTORIAL

SHOWCASING SA’s GREEN TALENT EIGHT TOP SA ENTREPRENEURS and SMEs had the opportunity to showcase their innovative green ideas and concepts (see table) to top industry and government representatives at a gala event held during COP17. This was the culmination of the first SA Cleantech initiative, a joint effort by the Department of Trade and Industry (through the National Cleaner Production Centre of SA), the Global Environmental Facility, and UNIDO. It was endorsed by the Departments of Environmental Affairs and Energy. The initiative provided participants with an opportunity to participate in the search for green solutions to critical environmental and economic challenges and contribute to industrial competitiveness and green job creation. Linkages with interested institutions and investment and funding agencies are being explored to contribute to the sustainability and success of participants. This year the initiative will be continued as the Cleantech SMME Accelerator Programme, a dti initiative run by the NCPC-SA. FINALISTS AND THEIR OFFER|NGS

Winner

Runner up

Finalists

BREAKTHROUGH INNOVATION TRACK

ADAPTIVE TECHNOLOGY TRACK

ECO2PARTNERSHIP SA

STELLENBOSCH BIOMASS TECHNOLOGY

FINISHING TOUCH (PTY) LIMITED

AGAMA BIOGAS

GAIA POWER GROUP (PTY) LIMITED

ENDEN ENERGY PROJECTS

Minimising carbon, reducing waste and producing green electricity Email: jeanne@eco2sa.co.za Web: www.eco2sa.co.za

Inventors of energy-saving cooking appliances that dramatically reduce energy costs and carbon footprint Email: lmpetersen@telkomsa.net

Converting wave power into electricity Email: peter@gaiaspower.com Web: www.gaiaspower.com

ROLATRIX LIMITED (PTY) LIMITED

Converting waste coal into synthetic fuel and electricity Email: uzibum@gmail.com

Avoiding the landfill of paper-industry wastes by conversion to bio-ethanol Email: johann@sbmt.co.za Web: www.sbmt.co.za

Using a range of biogas digesters that convert waste into clean energy Email: greg@biogaspro.com Web: www.biogaspro.com

Making tired tyres in the sea work again Email: ematthis@emailbox.za.net

HEMPORIUM BUILDS

Using industrial hemp in innovative ways to create green jobs, eco-friendly buildings and renewable construction materials Email: tony@hemporium.com Web: www.hemporium.com

For more information please contact Limpho Malebo on tel +27(0)12 841 3314/2669 or email lmalebo@csir.co.za Web: www.ncpc.co.za

Rob Davies, Minister of Trade and Industry, with Breakthrough Technologies Track winners Prof. Tom Campbell and Jeanne L Rose

Dipuo Peters, Minister of Energy, with Prof. Johann Görgens of Stellenbosch Biomass Technologies, the winning company in the Adaptive Technologies Track

40 ESG SOUTH AFRICA

national-cleaner-production-advertorial.indd 2

2012/08/07 12:18 PM

DPS-DIRCO-advertorial.indd 1

2012/08/02 9:20 AM

THE DURBAN PLATFORM

DURBAN CONFERENCE DELIVERED A BREAKTHROUGH IN THE INTERNATIONAL COMMUNITY’S RESPONSE TO CLIMATE CHANGE.

UNFCCC Executive Secretary Christiana Figueres, COP17/CMP7 President Maite NkoanaMashabane and UN Secretary General Ban Ki-Moon

AFTER MONTHS OF PREPARATION AND A MARATHON TWO WEEKS OF NEGOTIATIONS that ended in the early morning hours of 11 December 2011, the United Nations (UN) Climate Change Conference or COP17/CMP7 came to an end at the International Convention Centre (ICC) in Durban. Parties thanked the COP17/CMP7 President, Minister of International Relations and Cooperation Maite NkoanaMashabane, for her leadership in guiding the conference to produce a positive outcome. This included the African delegation which also thanked South Africa for excellent conference logistical arrangements. The UN Framework Convention on Climate Change (UNFCCC) Executive Secretary Christiana Figueres said: “In honour of Nelson Mandela: It always seems impossible until it is done. And it is done!” Her words were echoed by Connie Hedegaard of the European Union (EU): “We have a roadmap that marks a breakthrough for the international

fight against climate change.” The United States’ chief negotiator Todd Stern said: “I think in the end it ended up quite well. The first time you will see developing countries agreeing, essentially, to be bound by a legal agreement.” Durban expectations There were two main tasks that the UN wanted the conference to accomplish. One related to building the institutions that would help support the developing countries response to climate change. The second pressing task for governments was to answer the question of how they would move forward together to achieve their agreed goal to limit the average global temperature rise to two degrees Celsius, and how to review progress towards that goal between 2013 and 2015. A decision on the future of the Kyoto Protocol was also a central part of the Durban outcome. The Kyoto Protocol is the only legally binding treaty the world presently has to combat climate change, and it is important that

“THE KYOTO PROTOCOL IS THE ONLY LEGALLY BINDING TREATY THE WORLD PRESENTLY HAS TO COMBAT CLIMATE CHANGE.” 42 ESG SOUTH AFRICA

DPS-DIRCO-advertorial.indd 2

2012/08/03 1:07 PM

ADVERTORIAL governments safeguard what they had worked on so long to agree and develop, and what has proven effective. The process During the first week of the conference negotiators worked on the technical aspect of the negotiations. The officials were joined by no fewer than 12 Heads of State and Government, as well as 130 ministers, during the HighLevel Segment which started on 6 December 2011. At the opening of the COP17/CMP High Level Segment President Jacob Zuma said: “We are agreed that this global challenge requires a global solution. However, different positions still prevail on some critical points. It is important that there is common ground on the elements that will remain critical in reaching any agreement. These are multilateralism, environmental integrity, common but differentiated responsibility and respective capabilities, equity, and honouring of all international commitments and undertakings made in the climate change process.” Also addressing the High-Level Segment, UN Secretary General Ban Ki-Moon warned that the world was in danger. “It is not an exaggeration to say that the future of our planet is at stake. Science is clear – we are at a point of no return; the world is looking at you for leadership.” He reminded delegates to be “realistic” about a breakthrough in Durban, citing a difficult financial climate currently facing world countries. The outcomes in Durban Highlighting the difficult process of reaching a credible and fair agreement between all 194 Parties of the UNFCCC, negotiations continued until the early hours of the morning on 11 December 2011, after the conference was initially scheduled to close on 9 December. COP17/CMP7 spokesperson Clayson Monyela comforted the tired and impatient media guarding the hallways. “All COPs that ever produced results went into overtime. COP17 will be remembered for having exceeded expectations. The deal is in the bag!” Speaking at 5:10am at the conclusion of the conference, Minister Nkoana-Mashabane thanked all Parties for their dedication, hard work and for the spirit of Ubuntu and compromise that prevailed during the conference. “I applaud you for what you have been able to accomplish here in Durban. You were prepared to show the required political will to move this process forward. It is without any doubt in my mind that we have ‘worked together to save tomorrow, today!’” The Minister said the decisions that had been taken were “truly historical”. Decisions reached at COP17/CMP7 Governments decided to adopt a universal legal agreement on climate change as soon as possible, but not later than 2015. Work will begin on this immediately under a new group called the Ad Hoc Working Group on the Durban Platform for Enhanced Action. Governments, including 35 industrialised countries, agreed to a second commitment period of the Kyoto Protocol from 1 January 2013. To achieve rapid clarity, parties to this second period will turn their economy-wide targets into quantified emission limitation or reduction

UN Secretary General Ban Ki-Moon and South African President Jacob Zuma

objectives and submit them for review by 1 May 2012. This is highly significant because the Kyoto Protocol’s accounting rules, mechanisms and markets all remain in action as effective tools to leverage global climate action and as models to inform future agreements. A significantly advanced framework for the reporting of emission reductions for both developed and developing countries was also agreed, taking into consideration the common but differentiated responsibilities of different countries. In addition to charting the way forward on reducing greenhouse gases in the global context, governments agreed to the full implementation of the package to support developing nations, agreed last year in Cancun, Mexico (COP16/CMP6). This means that urgent support for the developing world, especially for the poorest and most vulnerable to adapt to climate change, will also be launched on time. The package includes the Green Climate Fund, an Adaptation Committee designed to improve the coordination of adaptation actions on a global scale, and a Technology Mechanism, which are to become fully operational by the end of this year. While pledging to make progress in a number of areas, governments acknowledged the urgent concern that the current sum of pledges to cut emissions both from developed and developing countries was not high enough to keep the global average temperature rise below two degrees Celsius. They therefore decided that the UN Climate Change process shall increase ambition to act and will be led by the climate science in the Inter-Governmental Panel on Climate Change’s (IPCC) Fifth Assessment Report and the Global Review from 2013-2015. “While it is clear that these deadlines must be met, countries, citizens and businesses that have been behind the rising global wave of climate action can now push ahead confidently, knowing that Durban has lit up a broader highway to a low-emission, climate resilient future,” the UNFCCC said.

ESG SOUTH AFRICA 43

DPS-DIRCO-advertorial.indd 3

2012/08/02 9:19 AM

BLUE DROP ACHIEVER COMMITMENT, DEDICATION AND TEAM WORK, THE CITY OF CAPE TOWN’S RECIPE FOR BLUE DROP SUCCESS.

BACK ROW: Mjikisile Vulindlu (Head: Biological Sciences Laboratory – Scientific Services ), Arne Singels (Specialist: Bulk Water), Peter Flower (Branch Manager: Bulk Water), Mpharu Hloyi (Branch Manager: Scientific Services), Sarel Pieterse (Head: Water Laboratory – Scientific Services), and Alfred Moll (Head: Operational Logistics – Reticulation) FRONT ROW: David Allpass (Head: Bulk Water Operations), Raymond Swarts (Senior Professional Officer: Scientific Services), Douglas Kiewiet (Area Manager: Bulk Water Operations – North), and Vernon Marinus (Area Manager: Bulk Water Operations – West)

CITY OF CAPE TOWN The City of Cape Town has a very long and proud history of serving good quality drinking water to the citizens of the city, its neighbours and thousands of visitors annually. The announcement by the Department of Water Affairs (DWA) of its intended launch of the Regulatory Performance Management Service Unit’s Blue and Green Drop Certification Programme just over four years ago was openly welcomed and embraced by the City’s Water and Sanitation Department. It happened at a good time as it gave strategic direction to the issues of water quality and water safety in the water sector. It also presented the Water and Sanitation Department the opportunity to assess the programme in terms of its methodology, the impact on its current business practises and processes and on the required skills levels of the staff. This resulted in the Water and Sanitation Department formally commenting on the standards and criteria of the Blue Drop Certification Programme with the view of enhancing it. It was well received and the Department was commended by DWA for its input.

Water Quality Forum The Water Quality Forum has mandated representation from the relevant branches including the Bulk Water, Reticulation and Scientific Services branches. They represent the various disciplines within their branches that have an impact on the water quality management within the City ranging from engineers, technicians, operational managers, scientists and health practitioners. This involves ensuring that the city’s operational infrastructure is optimally managed and utilised to provide water of an exceptionally high quality to the consumers of Cape Town and other surrounding municipalities throughout the year. The quality and competence of staff is a strength that the city is proud of. The Blue Drop Certification Awards The Blue Drop Certification Awards are a testimony to how well the water supply system is run. This city has consistently managed to improve its Blue Drop scores over the past four years maintaining its position among the top 10 performers in South Africa.

