Speeches for the General Sector, 2012
Minister Malusi Gigaba: The Value of United Nations Compact for South African Corporations
It gives me great pleasure to address you this morning.
According to Stefan Raubenheimer, in his book, Facing Climate Change: Building South Africa’s Strategy, the climate change challenge is a proxy for “how we govern ourselves; how we plan our economies; how we care for the next generation; how we produce and consume things; and even our understanding of our very place in the world.”
It is our collective responsibility as the country to keep the achievements of COP 17 alive and sustain the COP agenda on an ongoing basis. This is more so because developing nations and emerging economies must continuously fight against the tendency among developed nations and economies selfishly to resort to self-interest and inward focus in the face of what is but an enormous global challenge. Of course, this is a tendency we are now all too familiar with that whenever there is a global challenge which requires global responses, developed economies are always the first to try bailing out and avoiding global responsibility commensurate to their contribution to problems.
South Africa today is the most industrialised country in Africa, which makes it an economic powerhouse on the African continent. Small as the country might be, it is also making strides globally as a prominent member of the G20, the BRICS countries and other emerging economies.
This we can say without any fear of dispute that the business sector, both the private and public corporations, has played an important role in the socio-economic strides we have made as a country and it can still do more.
The South African economy is built on the back of the minerals-energy complex, which makes it an energy intensive economy. South Africa’s fossil fuel dependence has had the net effect of our country being one of the 30 largest emitters of greenhouse gases globally and amongst the highest per capita carbon emitters, which means that we cannot, as a country, avoid responsibility for mitigating emissions. The bulk of Greenhouse Gas (“GHG”) emissions in South Africa continues to come from the energy sector, which contributed 78% of South Africa’s total Greenhouse Gases in 1994, and more than 90% of carbon dioxide emissions.
This reflects our historical industrial policy of building on our comparative advantage of being able to build power stations directly above our large coal reserves to generate cheap electricity at the expense of the diversification of our economy. To illustrate this, Raubenheimer says: “Our first problem was an economy that was driven largely by burning low-grade coal to supply cheap electricity to an essentially inefficient domestic and industrial consumer base. Our second was a heavy reliance on road transport and liquid fuels, a third of which came from coal-to-liquids process, which is emissions-intensive. As a country we used to have an excess supply of electricity which we sold cheaply to bulk users (such as aluminium smelters) in order to attract foreign and domestic business. Our emissions reflect these economic realities. For these reasons, 2 South Africa’s further development and growth plans seemed coupled to more and more emissions.”
However, such a situation is not unique to South Africa or exclusive to the minerals-energy sector. Globally, environmental considerations and issues of sustainable development have been notoriously regarded, at best, as negligible. For a long period in our history the concept of ‘green development’ has not even been considered as an item for discussion, and as such our production systems are not environmentally friendly. This is true not only for the business sector alone; almost every stakeholder has been guilty of this mindset. Hence we are late starters in the development of green technology and are now playing “catch up”. Only in our very recent history has there been a global movement towards a greener future and recognition that responsibility for our planet rests with each one of us.
A number of spectacular corporate failures have highlighted and also questioned whether an emphasis on profit maximisation is indeed the correct avenue to pursue. Through the vision of the United Nations and its Global Compact amongst other things, we have clear evidence of international consensus that the environment does in fact, matter and that the resources of the earth are finite and there are consequences associated with irresponsible consumption. However, as a country, we should take deep pride in that we have recently been playing a leading role, adopting bold policy decisions and strategies and taking bold steps to mitigate emissions and contribute towards the global effort.
In South Africa’s new democracy, we are aiming for a collaborative approach towards the objectives of a developmental state. Issues of the environment and sustainable development therefore are firmly on our national agenda. The collaborative approach is premised on the notion of corporate citizenship, which is itself based on an aspiration that business will contribute to sustainable development and will become part of the solution. Corporate organisations are now joining hands and balancing their rights in relation to their responsibilities and at the same time are able to identify and take advantage of business opportunities in addressing complex social and environmental problems.
For the developed world, making the transition to a green economy has its own challenges in respect of re-organisation and new ways of thinking because they are after all advanced. But for emerging economies such as South Africa, the transition to the green economy will require the application of a fresh perspective because jobs will be affected; we will require investment in research and development, innovative ways of production that will create decent green jobs and support social driven enterprises with economic outcomes. So a sustainable future is non-negotiable if we are to meet socio-economic pressures such as poverty, unemployment and inequality.
This is why I am particularly impressed with initiatives such as this one where corporate organisations voluntarily sign up to such a Compact as a clear sign of commitment to this sustainable future. There is serious significance in positioning enterprises for global competitiveness through sustainable action such as this.
Firstly, without such the pledge, there would be doubt about the credibility of the free-market system. In fact, the global economic crisis has already posed a serious credibility crisis to the current global economic order. Commerce and industry are indeed no longer judged solely on their ability to make profit and create jobs but also on their contribution and relevance to society and its sustainability. In a democracy such as South Africa, this remains a key asset for all.
Secondly, making this move is in line with the transformation in leadership which South Africa has been pursuing in the last decade. A more encompassing leadership style that is focussed on a utilitarian approach or the common good and long-term sustainability may well become the norm in the near future. The move