44 ESG SOUTH AFRICA

ESG_advertorial_City of Cape Town.indd 2

2012/08/07 11:10 AM

ADVERTORIAL The city received the following awards: • The Platinum Award for having excelled in the Blue Drop Awards programme for four years in succession. The City is assessed on its entire integrated system and its score increased to 98.14 percent from 97.61 percent. This increase was in light of a significant increase in the standard applied in the Blue Drop Programme over the last three years. • An award for sixth place in the closely contended Top 10 Blue Drop Performers in SA. • The award for the ‘Best Performer’ in the Blue Drop Assessment Programme in the Western Cape Province. • A Silver Blue Drop Award as the Bulk Supplier from its Blackheath Water Scheme to areas of the Stellenbosch Local Municipality, which achieved Blue Drop status for the second successive year. • A Silver Blue Drop Award as the Bulk Supplier from its Faure Water Scheme to areas of the Stellenbosch Local Municipality, which achieved Blue Drop status for the second successive year. • A Blue Drop Award as the Bulk Supplier from its Wemmershoek Water Scheme to areas of the Stellenbosch and Drakenstein Local Municipalities, which achieved Blue Drop status. • A Blue Drop Award as the Bulk Supplier from its Voëlvlei Water Scheme to the Hermon area of Drakenstein Local Municipality, which achieved Blue Drop status. • Wemmershoek Water Treatment Plant received the award for the ‘Most Impressive’ Large Water Treatment Plant in the country. • The Manager of Scientific Services, Mpharu Hloyi, was the Runner-up to the Women’s Award. • The city also did exceptionally well in the RPMS (Regulatory Performance Management System) and was recognised for ‘Significant Contribution to the Enhancement of the RPMS Programme’ by means of the RPMS Appreciation Award. The Blue Drop Certification Report In the Blue Drop Certification Report for the 2011 Assessment year, the City of Cape Town received the following commendation from DWA: “The Department wishes to commend the City of Cape Town Metropolitan Municipality for being consistent in complying excellently with the regulatory requirements of the Blue Drop Certification Programme. The constant communication between the municipal officials and that of the department speaks of a remarkable dedication towards effective drinking water quality management. This would not only be to the benefit of the Cape Town community but also to that of Stellenbosch and Drakenstein Local Municipalities who are beneficiaries of the Metro’s bulk supply.” The lead inspector noted the following: “The City of Cape Town has again returned an impressive performance in this assessment cycle. The water quality team have again demonstrated their commitment to water quality excellence and have achieved the bulk of the goals set.” Water treatment plants This is no mean feat since there are many impacting factors on the day-to-day operations of the city water supply from its bulk storage, treatment and conveyance processes all the way to the reticulation of the high quality drinking water to its consumers. The city also receives water from three other dams owned by DWA located outside its municipal boundaries with the closest being 75 kilometres from the centre of Cape

Town. The combined storage capacity of the supply dams is 898,300Ml. There are ten water treatment plants with a total treatment capacity of 1,650Ml. The smallest treatment plant, Constantia Nek WTP, is also the oldest plant with a capacity of 3Ml/day and the newest plant, Faure WTP, has a capacity of 500Ml/day. Four of the larger plants have water turbines on the raw water supply pipelines that generate electricity sufficient for the operation of the plant.

“This city has consistently managed to improve its Blue Drop scores over the past four years maintaining its position among the top 10 performers in South Africa.” Bulk storage and conveyance system The city’s bulk storage and conveyance system of 605km of diameter pipelines as large as 2.4m diameter ensures that supply consistently meets the varying demand. The city’s 26 bulk storage reservoirs have a capacity of 2,740Ml strategically located to provide a sustained gravity supply into the reticulation system. The reticulation system comprises of 98 reservoirs and some 10,600km of distribution pipelines supplying the consumers. The City’s Water and Sanitation Department has a quality assurance regime that covers the entire cycle of water supply from the catchment to the consumer and this is managed by the Bulk Water, Reticulation and Scientific Services Branches. The quality of the drinking water is monitored operationally at the various stages of treatment and conveyance over a 24-hour period and the detailed analyses are conducted weekly, for compliance purposes, in terms of SANS 241 by the Scientific Services personnel at its laboratories, which is ISO 17025 accredited. Water Safety Plan To ensure adequate proactive risk management, the city has developed a Water Safety Plan that is referred to regularly. In support of the quality assurance regime, the department also has a Drinking Water Incident Management Protocol which covers both the bulk storage and conveyance system as well as the city’s reticulation network.

www.capetown.gov.za ESG SOUTH AFRICA 45

ESG_advertorial_City of Cape Town.indd 3

2012/08/07 11:11 AM

es.co.za

Cliffie Vraagom points behind him where his ‘gallery of honour’ will be built to accommodate the senior classes as a mark of their achievement at the school

FOUNDATION RECOGNISES ESSENTIAL ROLE OF SCHOOL HALLS IN EDUCATION Capacity to transform social and economic circumstances School halls play an essential role in successful holistic education. Used to full advantage, they have also proved to help integrate the school and surrounding inhabitants into a positive unified force that has a capacity to transform both social and economic circumstances in disadvantaged communities. This has been fully demonstrated over the past nearly nine years that the Archway Foundation, established by the 93-year-old residential housing developer in the Cape, Garden Cities, has been building school halls to try to alleviate the shortfall of 700 halls for over one million children in the province. The school halls are considered by educators to be so important in the lives of the children and the education they receive that they have become central to the daily activity at the schools where they have been built. One principal is even planning to use his hall to demonstrate the progress of children through school by allocating positions of seniority in the hall during assemblies. He will reserve the elevated gallery in his hall, that he is having specially built, to the matric pupils, as a mark of their seniority and respect in the school. Around 1 200 high school children attend Mr Cliffie Vraagom’s school, Diazville Secondary, in Saldanha, where he and his staff of 40 teachers have set an enormously high standard and the school’s results are exemplary. ‘There must always be a way of rewarding achievement, and there are some conventional means that include certificates and medals. But it struck me that the school’s greatest achievement was its acquisition of our Archway Foundation school hall, and this should in some way feature in the reflection of our learners’ progress through the school,’ he said. His ambition, ever since the hall was built and handed over in 2009, was to collect enough money to build a gallery level at the back of the hall, which could be used as audience seating during performances and school assemblies and then, also, as a much more personal measure of achievement for the senior pupils. As soon as the mezzanine gallery is completed, it will become the domain of the senior classes in the school. They will occupy the three levels on the gallery during assembly, while the rest of the school will be seated on the ground floor level. ‘Even on the main floor, seniority will be indicated by the position of the classes during assembly,’ says Mr Vraagom. John Matthews, CEO of Garden Cities and head of the Archway Foundation, said that Mr Vraagom’s initiative was another example of excellence in education. ‘Our recent research has shown that a school hall is acknowledged as primarily important to the successful holistic education of our children. Cliffie Vraagom entirely endorses that, and in so doing, has enhanced the function of his hall immeasurably. We applaud him and urge others to take just such a lateral view’. The Archway Foundation was established by the Board of the company at the instigation of John Matthews eight years ago. The Foundation already has valuable corporate collaborators and the WCED to help in the efforts to provide halls as fast as possible but each of the halls costs around R4 000 000 to build and the Archway is looking for participation from other corporates to help provide the buildings. ‘We cannot get the job done fast enough on our own, so we invite others to join us,’ says Matthews. Each contributor has full naming rights to the hall, and can use it to enhance their CSI programmes in the media and in their market place. Call John Matthews on 021 558 7181

smart cities program 9

ESG-2xadvertorial-greenhouse.indd 1

2012/07/05 9:25 AM

2012/08/03 12:49 PM

WATER

THE FUTURE OF WATER OF ALL OUR NATURAL SYSTEMS, AQUATIC ECOSYSTEMS ARE IN THE WORST SHAPE, AND ARE EXPERIENCING A RAPID LOSS OF FUNCTIONING. WETLANDS ARE ESSENTIAL N A WATER-SCARCE COUNTRY LIKE SOUTH AFRICA, YET AN ESTIMATED 50 PERCENT OF OUR WETLANDS HAVE BEEN DESTROYED OR CONVERTED. JOURNALIST AND SCIENCE WRITER LEONIE JOUBERT LOOKS AT THE FUTURE OF OUR MOST PRECIOUS RESOURCE. SOUTH AFRICA IS ALREADY A WATER-SCARCE COUNTRY AND WITHIN 15 YEARS all available water reserves will have been divvied up between various users: the natural environment, whose ‘ecological reserve’ is protected by law to maintain healthy ecosystem function; water for basic human need, also protected by law; and then all other business, industrial, agricultural, municipal and domestic needs. In spite of South Africa’s naturally semi-arid state, it’s not water scarcity that’s the problem, so much as access to clean water. Pollution from malfunctioning municipal

sewerage works and from leaking mines, fertiliser and soil flushing off farmlands, and invasive plant and animal species are degrading what water there is. Over-extraction by agriculture and industry further strain the existing supplies, while the growing economy is demanding more and more water from this limited and deteriorating supply. Meanwhile rising temperatures over the country are pinching off rainfall to some regions, sucking up greater amounts of moisture from soils and plants in many places, sowing longer and more intense droughts and compounding existing pressure on the country’s scarce water reserves. In light of this, the inextricable link between the environment, how sustainably it’s managed and the goings on in the DoE could not be more evident than in the case of toxic water bleeding from disused mines into aquifers, groundwater and surface water in the country’s historic mining regions, mostly in Gauteng and Mpumalanga.

Credits: Shutterstock

THE WATER UNDER THE WITWATERSRAND

South Africa’s recent history is interwoven with a glowing seam of precious metals and coal that have been dug from beneath the epidermis of our patch of Earth since the discovery of immense gold fields in the Witwatersrand area in 1886. But after over 120 years of scouring the bedrock of the Highveld for treasures and ancient fuels, there’s a series of abandoned holes and mineshafts in the ground, pits on the surface and artificial hills created by dumped mining waste, which are leaching highly acid water laced with a deadly cocktail of salts, heavy metals and sometimes even radioactive contamination into the surrounding environment. When rocks are splintered apart in the mining process, metal sulphides in the substrate are exposed to air and water, precipitating a reaction involving ‘extremophile’ bacteria – bacteria naturally occurring in the rock that are capable of tolerating inordinately harsh conditions. Fuelled by their exposure to oxygen, they break down the metal components, producing a highly acidic seepage.



“Such derelict mines will likely cost the taxpayer R1.46-billion.” ESG SOUTH AFRICA 47

water.indd 3

2012/08/03 4:15 PM

“This shows up the tension between keeping the energyintensive economy ticking over – where mining and particularly industry need large chunks of the country’s water, or are both responsible for polluting water – and meeting the environmental and human water needs in the country.” As groundwater and rainwater flush into these cavernous spaces, they pick up the acid and any heavy metal and salt residues. The water level rises over time, and, once it reaches the lip of the mine, begins to spill out (or ‘decant’), flushing a lethal concoction of poisonous effluent into rivers, wetlands, groundwater or nearby lands. Similar toxic run-off comes off the pit mines and mine dumps. A Council for Scientific and Industrial Research (CSIR) overview of the acid mine drainage (AMD) problem in South Africa quotes one of the most widely used statements on the matter: a 1987 report issued by the Unites States Environmental Protection Agency, which says, “problems related to mining waste may be rated as second only to global warming and stratospheric ozone depletion in terms of ecological risk. The release to the environment of mining waste can result in profound, generally irreversible destruction of ecosystems.”

The Klip River, which flows through Soweto, has 10 million people using it and has also been affected. A Department of Water Affairs (DWA) report states that ‘AMD discharge from the Witwatersrand basins currently accounts for only 5 percent of the volume of water in the Vaal River, [but] it accounts for 20 percent of the salinity that could include heavy metals’. Exposure to high radiation levels and other poisons in AMD-contaminated water can lead to cancers and to central nervous system and organ damage (particularly kidneys, liver and brain), and may cause birth defects among humans and animals. It can contaminate food crops and cause a build-up of salts in agricultural soil, thus undermining crop yields. The CSIR reports that landowners and agriculture downstream of leakage points are most vulnerable, particularly those who use groundwater, whether for domestic or economic purposes.

“Government has set standards for the quality of discharged water, but, according to the Durban University of Technology’s Professor Faizal Bux, failing infrastructure in many treatment plants, along with lack of human capacity, has resulted in many plants’ discharge water falling well below the required standard.”

THE ACID RISES

Government has known about the threat since the late 1950s, but the first acid mine decanting event happened in 2002 when an abandoned mine near Krugersdorp spilled over, destroying the life of nearby Robinson Lake. The pollution was radioactive enough to have the lake declared hazardous by the National Nuclear Regulator. But across the gold- and coalfields of Gauteng and Mpumalanga, which have the longest history of mining, abandoned mine shafts are filling up dangerously. Many other provinces with a more recent history of mining are facing a similar problem. Both the Vaal and Orange rivers have been touched by AMD at points along their tributaries, and these are rivers that feed 70 percent of the country’s economic engine. 48 ESG SOUTH AFRICA

water.indd 4

2012/08/03 4:21 PM

“The department regards toxic mine seepage as the ‘single biggest environmental threat’ in the country in the immediate future and that the ‘rise in the water table will have catastrophic consequences’ if not dealt with.” Gauteng’s Western Basin has been the focus of attention in this regard. However, it now appears as though AMD is rising to a near-critical level in the substrate beneath Johannesburg itself, in the Central Basin. The Mail & Guardian (M&G) reported in November 2010 that the DWA estimated this toxic water would contaminate groundwater and eventually start spilling out into the streets of Egoli sometime between early 2012 and 2014. But the department also believes that the water could be pumped out to prevent spillage from happening. The M&G goes on to say that the department regards toxic mine seepage as the ‘single biggest environmental threat’ in the country in the immediate future and that the ‘rise in the water table will have catastrophic consequences’ if not dealt with. Precisely how many people, how much agricultural land and what city spaces are vulnerable isn’t clear. Neither is the total cost of mopping up this delayed pollution associated with decades of mining.

Here’s an analogy of the situation Your’re in a water-scarce part of the world. You have a dam that’s running perilously low, a city of several million people needing water, but with a series of leaking pipes linking the two. Do you spend your money on building a new dam, or plugging up the leaks in your system first? International best practice regarding developing energy infrastructure would say you plug the leaks, but South Africa’s new energy policy doesn’t agree. It wants to build the dams. – Joubert on the power shortages.

WHO PAYS THE BILLS?

Ideally, the polluter should foot the massive bill for the cleanup. But where this involves derelict mines that have long been abandoned by the companies that have gone bust or no longer exist, it’s impossible to implement. Such derelict mines will likely cost the taxpayer R1.46-billion, according to a Department of Mineral Resources presentation to Parliament in September 2010 – a considerable expense with which to saddle the economy, when the profits from the mineral extraction went to private mining interests years or decades before. Many of those profits may even have gone offshore. This shows up the tension between keeping the energyintensive economy ticking over – where mining and particularly industry need large chunks of the country’s water, or are both responsible for polluting water – and meeting the environmental and human water needs in the country. Service delivery versus economic growth versus environmental health – it’s a tough one to juggle, particularly as demand starts to outstrip supply. The DWA’s 2009 Green Drop Report rang alarm bells about the extent of failing waste-water treatment plants around the country and how badly they were polluting rivers. All municipal sewage water goes from homes through pipes to waste-water treatment plants where it is cleaned of organic matter, pathogens, nutrients such as nitrates and phosphates, and any heavy metals that might be present in the water. Government has set standards for the quality of discharged water, but, according to the Durban University of Technology’s Professor Faizal Bux, failing infrastructure in many treatment plants, along with lack of human capacity, has resulted in many plants’ discharge water falling well below the required standard.

THIS COLLECTION, COMPILED AND EDITED BY MAX DU PREEZ, contains critical reflections on various aspects of contemporary South Africa. Each contributor is a significant voice in their area of commentary and is well positioned to explore the complexities of the topic under analysis. Available by Penguin Books and available at all good bookstores. Price R280

ESG SOUTH AFRICA 49

water.indd 5

2012/08/06 9:08 AM

“My vision for SAMSA is of an authority that plays its technical role as a centre of excellence to provide pollution control, safety, and environmental health, in a manner that will make it a world class player, but at the same time to aggressively pursue the economic agenda that SAMSA should have played from the beginning.” – Tsietsi Mokhele, SAMSA CEO

50 ESG SOUTH AFRICA

Samsa-new layout.indd 2

2012/08/06 2:23 PM

FEATURE

COMMANDING SA SEAS TRUE TRANSFORMATION GOES BEYOND TICKING BOXES ON AN OFFICIAL FORM TO REVITALISE AN ORGANISATION, GIVING IT A NEW SENSE OF PURPOSE AND REACHING GREATER HEIGHTS. COMMANDER TSIETSI MOKHELE’S LEADERSHIP OF THE SA MARITIME SAFETY AUTHORITY (SAMSA) HAS ENABLED THIS KIND OF TRANSFORMATION, JOCELYN NEWMARCH REPORTS. SOUTH AFRICA’S MARITIME SECTOR ACTS AS THE LIFEBLOOD OF THE ECONOMY, allowing imports and exports to move between foreign destinations and domestic markets. But in order to leverage this sector for economic growth, South Africa needs an industry body which can provide input into effective policy. SAMSA’s transformation has been driven by the realisation that the organisation has a larger role to play in the sector, to the benefit of all South Africans. When Mokhele was appointed CEO of SAMSA in 2008, the organisation had no systems and no policies. Its financial system had collapsed in 2005, leaving staff morale at an all-time low. Though it had successfully maintained South Africa’s technical excellence and compliance with international maritime laws, it had failed to interpret its role beyond compliance. Mokhele’s repositioning of SAMSA focused on the organisation’s role in enabling international trade to and from South Africa. After all, this is a country with a 3,000 km coastline and nine working ports. It’s estimated that 58 percent of South Africa’s GDP is due to international trade – mainly as a result of shipping. The maritime industry, as a driver of economic growth, has the potential to change the lives of ordinary South Africans. This was precisely the task SAMSA has been entrusted with. To enable the organisation to operate at optimum levels, all internal policies and systems critical to business processes were overhauled. More staff were taken on, to build capacity within the organisation, and all employees were motivated to assist in the turnaround. A new pride in their work began to show, with projects undertaken that were intended to position South Africa as a maritime centre of excellence. Since then, SAMSA has successfully completed several prestigious projects,

restoring trust in the authority and enabling it to play a stronger role in policymaking. Stakeholders have taken notice, with several awards recognising the organisation’s achievements. South Africa was one of the first countries within Africa to comply with an international requirement for long range ship identification and tracking technology. This allows the authority to monitor via satellite all activities up to 200 nautical miles which take place along South Africa’s coastline. Vessels within this range can be identified, tracked and communicated with, should this be necessary, improving the maritime rescue coordination centre’s incident response. Previously, ships could enter South African waters without SAMSA’s knowledge, posing a security and pollution threat. This problem has now been eliminated. SAMSA has since supported other African countries to plug into its system, extending the technology to the rest of the continent and improving safety throughout African waters. As a result, the International Maritime Organisation has confirmed South Africa as a regional search and rescue coordination centre for the SADC region. SAMSA has successfully completed a marine highway project, on behalf of Western Indian Ocean countries including Kenya, Mozambique, Mauritius, the Comores, Madagascar, the Seychelles, and South Africa. The project allowed this region of the ocean to be safely navigated by larger vessels shipping oil via the Cape, rather than the Suez Canal. With more than half the world’s crude oil supply shipped via this route, the project’s impact on maritime safety and pollution risks is far-reaching. Completed in 2011, the project is now being used as a blueprint for a similar project in the Mediterranean.

COMMANDER TSIETSI MOKHELE WON TOP BLACK PUBLIC SECTOR EXECUTIVE AT THE OLIVER EMPOWERMENT AWARDS AND SAMSA SA WON THE PUBLIC SERVICE AWARD.

ESG SOUTH AFRICA 51

Samsa-new layout.indd 3

2012/08/06 2:23 PM

MARINE TRANSPORTING SAMSA TELLS OF THEIR TRANSPORT POLICY AND THEIR VISION FOR SOUTH AFRICA’S TRANSPORT SYSTEM. THE SOUTH AFRICAN MARITIME SAFETY AUTHORITY (SAMSA) was established under the SAMSA Act 5 of 1998. It is the authority charged with the promotion of South Africa’s maritime interests even though South Africa has many maritime interests that cut across many ministerial and departmental jurisdictions. It falls under the ambit of the Department of Transport. These interests, rights and obligations are covered under international conventions to which South Africa is party, such as the United Nations Convention on the Law of the Seas (UNCLOS), the Safety of Life at Sea (SOLAS) and other maritime related conventions, which SAMSA must protect and promote. These international conventions are administered by the International Maritime Organisation (IMO) which is SAMSA’s major international stakeholder. SAMSA was established on 1 April 1998. Its formation resulted from the 1996 Transport Policy with the vision that South Africa’s transport must support government strategies for economic and social development while being environmentally and economically sustainable. The articulation of the maritime policy imperatives and goals are as follows: • Developing maritime awareness; • Assisting in the creation and fostering of an economic environment for the Maritime Transport Industry which will allow it to compete with other nations; • Contributing to the release of the full potential of the

maritime industry in South Africa and to the modernisation of the shipping administration; and • Ensuring fair labour practices such as employee rights, job creation and security with acceptable standards of employee health, welfare and safety in the maritime industry. As a result of articulations in the Transport Policy the founding legislation of SAMSA identified three core mandates of the entity as: • Ensuring safety of life and property at sea • Preventing and combating pollution from ships in the marine environment • Promoting South Africa’s maritime interests Other mandates that have been recently entrusted to SAMSA are as follows: • The lead executing and implementing agency of the Western Indian Ocean Marine Highway Project. The project’s development objective is to introduce modern aids to navigation systems in the SADC region, such as an electronically supported marine highway to guide ships through sensitive areas. • The Authority charged with administering the Merchant Shipping (National Small Vessel Safety) Regulations, 2007 as amended (‘the Regulations’). The Regulations extends SAMSA’s core mandate to include inland waterways (only waterways accessible to the public) within the Republic.

52 ESG SOUTH AFRICA

ESG_advertorial_Samsa DPS.indd 2

2012/08/06 2:25 PM

ADVERTORIAL

• The Authority charged with implementing and executing the Long Range Identification and Tracking of Ships (LRIT) along the South African Coastline. The longrange vessel monitoring system assists in securing South Africa’s coastal waters in the midst of the rising lawlessness in the high seas with the worrying surge in pirate attacks along the East African Coast.

SAMSA is governed by a Board made up of the CEO and six non-executive directors including a chairperson and a deputy chairperson. SAMSA’s CEO since 2008 is Commander Tsietsi Mokhele who spent most of his career in the maritime environment. He commenced his career in the navy and the National Ports Authority before joining SAMSA.

SAMSA’s local customers cut across a couple of industries with government being the major stakeholder. They are divided into four categories: • Government and public entities • Maritime industry and clients • Academic institutions • SAMSA staff SAMSA’s operations are structured by way of centres (divisions) which deliver through the following service clusters: • Corporate Governance and Institutional Positioning cluster • Maritime Sector Governance • Maritime Sector Compliance and Enforcement • Maritime Sector Development

www.samsa.org.za

ESG SOUTH AFRICA 53

ESG_advertorial_Samsa DPS.indd 3

2012/08/06 12:54 PM

At SAMSA we pride ourselves on young people who want to discover their true north. various career fields in the maritime industry. SAMSA, NURTURING CHAMPIONS IN For further information visit www.samsa.org.za

ESG_advertorial_Samsa DPS.indd 4

2012/08/06 12:53 PM

For th THE G

north. NS IN

nyalucommunications

For the past five years, SAMSA has been training young graduates in THE GLOBAL MARITIME INDUSTRY

ESG_advertorial_Samsa DPS.indd 5

2012/08/06 12:54 PM

CARS

THE HYBRID

WITH THE ERRATIC FLUCTUATIONS OF THE PETROL PRICE, AND THE EVEN HIGHER EXPENSE OF IT DAMAGING OUR ECO SYSTEM, CAR MANUFACTURERS DESIGNS OF THE HYBRID VARIETY ARE INCREASINGLY EXPANDING. SHANA GENEVA REPORTS

THE VOLVO V60 PLUG-IN HYBRID The new Volvo Hybrid V60 is said to be in a league of its own. The world’s first diesel Plug-in Hybrid is Volvo Car Corporation’s most technically advanced model ever – an electric car, hybrid car and muscle-car combined. At just the touch of a button you can choose which of your three cars you want to drive.

WHAT’S THE HYPE ABOUT THIS NEW MODEL REALLY ABOUT?

The interior of the Volvo V60 Plug-in Hybrid has black leather upholstery with contrasting stitching and inlays of blue-grey wood. Other distinctive interior details include a leathercovered steering wheel, specially designed mats and a gear lever knob with integrated indicator.

TOYOTA YARIS HYBRID SYNERGY DRIVE (HSD) Toyota has guaranteed its customers three things:

The production version of the Volvo V60 Plug-in Hybrid launched in just one colour – Electric Silver. Aero-designed 17-inch wheels, integrated exhaust tailpipes and a number of bodywork features in glossy black, such as the grille and the aerodynamic front spoiler distinguish the vehicle.

1. You will drastically cut down on your fuel consumption 2. You will radically reduce hazardous emissions (much lower particulate and nitrogen oxide emissions than a diesel, plus there’s no particulate filter to go wrong) 3. You will be helping to protect the environment

“Our plug-in hybrid has received considerable attention since it was unveiled at the 2011 Geneva Motor Show. Now we’re taking the next step by presenting the production model, which is graced with a distinctive profile featuring a spectacular silver colour, an exclusive interior and generous standard equipment,” says Stefan Jacoby, President and CEO of Volvo Car Corporation.

Featuring a new powertrain that is said to have been optimised for installation within the vehicle’s compact, the new Yaris HSD offers an extremely efficient packaging design that it promises to deliver without detriment to performance, passenger accommodation or load space.

According to Topgear.com, “No matter what the eco-ists say, there are cars out there like this Volvo V60 Plug-In Hybrid which mean we’ll still be driving ‘normal’ vehicles for plenty of years to come. Here is a proper family estate that’s capable of 0-62mph in 6.9secs, yet emits only 49g/km of CO2 and achieves roughly 150mpg. The V60 has two motors: a normal D5 2.4-litre diesel up front, plus a 69bhp electric motor mounted on the rear axle. Much like a normal hybrid. But you can also plug the V60’s beefy battery pack into the mains, and, when fully charged, drive it solely on electric at up to 60mph for 30 miles.” The Volvo Hybrid V60 will be released in South Africa in 2013.

WHY IS IT A HYBRID?

According to Toyota South Africa, the downsized hybrid system combines a substantially re-engineered 1.5 litre petrol engine with a lighter, more compact electric motor, transaxle, inverter and battery pack. It has low fuel consumption (average fuel consumption of just 3.8 l/100 km), low environmental impact, strong acceleration, great maneuverability and unique all-electric EV capabilities. Developed to become the most affordable full hybrid on the market, the new Yaris Hybrid was launched in June this year. Prices (including VAT) Yaris HSD XS - R223 800 Yaris HSD VR - R245 900

56 ESG SOUTH AFRICA

car review.indd 2

2012/08/07 9:45 AM

WASTE

WHEN IS WASTE REALLY WASTE?

Credits: Shutterstock

SOME COMPANIES AND THEIR VIEW ON WASTE POSE A CHALLENGE TO ALL OF US TO RE-EVALUATE OUR THINKING ABOUT WASTE. BONGANI COKA, CEO OF PRODUCTIVITY SA WAS ONE OF THE SPEAKERS AT THE SMART CITIES SUMMIT IN DURBAN. HE CHALLENGES OUR IDEAS OF WASTE.

ONE OF THE MANY OPTIONS AVAILABLE FOR HOW TO IMPROVE PRODUCTIVITY IS TO REDUCE WASTE, be it time or materials. Waste can occur at any stage in delivering a product or service to a customer. So each waste opportunity can be very costly, have a significant impact on productivity levels – on unit costs and so profit margins. Therefore prevention is better than cure. Studies have shown that companies could save millions of rands if they had strategically made efforts to reduce waste found in all aspects of their operations. A simple, proven technique known as ‘seven wastes’ developed by the famous Toyota Motor of Japan has been used by many companies all over the world to improve the productivity of their operations. Many refer to the technique as a ‘system to squeeze water from a towel’. This may sound very manufacturing-oriented, but over the years many service-sector companies have adapted the concept in their operations to help them improve productivity and profitability. In a restaurant the management found that there was waste in motions where employees had to search for items each time they served customers. The searching motion resulted in man hours wasted and also caused delays in serving customers. The company then introduced a visual



ESG SOUTH AFRICA 57

waste.indd 1

2012/08/06 12:23 PM

management system to arrange items in fixed locations. The standardisation of the system helped in eliminating motion waste, thereby allowing employees to serve more customers over the same period of time. In another case, the poor purchasing policy of an SME electrical contractor resulted in inventory waste, causing other issues like extra manpower needed to handle the stock of raw materials and extra warehousing space needed for storage. At the end of a project, the contractor needed to bring three lorry loads of leftover raw materials back to the warehouse. To address this problem, the company started to purchase its raw materials in smaller lots and reordering only when all raw materials were used up. With this new purchasing policy, the leftover materials at project sites are now reduced to just three small cardboard boxes each time. The improvement helped the company reduce its warehousing space by 50 percent, resulting in decreases in its property rental cost, manpower, and inventory carrying cost, achieving a total savings of sizeable money per year. The seven wastes technique is a good framework to help companies identify opportunities for elimination of waste in operations. The technique can be implemented either as a driver or as a tool. The former requires companies to set up a companywide organisation to manage the programme and to set waste elimination objectives for deployment throughout the organisation. When used as a tool, it complements other productivity improvement programmes like lean management, 5S, quality circles and green productivity. Both approaches require strong commitment and leadership from the top management and a structured implementation process so improvement initiatives can be coordinated and sustained. 5S OR GOOD HOUSEKEEPING 5S or good housekeeping involves the principle of waste elimination through workplace organisation. 5S was derived from the Japanese words seiri, seiton, seiso, seiketsu, and shitsuke. In English, they can be roughly translated as sort, set in order, clean, standardise, and sustain. The cornerstone of 5S is that untidy, cluttered work areas are not productive. As well as the physical implications of junk getting in everybody’s way and dirt compromising quality, we all are happier in a clean and tidy environment and hence more inclined to work hard with due care and attention. Seiri Sorting/Putting things in order. Remove/discard what is not needed so that there are fewer hazards and less clutter to interfere with work. Only keep what is needed. Seiton Orderliness/Proper Arrangement. Place things in such a way that they can be easily reached whenever they are needed. There must be a place for everything, and everything must be in its place. Seiso Clean/Cleanliness. Keep workplace and things clean and polished; no trash or dirt in the workplace. Seiketsu Standardize/Purity Maintain cleanliness after cleaning, consistently-perpetual cleaning. Such cleaning is part of every one’s work. Shitsuke Sustaining/discipline/commitment. Maintaining standards and keeping the facility in safe and efficient order day after day, year after year.

INTEGRATED WASTE MANAGEMENT INTEGRATED WASTE MANAGEMENT IS LAW. The Institute of Waste Management of Southern Africa recognises the importance of a broad hierarchy of preferred options that look at the waste stream in a cradle-to-cradle approach, namely:

• Waste avoidance: The reduction of waste at source. Through a deliberate policy of minimising the creation of waste within an industrial process not only reduces waste but also reduces the need for virgin resources to be exploited. • Resource recovery: The recovery or retrieving of recyclable materials out of the waste stream or the collection of recyclable materials before they enter the waste stream – for the purpose of re-use or recycling. • Re-use: The utilisation of a waste product without further transformation (e.g. the use of old newspapers as wrapping material or using old glass jars for storage). • Recycling: The manufacturing of a product that is made from waste materials. This can only be done by a business that is technically equipped to change the properties of a former waste material into a new product (e.g. making plastic pellets out of plastic waste, melting waste glass to make new bottles, melting beverage cans for new metal appliances). • Treatment: The processes of changing the physical and/or chemical properties of a waste product (by compaction, incineration, neutralisation of acids and bases and detoxification of poisons). • Disposal: The final and least desirable step in the hierarchy, involving filling land waste in a controlled manner.

JOB CREATION FROM WASTE

THERE HAS BEEN AN INCREASE IN RECYCLING ACROSS SOUTH AFRICA WHICH HAS LED TO JOB creation and economic growth – direct formal employment and informal employment. The government, through the Department of Water and Environment Affairs is seeking partnerships to create 300,000 new jobs in the green economy. Minister Edna Molewa has in one of her recent statements mentioned that: “Waste is wealth and we aim to prove that in line with our efforts to reduce, re-use and recycle waste, we could create job opportunities for all our young people.” While waste collection or management’s benefits may be on the environmental impact, it is job creation and the economy which benefits most. Enterprises that are not recycling companies can through their innovations to provide self-employment to people in the informal sector through involvement in the recycling industry. Those SMMEs act as ‘agents’ who uses recyclable products from homes, offices, retailers, wholesalers, factories, schools and many

58 ESG SOUTH AFRICA

waste.indd 2

2012/08/06 3:53 PM

other sources. Recyclables like paper, glass, plastic, metal and even vegetable remains can be sold or produce other material out of it. On the other hand individuals can collect waste and drop it off at a recycling agent or municipal buy back centre for a fee. Productivity SA has encountered several good examples in this regard such as:

WASTE LEADS TO JOB CREATION

• As a direct result of the waste material generated by Adcock Ingram, Riggs Recycling employs 25 people for sorting and grinding. • As a direct result of the waste material generated by AICC, Tongi-Yi Footwear employs 45 people for the manufacture of the footwear. • A further 40 customers have become entrepreneurs selling this footwear. • Product proudly bears the mark “MADE IN SOUTH AFRICA”. • Adcock Ingram, a manufacturer of pharmaceutical products, uses outsourced SMMEs to produce footwear out of their waste materials. • Granorpassi is a leading fruit processor (fruit juice producer) in South Africa. They extract essential oil from citrus fresh fruit peel which gets used by other producers for production of perfume. • Green Farm Nut Company is a processor of macadamias in South Africa. It extracts essential oil from hard solid shell of the macadamias which they use to produce macadamia oil (table oil). • Merensky is a provider of high quality timber to both local and international markets. It uses offcuts to manufacture furniture.

The examples from Adcock Ingram Critical Care (AICC) pose a challenge to all of us to re-evaluate our thinking about waste. We should not limit our thinking on the current products and services because we might as well discover future products and services from today’s waste. We need to pause and think of innovative ways of converting the ‘waste’ back into value before disposal because we might be missing out on a wonderful opportunity that mother earth and its citizens might be grateful of! These examples show that innovation could lead to ‘waste’ becoming essential in meeting needs of the customers, job creation and GDP growth.

* Productivity SA is a statutory body under the stewardship of the Department of Labour. The organisation discharges its responsibilities through long standing programmes that focus on research, providing information, training, and facilitation, advisory services, auditing and monitoring productivity issues.

ESG SOUTH AFRICA 59

waste.indd 3

2012/08/06 12:23 PM

Harnessing Natureâ&#x20AC;&#x2122;s Forces in Response to Climate Change Biodiversity underpins the ecosystems on which all life depends. Ecosystem-based adaptation provides a natural solution to many of the problems associated with climate change, and millions of natureâ&#x20AC;&#x2122;s creatures play an important role. Through ongoing investment in the science and policy of natural capital and ecological infrastructure in South Africa, the South African National Biodiversity Institute is helping to defend against climate change by proving the power of natural solutions and building the green economy.

SANBI. Leading the way for ecosystem-based adaptation science, policy and action.

www.sanbi.org

zuma-foreword.indd 1

SANBI Biodiversity for Life

2012/08/02 9:10 AM

ADVERTORIAL

CHAMPIONING ‘GREEN’ ENTERPRISES THE GREENHOUSE PROJECT (THE GHP) IS A REGISTERED SECTION 21 NOT-FOR-PROFIT COMPANY THAT RUNS THE GREENHOUSE PEOPLE’S ENVIRONMENT CENTRE (GHPEC) IN JOUBERT PARK, JOHANNESBURG. The centre is a walk-in demonstration, outreach and information hub for environmental sustainability and sustainable living practices on: permaculture landscaping and organic food and herb gardening; materials reclamation for reuse, recycling and composting; renewable energy and energy efficiency; rainwater harvesting, grey water treatment and water efficiency; green architecture and design, as well as green edu-tourism. The GHP support groups and individual persons who are champions of community-based green enterprise initiatives. Its goal is to run a self-sustaining demonstration, outreach and information centre that highlights environmental challenges while integrating practical solutions into everyday life by the year 2014. To this extent the GHPEC serves as an interface for business, government and the public to support communitybased ‘green’ enterprise initiatives and sustainable livelihoods that can be replicated within local thresholds.

“The GHP facilitates project organisation and enterprise development support for individuals and groups that champion communitybased ‘green’ enterprises.” The GHP facilitates project organisation and enterprise development support for individuals and groups that champion community-based ‘green’ enterprises and

supports their collaboration into a network of communitybased hubs for sustainable practices and related livelihoods. The GHP thrives on partnerships with individuals and groups that seek business and government partnerships to support emerging green enterprises. Anyone can support a community-based green enterprise initiative as a Frog (a Friend of the GreenHouse) by simply registering as: • A paid up and voting member of the GHP; • An associate professional, business or government agency partnering with a champion or demonstrating their green product or service at the GHPEC; • A self-motivated champion of a community-based green enterprise initiative; • An ambassador – someone who uses their good standing in the public to raise awareness of the work the GreenHouse Project is doing. Its flagship projects include designing and setting up the first organic rooftop garden in central Johannesburg; supporting a community-based fruit-tree propagation enterprise initiative; and completing the Earth Building and Conservatory. The GHP is currently piloting a communitybased materials reclamation programme for recycling and preparing for the launch of the Green Edu-tourism, and weekly Organic Farmers and Crafts Market in September.

www.greenhouse.org.za

ESG SOUTH AFRICA 61

ESG-2xadvertorial-greenhouse.indd 3

2012/08/03 1:06 PM

THE OLD SHANGHAI FIRECRACKER FACTORY 702796 702796 ESG_advertorial_UNDP Leaf Print Ad.indd new.indd 1 1

Remanufactured GenuineParts. Totally Committed to a greener environment. Visit www.mercedes-benz.co.za or call 0800 133 355 to locate your nearest dealership.

2012/08/03 2012/08/03 11:29 12:35 AM PM

ADVERTORIAL

TREADING LIGHTLY ON MOTHER EARTH

WHY GO GREEN? THE ANSWER IS SHORT AND SIMPLE – THE SURVIVAL OF HUMANKIND DEPENDS ON IT. THIS IS WHY MERCEDES-BENZ SOUTH AFRICA (MBSA) has already driven a long way down the road to sustainable mobility, entrenching responsible and ethical business practise into its everyday operations. MBSA is a division of Daimler AG, a global leader in automotive mobility solutions, committed to a comprehensive and integrated approach to sustainability. “We recognise that green business models cannot be implemented in silos, due to the fact that one activity has a ripple effect and impacts on so many other elements, both internal and external to our operations,” says CEO and president, Dr Martin Zimmermann. As a result, green awareness is inculcated into the mindset of every employee. MBSA brings its trademark MercedesBenz innovation into play to find new ways of maintaining its leadership in the industry, while minimising the impact on the environment. This starts right on the company’s doorstep. From the landscape surrounding its offices and production facility, to the technological advances that allows MBSA to deliver products that reduce the carbon footprint of their customers – every aspect is subjected to careful scrutiny for continuous improvement. “We cannot ensure a sustainable future without having effective environmental management systems in place to shape our operations,” Zimmermann says. The MBSA manufacturing plant in East London has become renowned for its systematic approach to producing cars of the best quality in the world. This same approach and focus on reducing the carbon footprint has brought many accolades and awards from green conscious organisations. Over the last three years, savings in kilowatts of gas and electricity, translates to a reduction of 28 015 tonnes or 32 percent of CO2. For the Mercedes-Benz brand, the road to zero emissions translates into a quest for green technologies. “In fact,” says Zimmermann, “in some aspects of automobility, we have designed green solutions that compel the rest of the world to follow suit.” This is true of the electric car concept which Daimler put through its paces last year when three B-Class F-Cell cars successfully completed a 125-day trip around the world, proving that this emission-free technology is suitable for everyday use. However, a whole new infrastructure would be needed for the large-scale move away from fossil-fuel powered vehicles to electric vehicles, for example in terms of public battery recharging facilities. In the short-term, this would require capital investment. However, over and above the gains to the environment, this could also spurn a whole new industry and create new jobs. A few world governments such as France, China, and Japan have already come to the party, offering tax rebates and subsidies to encourage citizens to lower their emissions.

“We are at the vanguard of the movement to erase the negative effects which industrialised living has had on our planet,” Zimmermann says, “because we believe that only by taking responsibility for our contribution can we advance in our quest for ethical business leadership that does not value profit at the expense of the environment.”

The Mercedes-Benz East London plant has one of the most picturesque settings of any manufacturing facility in South Africa, and the company places much emphasis on ensuring environmental sustainability

The B-Class F-Cell 125-day trip around the world challenge proved emission-free technology is suitable for everyday use

www.mercedes-benz.co.za

ESG SOUTH AFRICA 63

Mercedes-advertorial.indd 3

2012/08/03 12:39 PM

AVOIDING DISASTER. CAN ETHICAL INVESTING STOP DISASTERS? ENRON AND THE BP GULF OIL EXPLOSION ARE THE KIND OF UNEXPECTED EVENT THAT INVESTORS DREAD, BUT BY APPLYING ESG STANDARDS, THEY COULD BE AVOIDED. GAVIN DU VENAGE REPORTS. THE PRINCIPLES OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) indicators could warn investors of lurking dangers such as those that caused Enron to fall, or the NASDAQ to lose 75 percent of its value during the market collapse a few years ago. Investors have always sought a holy grail of data points that would flash a signal to indicate that something in a company’s activities could end up costing them money. Recent events such as the Barclays rate-rigging scandal and the BP 2010 Gulf oil spill are two examples of what can go wrong when investors are blindsided by corporate malpractice. “With all the investable shares around the globe – some 40,000 of them give or take – why not remove those prone to this kind of thing from your portfolio,” says Glenn Silverman, chief investment officer at Investment Solutions in Johannesburg, which has R200-billion in assets under management. ESG scores help avoid such wealth-destroying catastrophes by widening the information available about a company. They first piqued the interest of fund managers in the early part of this century when a wave of corporate governance related bankruptcies – like that of Enron – rolled over world markets. “If we don’t factor in these things when weighing up risk, an investment can go sour very badly when things go wrong,” says Silverman. “From a risk control perspective, it’s fundamental. And increasingly we think that from a return perspective it will show better returns over the long-term as well.” According to Reuters, fund managers with about $32-trillion in assets now submit themselves to ESG audits. Companies are increasingly being judged not only on their short-term ability to generate profits, but on the seeming intangibles that could come back to bite them in the rear sometime in the future. BP’s Gulf blowout a few years ago happened as the company was returning record profits to investors. As holders of BP scrip, shareholders were severely wounded by the payouts the oil company had to make; now reaching $20-billion in damage compensation.

64 ESG SOUTH AFRICA

finance.indd 2

2012/08/03 9:42 AM

FEATURE

Yet a small group of top fund managers – experts in joining the dots between a company’s environmental, social and governance record, together with its financial performance – bailed from the stock early and saved millions in losses for their investors. One such firm is Generation Investment Management, co-founded by former US presidential hopeful and greenie Al Gore, which has an investment approach that is 100 percent based on integrating ESG and traditional analysis. GIM’s approach to BP has already entered the lexicon of investment management lore, and is likely to fundamentally influence a coming generation of CEOs. Essentially, GIM placed millions of dollars with BP, because it was attracted by its stated aims in the earlier part of the decade to diversify away from fossil fuels. When the new CEO Tony Hayward stepped in to take over in 2007 however, things changed. GIM interviewed Hayward, and came away with the view that he wanted to depart from the course set by his predecessor and pursue fossil fuels exclusively. GIM sold its holdings. “It was more than luck that helped them avoid exposure,” says Mr Silverman, who met GIM’s executives while researching his firm’s own ESG strategy. “Their risk



Credits: Shutterstock

“Fund managers with about $32-trillion in assets now submit themselves to ESG audits.”

ESG SOUTH AFRICA 65

finance.indd 3

2012/08/03 9:42 AM

“One such firm is Generation Investment Management, co-founded by former US presidential hopeful and greenie Al Gore, which has an investment approach that is 100 percent based on integrating ESG and traditional analysis.”

JSE’S BIG GUNS

THE JSE’S BUILT-IN ESG DEFENCES PREPARE INVESTORS FOR STOCK MARKET CALAMITY AND ETHICAL GUIDELINES MEAN STOCK MARKET INVESTORS HAVE ANOTHER TOOL WITH WHICH TO EVALUATE RISK.

assessment told them that sooner or later, something was going to go wrong.” Another top fund manager, Walden Asset Management, bailed even sooner, after a pipeline explosion in 2005 killed 17 workers in Texas, and a leaking pipeline in Alaska pointed to a poor safety record that bordered on the reckless. It’s no surprise therefore that polluting – or potentially polluting – sectors such as energy tend to be avoided by ESG-savvy investors. For South African investors however, using ESG tools can be a little more complicated. The huge markets represented by the US, Asia and Europe present investors with a large choice. With so many listed companies available, avoiding higher risk sectors while maintaining above average returns is achievable. But if mining and energy were to be excluded from a portfolio of JSE Top 40 Companies – the country’s benchmark index – it would leave few options to choose from. Unlike global markets, South Africa has fewer than 400 listed companies and many of them focus on mining.



For most investors, the stock market is the hot zone where they get the chance to put money into a company they believe will create wealth for them; for the unwary however, it’s also a vale of tears. The JSE was one of the first markets in the world to include ESG factors in its reporting requirements, through its Social Responsibility Index (SRI). For the investor looking beyond making a quick buck, it is a complementary tool to assess the risk of a listed company. “A responsible investor should look at more than the short-term returns,” says Corli Le Roux, Head of the JSE SRI Index. “They should look at sector risks, for example, and see whether a company has the systems to deal with these.” One of the biggest difficulties worldwide in getting companies to embrace ESG, is the reluctance of investors – shareholders – to look beyond quarterly figures. Shareholders are notoriously promiscuous – they will buy into a company as long as it makes returns, and dump the stock as soon as something better presents itself. “Investors need to balance a company’s governance and other ESG factors with its financial performance,” says le Roux. “They need to look beyond the shortterm.” Obsession with short-term profits often blinds investors to long-term risks – by the time these manifest themselves, such as the Enron implosion, or the dotcom bubble burst, it is often too late to bail. Indeed, the high tech boom is a clear illustration of how companies launched themselves on the public while providing scant information on how they intended to deliver on their investors’ expectations. In doing so, they violated the ‘governance’ part of ESG vetting. Often their business plan consisted of little more than a catchy name, funky website and a couple of teenage computer nerds. As a result, billions of dollars in wealth evaporated when the bubble burst. The JSE, as the largest stock market in Africa by far, has worked to ensure that it provides investors with as much information as possible about the companies it hosts. It’s not a question of penalising companies for poor performance – it is about making sure that as much information as possible is available to investors, who can then embrace the risk with eyes wide open. “The JSE is not there to police compliance,” adds le Roux. “But we have found companies are comfortable with making this information available. It is about giving investors as much information as possible.”

Contact Corli le Roux at corlilr@jse.co.za

66 ESG SOUTH AFRICA

finance.indd 4

2012/08/03 1:19 PM

A CRYSTAL BALL TO DIVINE FUTURE RISK? FOR INSURERS TO ACCURATELY PUT VALUE ON POTENTIAL RISK, THEY MUST HAVE ALL THE FACTS.

In finance, risk is the possibility that the money you put in, won’t come back out again. Few industries are better at managing the unexpected than insurers, who must take an Eeyore-like view of the future – that whatever can go wrong, probably will. Insurers have therefore been among the first to adopt ESG principles, glad to have another tool with which to manage risk. And in South Africa, the country’s largest short-term insurer Santam, has moved ahead to implement the international benchmark of ESG, the UNEP FI, or to give it its full mouthful of a name, the UN Environmental Programme Finance Initiative. “These principles are of great significance to the global insurance industry,” says Ian Kirk, CEO of Santam. “They address systemic risk and change, and how to ensure that the sector remains sustainable in the face of profound change in, for example, socio-politics, climate, regulatory and public policy environments.” An example of how this works is Santam’s participation into a study in the Southern Cape, which has of late suffered higher than average losses caused by underlying environmental, social and governance issues. Fast-paced development and changing climate have damaged the region’s ‘bounce-back’ capacity, leaving it vulnerable to flooding as riverine systems are eroded and woodlands are cleared. In some areas, unscrupulous developers have built below long-established flood lines; in others, changing weather patterns have seen flood plains encroach on land once regarded as being above the water line. The study showed that with quick thinking and active management, ecological systems could be repaired and therefore the long-term risk related to climate change successfully reduced. ESG is more than an appeal to hipster investors. It has the ability to affect how risk is perceived, and influence how it is managed. Elsewhere in the world, much the same is happening; the Association of British Insurers has issued a directive which says that a company’s annual report should now also reflect ESG-related risks and opportunities which may have an impact on its long-term value. Corporations are not obliged to include such data in their reports or submit to audits, but failing to do so will be regarded as a risk factor and inevitably lead to higher premiums. The history of long-established insurers such as Lloyds of London, which effectively underwrote sea travel and therefore sponsored the colonial age, shows that when insurers set a trend, others are certain to follow. In time ESG will become a standard tool to evaluate the risks a company presents to investors, and allow them to price it accordingly. “The JSE is not there to police compliance,” adds le Roux. “But we have found companies are comfortable with making this information available. It is about giving investors as much information as possible.”

“It would be hard to build a portfolio in South Africa excluding commodities, and still be confident that it was balanced,” says Silverman. Still, this does not leave local investors without options. Corporations that are exposed to environmental, health and safety, and other risks can also be judged on their self-awareness of these issues. A mining firm suffering from higher than average underground deaths would also be faced with higher lost days of productivity. Such losses quickly find their way into the share price, as the company is punished by shareholders fleeing its stock and driving down the price. “It does happen that the bad news is priced in, and that management are doing something about it. Then that would be the time to look at a share like that.” Increasingly too, shareholders will make their voices heard around these issues. As the voters who can hold directors accountable, they have the power to nudge companies in the direction of ESG risk management. “As investors begin to judge how environmental issues affect their savings, company leadership will have to take these into account too,” Silverman adds. ESG is therefore more than a feel-good public relations exercise. It can provide investors with an early warning of bad judgment taken by corporate leaders that will, sooner or later, hit their bottom line. For the investor who must entrust a pension or life savings to a frighteningly complicated market, it may be the last line of defense.

“The history of longestablished insurers such as Lloyds of London, which effectively underwrote sea travel and therefore sponsored the colonial age, shows that when insurers set a trend, others are certain to follow.”

ESG SOUTH AFRICA 67

finance.indd 5

2012/08/03 1:19 PM

SOUTH AFRICA IS OPEN FOR CLEAN BUSINESS

GIVEN THAT COMMODITIES REMAIN THE DRIVING FORCE OF THE ECONOMY, AND THE MAIN SOURCE OF INTEREST FOR INVESTORS, KEEPING ETHICAL BOUNDARIES IN TACT IS A CHALLENGE. GAVIN DU VENAGE REPORTS ON A PROGRESSIVE BUSINESS POLICY THAT IS DRIVING GROWTH. THE END OF APARTHEID, almost 20 years ago brought South Africa in a full circle: a pariah state shunned by ethical investors, it embraced democracy and was once again open to the world for business. In the 1970s, the Sullivan Principles were drawn up as the international community’s response to shame corporate investors who chose to do business with the white regime. They also set the tone for future ethical investing, which resonates today in democratic South Africa, a country with one of the world’s most enlightened governing documents as its constitution. Achieving economic freedom along with political emancipation is no easy task. The black majority embraced democracy with the expectation that their newfound rights would go beyond the ballot box. A chicken in every pot, and a roof over every head was the cry often heard in those heady days after the first election. “Overcoming poverty is not a task of charity, it is an act of justice,” Nelson Mandela says in his autobiography, Long Walk To Freedom. Like slavery and apartheid, poverty is not natural. It is man-made and it can be overcome and eradicated by the actions of human beings.” To meet the lofty goals of sustainable development, South Africa has incorporated the over-arching ideals of environmental, social and governance (ESG) management. Given that commodities remain the driving force of the economy, and the main source of interest for investors, keeping ethical boundaries intact is a challenge. MINING can be a brutal, nasty business if left unchecked – as under apartheid, it frequently was. The industry today is a kinder, gentler version of its forebear. Even as mines go deeper into the earth, their safety record sets world standards. Communities now frequently have a direct stake in the profits, and environmental laws are fiercely protective of the surrounding countryside. Perhaps it’s no coincidence that many of the men and women who now sit in the boardrooms of the country’s mining houses were once revolutionaries themselves, with first-hand experience in battling for justice against corporate indifference. AGRICULTURE, which too was once the preserve of a privileged class of white farmers, is now rapidly being transformed by aggressive restitution policies, that serve to return blacks to the land once worked by their ancestors. The BANKING SECTOR is extremely well regulated by international standards, so much so that it largely escaped

the global credit crisis that rolled over much of the west in 2008. It has however helped to bankroll one of the world’s largest public housing projects; only China is now building more homes than South Africa. More than two-thirds of our population now live in their own houses; more are still being built. Jacob Zuma acknowledged that building homes will have a social impact that goes far beyond simply giving people a dry place to sleep. “We will proceed from the understanding that human

68 ESG SOUTH AFRICA

economy2.indd 2

2012/08/02 8:54 AM

COUNTRY PROFILE

“For investors, the transforming of South Africa is a huge opportunity. South Africa's openhearted embrace of sustainable investing is as much about what we’ve learnt from our past as its desire for a new future.”

settlement is not just about building houses,” he said in Parliament recently. “It is about transforming cities and towns and building cohesive, sustainable and caring communities with closer access to work and social amenities including sports and recreation facilities.” For INVESTORS, the transforming of South Africa is a huge opportunity. With houses, comes the need for kettles, stoves and refrigerators. Roads are being built and so buses, cars and public transport will follow. Hospitals and schools too, which now take up the bulk of the national budget, which will require bricks, mortar and electrical cabling in their construction. South Africa’s open-hearted embrace of sustainable investing is as much about what it learned from its past, as its desire for a new future.



“Even as mines go deeper into the earth, their safety record sets world standards.”

ESG SOUTH AFRICA 69

economy2.indd 3

2012/08/02 8:54 AM

There is more To prinT Than ink. When printing, there is more to consider than just the job itself. At Paarl Media, we realise that without natural resources there would be no printing. We are minimising our carbon footprint by eliminating emissions and recycling waste products. In fact, we were the first in Africa to achieve FSCâ&#x201E;˘ Chain of Custody (CoC) certification, an independent international verification, that the products printed can be traced back to their point of origin to responsible well-managed forestry, controlled and recycled sources. Printing responsibly with Paarl Media allows your work to be delivered with the least impact on the environment without any compromise on the quality.

Itâ&#x20AC;&#x2122;s in the detail.

Tel 021 550 2500 www.paarlmedia.co.za

6413_PM_GREEN zuma-foreword.inddAD.indd 1 1

2012/05/04 2012/08/02 8:07 9:08 AM

“South Africa is running one of the world’s largest housing and infrastructure projects.” WHAT ARE THE SOCIAL NEEDS?

ALMOST 11 MILLION PEOPLE NOW HAVE A DECENT ROOF OVER THEIR HEADS, WITH 2.3 MILLION FORMAL HOUSES HAVING BEEN BUILT. THIS PLACES THE COUNTRY SECOND TO CHINA, A COUNTRY WITH A VASTLY GREATER POPULATION, IN THE DELIVERY OF HOUSING FOR ITS PEOPLE. MORE ARE STILL TO COME. WHEN THEY LEAVE THEIR HOMES IN THE MORNING, SOUTH AFRICAN WORKERS head for jobs where they have full union representation. At times, labour rights inevitably clash with the expectations of investors. Zwelinzima Vavi, the indefatigable leader of the massive trade union federation Cosatu, says however that protecting hard-won rights is a basic principle that must be defended. “We are building a new society,” says Vavi, “meaning a non-racial, non-sexist, democratic and prosperous South Africa that won’t tolerate and justify current inequalities.” Creating a society where everyone has access to opportunity is not easy. It requires more than laws – it needs bricks and mortar. Recognising this, South Africa is running one of the world’s largest housing and infrastructure projects.

Almost 11 million people now have a decent roof over their heads, with 2.3 million formal houses having been built. This places the country second to China, a country with a vastly greater population, in the delivery of housing for its people. More are still to come. Most of these houses are privately owned, and funded directly through a government allowance. The spin-offs for investors are significant. These new households need everything from kettles to rugs to refrigerators. Within two years, the government hopes to reach its target of every single household having access to electricity. This will include the plush mansions that spring up along the coastline, to isolated rural hamlets where farmers can, for the first time ever, milk their goats in the early dawn by electric powered lamps. Perhaps the most visible sign that life has changed for ordinary South Africans is the curious lack of smog, which once hung like a dirty blanket over Johannesburg during the chilled winter months. Without electricity, most black residents of Soweto would use coal fires, for warmth, cooking and a feeble amount of light. Today those fires are all but gone and instead, the steady, unwinking glow of electric bulbs light up the previously gloomy nights above the city.



ESG SOUTH AFRICA 71

economy2.indd 5

2012/08/03 1:15 PM

Options and insights for people seeking practical steps to cleaner living in the 21st Century. SA's top green news and information publication Join our growing green community online Sign-up for our free e-mailer and get the hottest eco info SubSCribe tOday 1 year – 6 editiOnS fOr Only r175.00 (Vat inCl.)

w w w. s i m p l y g r e e n . c o . z a • info@simplygreen.co.za • 021 713 0018

zuma-foreword.indd 1

2012/08/02 9:09 AM

BALANCING THE NEEDS OF NATURE

A MASS-MOVE TO THE CITIES, RAPID INDUSTRIALISATION AND AN ACUTE ENERGY SHORTAGE THAT REQUIRES VAST INVESTMENT IN INFRASTRUCTURE CHALLENGE THE BEST OF INTENTIONS. ONE IN EVERY TEN PLANTS ON THE PLANET IS FOUND IN SOUTH AFRICA, as are seven percent of all the world’s birds, beasts and reptiles. This staggering natural bounty includes the Cape Floral Kingdom, a World Heritage site with more diversity of plants than any other place on earth, including the Amazon jungle. The country is also Africa’s largest economy, and herein lies the rub: how to balance the needs of nature and money. The country’s Constitution goes a long way to reconciling the two. Every person has a legal right to an environment which is not harmful to their health and well-being. The Constitution does not stop there, however – it also places a mandate on government to protect the environment, prevent pollution and ecological degradation, and to promote conservation. Meeting these requirements will not be easy. A mass-move to the cities, rapid industrialisation and an acute energy shortage that requires vast investment in infrastructure challenge the best of intentions. The legal requirement to protect the country’s natural resources insists that the environment be taken into account, which is why South Africa is now the continent’s leading investor in green technology. Clean energy, for instance, is an ongoing priority: “We want to ensure that the state, through its entities, invests R22-billion (US$3-billion) in green projects with a commitment of R3-billion towards local manufacturing in the next five years,” the energy minister Dipuo Peters said at a recent mineworkers union conference. The country’s first wind farm, on the West Coast, is already operational and more are to follow. Durban, on the East Coast and Africa’s largest container terminal, is exploring offshore wave power generation. Solar power hot water boilers are being installed in houses across the country, heavily subsidised by the state-owned energy company, Eskom.

A RESPONSIBLE APPROACH

SOUTH AFRICA HAS APPLIED A PIONEERING SPIRIT TAKING UP CORPORATE INVESTMENT CODES THAT ADDRESS SUSTAINABILITY. REGULATION 28, PASSED INTO LAW LAST YEAR, MAKES THE COUNTRY ONLY THE SECOND AFTER THE UNITED KINGDOM TO ADOPT A LEGALLY BINDING FRAMEWORK FOR RESPONSIBLE INVESTMENT. AFTER THE ENRON DEBACLE NEARLY A DECADE AGO, South Africa became one of the first countries to adopt the Sarbanes-Oxley set of accounting principles. The no-nonsense embrace of the Act, which set new global standards of corporate governance, skipped much of the debate that undermined its adoption in many western countries. Today, South Africa has applied a similar spirit taking up corporate investment codes that addresses sustainability. Regulation 28, passed into law last year, makes the country only the second after the United Kingdom to adopt a legally binding framework for responsible investment. “Ultimately, as a long-term investor, we believe that a responsible investment approach not only makes sound business sense, but that it’s also the right thing to do as a custodian of our collective long-term future,” says Jon Duncan, ESG analyst at Old Mutual Investment Group. The flood of people into the cities, and mounting pressure on scarce resources are risks that fund managers have to take into account when making long-term decisions. Even hard-nosed bankers, after all, want to leave the world a better place for their children. Regulation 28, and other standards being adopted by the financial industry, places responsible investing at the centre of the decision-making for pension funds and private equity managers. Investment analysts will now sift through not only financial data, but also interrogate a listed company’s own risk exposure to ESG issues. “These are to specifically challenge investors to think about the quality of the environment that their beneficiaries will inherit in 10 to 20 years’ time, as a result of investments being made now,” says Duncan. For offshore investors, the governance framework of South Africa is already in place and provides clear, transparent access to the Johannesburg Stock Exchange, home to a number of world industry leading corporations.

ESG SOUTH AFRICA 73

economy2.indd 7

2012/08/03 1:16 PM

OLD MUTUAL INVESTMENT GROUP SOUTH AFRICA’S ALTERNATIVE INVESTMENTS – DELIVERING SOCIAL AND INVESTMENT RETURNS addressed, with a primary focus on developing affordable housing and providing access to quality education through training teachers as educators and as entrepreneurs, as well as upgrading and building new school infrastructure. The knock-on effects of these initiatives are tangible economic development and job creation. OMIGSA’s philosophy is to partner with businesses who are experts with proven track records in their respective fields. This reduces investment risk for our investors, has a positive impact on investment returns through greater efficiency and lower costs, as well as allowing us to provide an end product that is affordable to the target market. FUTURE INITIATIVES Old Mutual Impact Fund for African Housing (OMIFAH) Based on the potency of the current housing development initiative (see overleaf), OMIGSA aims to launch an African low-income housing development fund in 2013.

“Education is the most powerful weapon which you can use to change the world.” Nelson Rholihlahla Mandela

A DYNAMIC AND INNOVATIVE BUSINESS WITHIN THE OLD MUTUAL INVESTMENT GROUP SA (OMIGSA), Alternative Investments is the largest alternative investment manager in South Africa. With assets under management in excess of R37-billion*, it manages investments in private equity, infrastructure, mezzanine debt and a range of development impact funds. The Alternative Investments is widely acknowledged for its contribution to the improvement of South Africa through the provision of affordable housing and access to quality education. In addition, they are active investors in road and rail infrastructure and alternative energy. DEVELOPMENT IMPACT FUNDS (DIFs) In the DIFs team, a division of OMIGSA Alternative Investments, the company shares the view that socially responsible investments (SRIs) are fundamental to national economic transformation, and defines SRIs as those that provide investors with commercial returns while delivering positive social and developmental impacts on scale. The company invests in assets/areas where gaps or backlogs in social infrastructure have not been adequately

• Target fund size: US$450-million • Sector: Unlisted property – housing • Target return: 12 percent a year (excl. costs, currency swaps and country-risk insurance) • Term: 15 years from closing • Commitment period: 5 years from closing • Investment vehicle: Limited Liability Partnership (South Africa) • Minimum commitment: US$50-million The fund aims to deliver commercial debt-type returns from investments in all forms of low-income housing (physical development, ownership of rental stock and end-user finance) across a selection of countries in subSaharan Africa (excluding South Africa). Investors are required to have a long-term view and the investment upside is expected through participation in the project equity. The investment mandate of the fund will also incorporate associated investments, such as local-level infrastructure, urban management support projects and facilitating infrastructure. As with our South Africanbased housing fund, we’ll partner will local developers and businesses in the management and delivery of these investments. If you are interested in investing in OMIFAH, please contact Christine Glover at +27 (0) 21 509 5977 or cglover@omigsa.com

*Dec 2011 74 ESG SOUTH AFRICA

ESG-4xadvertorial copy 2.indd 2

2012/08/02 9:17 AM

ADVERTORIAL

CURRENT INITIATIVES We currently have three active DIFs, with the R9.15 billion Housing Impact Fund of South Africa (HIFSA) as our flagship fund. See details below. 1. The Financial Sector Charter (FSC) Fund Inception date: October 2007 • Target: 3-month JIBAR +400 basis points • Key and founding investor: Old Mutual Life Assurance Company South Africa • Type: Closed-ended, unlisted and unrated • Term: Open-ended • Investment vehicle: Fund policy as defined in the Long Term Insurance Act, 1998 The fund provides accessible finance and facilities to disadvantaged people by investing in targeted sectors of the economy in terms of the Financial Sector Charter. The portfolio aims to make commercial investments which will have scale impact in the target area. 2. The Schools and Education Development Impact Fund (the Schools Fund) Inception date: December 2011 • Target: 3-month JIBAR + 430 basis points • Key and founding investor: Government Employees Pension Fund • Type: Open-ended (for 3 years); unlisted and unrated • Term: 17 years from closing • Commitment: 5 years • Investment vehicle: Vesting trust • Minimum investment: R100-million The fund offers investment capital for infrastructure expansion and partners with experienced local school operators who have a track record in delivering high-quality education. It invests in the education sector, with a focus on low-fee, independent schools, targeting households that earn less than R200 000 per annum. We are actively seeking investments for the Schools Fund. Please contact: Lala Steyn at +27 (0)21 509 2913 or lsteyn@omigsa.com 3. The Housing Impact Fund of South Africa: stimulating economic well-being The DIF team has disbursed more capital in the affordable housing market in the last two years than the country’s four largest banks combined, and is currently the most significant single provider of development funding in this market. The model developed by Old Mutual engenders a marketdriven, commercially viable approach to providing solutions for growing markets that harnesses profit for a greater good. Over the next eight to ten years, it is anticipated that these funds will facilitate the development of 75 475 new houses. ZAR1/US$8.27 @ 17 May 2012

A new home in an Alternative Investments / Urban Space development in Randfontein, Gauteng, stands ready for its owner

Key investors 1. Old Mutual Life Assurance Company SA 2. Public Investment Corporation (manager of public sector retirement funds; one the largest investment managers in Africa) 3. Development Bank of Southern Africa (mandated to promote economic development and growth) The context: South Africa’s housing challenge Lack of affordable housing has enormous negative socio-economic consequences. It limits opportunities for previously disadvantaged, upwardly mobile households to benefit from the potential financial rewards of owning a home. By maintaining the current status quo, the unsustainable level of wealth inequality is unlikely to decline. The South African government’s housing efforts target households with a monthly income of ≤ R3,500 (US$423+). On the other hand, private sector housing delivery tends to focus on the highest earning 10 percent of households – those earning upwards of R20,000 (US$2,418+) a month. There is therefore a wide gap occupied by households who earn too much to qualify for state assistance, but too little to afford private-sector built units. Fund details • Inception date: October 2010 • Investment targets: 3-month JIBAR +400 basis points • Type of fund: Closed-ended, unlisted and unrated • Minimum investment: R200-million • Term: 15 years from closing • Commitment: 4 years from closing • Investment vehicle: Insurance policy Launched in 2010, the fund aims to fill this significant housing gap and focuses primarily on residential households earning between R3,500 and R16,000 (between US$423 and US$1,935+) per month. Our focus Continues on overleaf



ESG SOUTH AFRICA 75

ESG-4xadvertorial copy 2.indd 3

2012/08/02 9:17 AM

partners, Mayibuye Finance, was granted a loan facility of R457-million to provide home loans to borrowers who are unable to access finance from other lenders. Within three years Mayibuye had originated 1,800 mortgages and 24,000 unsecured loans. Rentals: We partner with suitable operators who acquire and develop rental stock to provide rental and student accommodation in SA’s urban environment, providing a much-needed service in this segment while helping to revive decaying inner cities. In addition to inner-city rentals, there is a focus on providing student accommodation to those students falling into OMIGSA’s ‘affordable’ segment. Currently, accommodation is provided to approximately 4,000 students, mainly in Johannesburg, Durban, Pretoria and Cape Town.

Excited homeowners receive the keys to their new house in Randfontein, Gauteng

on affordable housing is therefore not only a commercial response to a real need, but a strategic response to a national priority. Real impact: making a difference one house at a time Research indicates the high impact of owning quality housing on those from previously impoverished circumstances. In a recent survey in one of our new developments, Karino Lifestyle Estate, the overwhelming majority of households felt their lives have improved in terms of safety and access to sanitation and running water. In addition, 87 percent of homeowners have invested in home improvements since moving into their homes. Progress is being made House sales: Urban Space Housing is a joint venture between HIFSA and housing developer Probuild and its sister marketing company Renprop. Old Mutual has approved funding of R721.5-million for the development of 19,996 housing units in eight mixed-income projects over the next five years. End-user finance: Aside from the creation of new stock, approximately 27 percent of the funds are allocated towards improving access to end-user housing finance, including unsecured housing finance and mortgages. This is achieved by providing funding to micro lenders with sustainable models. In 2008 one of our end-user finance

Economic effects While affordable housing is the primary focus of our fund, the economic benefits generated by the construction process are considerable. Many of the projects are still works in progress, rendering total project figures a projection. The tables below are taken from an independent report, conducted by Urban-Econ Development Economists. Capital expenditure (Capex) 2011 (actual)

Total construction period (ends 2018)

Production*

R8.2m

R28bn

Gross geographical product (GGP)*

R2.6m

R9.5m

Jobs created

17,662

64,100

Capital expenditure (Capex) 2011 (actual)

Total construction period (ends 2018)

Production*

R1.4bn

R5.1bn

Gross geographical product (GGP)*

R1.4bn

R2bn

Jobs created

3,591

14,200

* At 2011 prices

In conclusion OMIGSA funds are a unique example of economicallysustainable, developmentally-focused investing. Affordable housing and quality education have a significant social impact and, at the same time, provide an opportunity to generate market-related returns.

Old Mutual Investment Group (South Africa) (Pty) Ltd is a licensed financial services provider, FSP 604, approved by the Registrar of Financial Services Providers www.fsb.co.za to provide intermediary services and advice in terms of the Financial Advisory and Intermediary Services Act 37 of 2002. Reg. No 1993/003023/07. These products are sold subject to terms and conditions. Refer to Alternative Investments at www.omigsa.com

76 ESG SOUTH AFRICA

ESG-4xadvertorial copy 2.indd 4

2012/08/02 9:17 AM

10001001

10001001JB

UNDERLYING ASSETS. UPLIFTING RETURNS. Imagine a fund that is as kind to your community and environment, as it is to your investment returns. The IDEAS* Managed Fund – established in 1999 – holds true to this ideal. Not only has it become the largest private infrastructure equity investor in the country, uplifting the broader community through economic development, but it has also produced strong returns for its investors. In fact, it has produced benchmark-beating returns** since inception. And with extensive investments into infrastructure assets and renewable energy throughout South Africa, it’s no wonder. After all, long-term, sustainable investments mean long-term, sustainable returns. For more information contact Sean Friend, Fund Manager, IDEAS Managed Fund on (011) 217 1685 or sfriend@omigsa.com, or visit www.omigsa.com/alternative *The Infrastructure, Developmental and Environmental Assets Managed Fund **Benchmark: CPI+7% p.a. over a 36-month rolling period IDEAS Managed Fund is managed by Old Mutual Investment Group (South Africa) (Pty) Ltd. Alternative Investments

The IDEAS Managed Fund is a product of Setsing Financial Services (Pty) Ltd. Setsing Financial Services (Pty) Ltd is a licensed financial services provider, FSP 4262, approved by the Registrar of Financial Services Providers (www.fsb.co.za) to provide advice in terms of the Financial Advisory and Intermediary Services Act 37 of 2002. The IDEAS Managed Fund is sold through an insurance policy underwritten by Old Mutual Life Assurance Company (South Africa) Ltd, which is a licensed financial services provider in terms of the FAIS Act, FSP 703. Asset management is performed by the Old Mutual Investment Group (South Africa) (Pty) Limited (OMIGSA). OMIGSA is a 35% shareholder in Setsing Financial Services. OMIGSA is a licensed financial services provider, FSP 604, approved by the Financial Services Board (www.fsb.co.za) to provide intermediary services and advice in terms of the Financial Advisory and Intermediary Services Act 37 of 2002. Reg No 1993/003023/07. All employees of OMIGSA are remunerated with salaries and standard short-term and long-term incentives. No commission or incentives are paid by OMIGSA to any persons. All inter-group transactions are done on an arms lengths basis. OMIGSA is a wholly owned subsidiary of Old Mutual (South Africa) Limited (OMSA).OMSA is a member of Association for Savings and Investments SA. The rights and obligations of the investor are set out in the relevant policy contract. Market fluctuations and changes in rates of exchange or taxation may have an effect on the value, price or income of investments. Since the performance of financial markets fluctuates, an investor may not get back the full amount invested. Past performance is not necessarily a guide to future investment performance.

ESG-4xadvertorial copy 2.indd 5 10001001JB 276x210.indd 1

2012/08/02 9:17 AM 2012/05/22 11:54 AM

Investing responsibly for Investing for future: In the age of climate change governments and companies are voluntarily committing themselves to local and international disclosure about what they are doing to not only address environmental concerns, but also social and governance issues before investing and making decisions on investment activities. This is known as responsible investment. In South Africa, Government Employees’ Pension Fund (GEPF) has developed and adopted policies outlining the Fund’s approach to both responsible and developmental investment across its approximately US$130-billion portfolio. The changes that have seen South African investors increasingly required to pay attention to environmental, social and

governance (ESG) issues have been brought about by amendments to Regulation 28 of the Pension Funds Act, voluntary investor codes such as the UN-backed Principles for Responsible Investment (PRI), and the launch of the Code for Responsible Investing in South Africa (Crisa). These developments are a call to action for pension fund trustees and their service providers to align the fund’s investment policy, strategy and reporting frameworks to the new legislation and non-mandatory market-based investor codes, says Adrian Bertrand, ESG manager for the GEPF. The World Wide Fund for Nature, in a discussion paper on how to accelerate South Africa’s transformation towards a more sustainable and equitable economic future

concluded that there was no doubt that sustainable investment “is no longer just an academic exercise”, integration of ESG factors into investment decisions remained a work-in-progress.

Adria n Bert ra Mana ger fo nd, ESG r the G EPF.

The GEPF is a leader in responsible investment in South Africa, and is setting the example for other institutional investors, particularly pension funds, to follow suite in a new approach to investment analysis by including ESG factors into investment decision making and ownership practices.

Who’s Government Employees’ Pension Fund? • The largest pension fund in Africa; • One of the 10 largest pension funds in the world; • A defined benefits fund underwritten by South African government and governed by a board of trustees; • The GEPF was established following proclamation of the Government Employees Pension Law of 1996; • By far the most powerful investor in the South African economy with significant holdings in South African government issued bonds, including more than 50% of the government inﬂation-linked bond portfolio, corporate bonds, listed equity, including 10% of the Johannesburg Stock Exchange (JSE) All Share Index, as well as unlisted equity, and property; • The GEPF Portfolio of Investments equal a third of South Africa’s GDP; • The GEPF’s Developmental Investment Portfolio is limited to 5% of the GEPF’s total investment portfolio.

GEPF has (as at March 31 2012) • 1.242 million contributing members • 345 000 pensioners and beneﬁciaries • Net assets of approximately US$130 billion GEPF members include soldiers, policemen and women, teachers, social workers, nurses, doctors, teachers, school principals, clerks, directors-general and all other employees in the South African public service. Important: Any constraints on South Africa’s ability to grow its economy will have a similar impact on GEPF. GEPF is not a charity, donor, patient capital investor, DFI, or government.

GEPF-4pages.indd 2

GEPF board of trustees believes that: Savings are not to be given away or put at higher risk without commensurate reward. Any additional risk should be compensated by additional returns, as the Fund has no intention of mis-pricing risk at the expense of its members and pensioners. Which international initiatives have we signed as a supporting investor? The UN-backed Principles for Responsible Investment (PRI) – and is one of more than 1,000 investors who have signed up and who collectively represent in excess US$30-trillion in assets under management. The Carbon Disclosure Project, an independent non-profit organization holding the largest database of primary corporate climate change information in the world.

We have also signed the 2011 Global Investor Statement on Climate Change which is to advocate for investment grade climate change and energy policies at the national and international level. Bodies that form part of the 2011 Global Investor Statement on Climate Change include the Institutional Investors Group on Climate Change (IIGCC) and the United Nations Environment Programme Finance Initiative (UNEP FI).

2012/06/08 4:49 PM

a sustainable future “GEPF has a duty to set an example to other investors to support developmental investment opportunities.” – Arthur Moloto, Chairman of GEPF Board of Trustees

What is responsible investment? Responsible investment involves understanding and managing the risks and opportunities linked to environmental, social and governance (ESG) issues. The range of techniques for being a responsible investor is developing rapidly. They include: • Conducting new types of research into ESG issues and incorporating these findings into investment decisions across asset classes; • Engaging in dialogue with companies to encourage good ESG management; • Reflecting ESG factors in voting decisions; and • Requiring service providers and external investment managers to demonstrate their own capability in these new areas.

Clim ate impa change a ct is nd it s the n one umb threa e r t to S Afric outh a’s s deve usta inab lo le grow pment, e cono th an m d qu ic ality of lif e.

The RI policy sets out GEPF’s intention to integrate environmental, social and governance (ESG) issues in all investment decisions and ownership practices. The RI policy is a macro-level policy that touches on the entire portfolio and every investment decision. The UN-backed Principles for Responsible Investment (PRI) has become the leading network for investors to learn and collaborate in order to fulfill their commitments to responsible ownership and long-term, sustainable returns. Pension funds, insurance companies, sovereign and development funds, investment managers and service providers make up the global PRI network. The goal is to grow investor interest in environmental, social and corporate governance (ESG) issues, share best practice and support signatories in their fulfilment of the six PRI Principles. The UN-backed Principles have a more important role to play in the way governments and companies do business in future. According to Dr Wolfgang Engshuber, Chair of the UN-backed PRI’s foreword in the PRI Initiative ‘s 2011 annual report, it is clearer now than ever before that effective risk management and corporate responsibility are not only vital in terms of individual investments, but also critical to the stability and health of the financial system as a whole.

UN-ba cked Princ Inves iples tmen for Re t (PRI spons ) 1

ible . We w ill in and de corporate E SG iss cision-m ues into aking investm proces 2. We ses. ent an will be alysis a ctive o our ow wners nership and in policie corpo s and 3. We practic rate ESG iss will se es. ues into e k app entities in whic ropriate disc losure h we in on ESG vest. 4. We issues will p by the Princip romote acce ptance les wit hin the and im investm p 5. We ent ind lementation will wo of the ustry. rk toge implem ther to enting e n h a the Pri nce ou nciple r effec s. 6. We tivenes will ea s in implem ch report o n enting our ac the Pri tivities nciple and pro s. gress toward s

Toll Free Number: 0800 117 669 | E-mail: enquiries@gepf.co.za www.gepf.co.za

GEPF-4pages.indd 3

2012/06/08 4:50 PM

What is Crisa?

The Code for Responsible Investing in

South Africa (Crisa), was launched in July 2011. At the heart of Crisa is the recognition of the importance of integrating sustainability issues, including ESG, into long-term investment strategies. Crisa applies to institutional investors such as pension funds and insurance companies as the owners of assets, and their service providers including asset managers and consultants. Crisa aims to put in place the checks and balances needed to make the King III voluntary governance framework in South Africa successful. Together with the King Report, Crisa seeks to encourage best practice conduct by both shareholders and companies.

Crisa has been endorsed by: • the Institute of Directors in Southern Africa (IoD)

GEPF’s developmental investment (DI) policy: The purpose of the DI policy is to earn good returns for members and pensioners while supporting positive, long-term economic, social and environmental outcomes for South Africa. Commitment to invest 5% of GEPF’s portfolio in DI’s and in assets with positive developmental impact, where there is a need for funding, and where appropriate risk-adjusted returns can be earned. Actively investing in return-seeking, sound investments in: • The construction, improvement, and replacement of the economic and infrastructural framework of South Africa, which not only enables the economy to grow, and to be more competitive, but which improves the lives and prospects of South African citizens. • Firms, funds, and projects that improve long-term environmental

• the Principal Officers Association (POA) • the Association for Savings and Investment South Africa (ASISA) • the Financial Services Board (FSB) • the Johannesburg Stock Exchange (JSE) Crisa’s five key principles: 1. An institutional investor should incorporate sustainability considerations, including environmental, social and governance, into its investment analysis and investment activities as part of the delivery of superior risk-adjusted returns to the ultimate beneficiaries. 2. An institutional investor should demonstrate its acceptance of ownership responsibilities in its investment arrangements and investment activities.

sustainability in South Africa, that mitigate against and allow adaptation to climate change, and that foster renewable energy, green buildings, energy efficiency, recycling, and clean technology. • Job creation and new enterprise including small and medium sized enterprises, especially those with high positive social or environmental impact; in smaller cap’ stock exchanges; in sectors in which enterprise growth and the creation of high numbers of new jobs is likely; and in support of broad-based black economic empowerment. GEPF’s commitment to a DI policy is informed by the belief that: Developmental investments suit the investment profile of GEPF. These investments provide large-scale and long-term investment opportunities that are usually not correlated with listed markets, and as such act as an excellent diversifier for the overall GEPF portfolio. Developmental investments are

w for a to gro th Afric u pital o a S c r , “Fo eration n e g t x de in the ne t be ma nt mus e , in re tm s tu e inv struc ic infra in a , re tu econom c u infrastr and in social nomy, o c e r e bs.” green jo f g more creatin irman o a h C , to lo o M s r e Truste – Arthu oard of GEPF B

Arthur Mo loto, Chair ma the GEPF Board of Tru n of stees.

3. Where appropriate, institutional investors should consider a collaborative approach to promote acceptance and implementation of the principles of Crisa and other codes and standards applicable to institutional investors. 4. An institutional investor should recognise the circumstances and relationships that hold a potential for conflicts of interest and should proactively manage these when they occur. 5. Institutional investors should be transparent about the content of their policies, how the policies are implemented and how Crisa is applied to enable stakeholders to make informed assessments.

sound investments: This means that investments in areas where there is an economic need have been shown to generate impressive returns, to compensate investors for both speciﬁc and liquidity risk, and are not to be equated in any way with subpar investments. Developmental investment is in the long-term interests of GEPF’s members and pensioners and their families. How does developmental investment work in terms of responsible investment? GEPF’s DI policy is a subset of GEPF’s RI policy. This means it focuses on positive, targeted investments that contribute actively to better social, environmental and economic outcomes in South Africa. The responsibility for implementation of the DI policy rests with the Board of Trustees.

nds ema ew d es n s alike to c la ie tp a tha compan a better w er and mes a ne out s o r c is o e t s ab b “This th inves orld y wa ofits. a w d o r e on b e that th er, yeste more pr oday r ensu Rememb ofits and having. T r . p h e rt ent in plac , profits, ts wo onm ocial ts profi he envir s t u u profi o bo t d ab or t it’s a y it’s ing f oo Toda bout car te. Today about g it’s a e opera oday it’s ce.” an dt hw of whic vance an e govern ’s Head a PF Cris orat rele E p d r G n o , a c nt arial ipha l u t O c A hn r. John Oliph – Jo ents and ee Chai an of Investm t, GEPF’s Head en mitt stm m and Crisa ts and Actuarial o Inve C Committe e Chair.

GEPF-4pages.indd 4

2012/06/08 4:50 PM

• Investment in job creation, new enterprises and broad-based black economic empowerment.

predominantly passive investment strategy enhances this vulnerability.” We commit to taking action on ESG issues in a manner that will deliver longterm investment performance across our entire portfolio. DI will not only shelter the GEPF from future worldwide financial crises, but also ensure greater diversification and longterm returns. Our allocation of 5% of the overall GEPF portfolio towards implementation of this policy is our clearest commitment towards investing in a way that will beneﬁt our members and pensioners in the long-term, while at the same time impacting positively towards addressing some of the challenges that face our country, continent and the world at large. Our commitment to this policy is a bold step towards investing in a more sustainable future.

Why is it important? The GEPF believes that a strategy to assimilate ESG issues and thereby promote the long-term value of the GEPF’s investments is in the interests of its members. This is because investment performance influences the GEPF’s ability to grant pension increases, improve benefits and maintain a stable contribution rate. “We believe that the GEPF’s investments are vulnerable, to varying degrees, to ESG risks across specific investments, sectors and asset classes, and that the GEPF’s long-term, broadly diversified and

How have we made responsible investment a reality? As a very large investor in the South African economy, GEPF can influence companies towards better ESG behaviour and disclosure by making it clearly understood that these issues are considered to varying degrees in all investment decisions. This pushes companies to better manage and think more actively on these issues. The GEPF and its principal asset manager, the South African governmentowned Public Investment Corporation (PIC), have developed a corporate governance rating matrix in conjunction

The DI policy rests on four pillars: • Investment in critical economic infrastructure for energy, commuter transport, water, broadband connectivity, liquid fuels and logistics; • Investment in social infrastructure in the form of affordable housing, education, and healthcare; • Investment in a sustainable future (greener economy) in the form of renewable energy; energy efficiency, storage of energy, clean technology, environmentally friendly construction, recycling and green ﬁrms, green buildings and conservation; and

with the Centre for Corporate Governance in Africa, a Centre within the University of Stellenbosch Business School which rates the JSE Top 100 companies on ESG criteria. Poor performing companies as evaluated against the matrix are engaged with by both GEPF and PIC management. In terms of addressing climate change, the GEPF engages companies on sustainable business practices including targets and management incentives to reduce electricity usage, GHG emissions etc. What do we invest in? • Equities • Fixed income • Properties • Isibaya Fund • Pan African Infrastructure Development Fund (PAIDF) The GEPF property portfolio includes investments in retail, corporate, industrial, specialized and residential properties across South Africa. Recently, the GEPF bought the V&A Waterfront, a flagship retail property in Cape Town in a 50-50 partnership with Growthpoint Properties, bringing one of South Africa’s most valuable commercial properties back into South African hands. The GEPF also has other strategic investments such as a 20% share in the Airports Company of South Africa (ACSA). The Isibaya Fund invests in black economic empowerment and infrastructure development projects that help to create jobs, relieve poverty and transform the economy.

Toll Free Number: 0800 117 669 | E-mail: enquiries@gepf.co.za www.gepf.co.za

GEPF-4pages.indd 5

2012/06/08 4:50 PM

2ND ANNUAL AFRICA ESG INVESTMENT FORUM August 22, 2012 | Johannesburg Stock Exchange Auditorium, South Africa

The annual Africa ESG Investment Forum is Africaâ&#x20AC;&#x2122;s leading networking and learning event on Environmental, Social and Governance (ESG) and Impact Investing. The 2012 Africa ESG forum brings together asset owners, asset and fund managers, pension fund trustees and regulators, financial services and banking groups, corporates, stock exchanges and service providers to discuss how ESG factors may impact the risk and return of their investments, organisational ESG strategy, transparency and reporting of ESG practices and evaluate emerging trends in impact investing. HOST

CO-HOST

IN ASSOCIATION WITH

OFFICIAL SUPPORTER

AFRICONOMIE

STRATEGIC PARTNERS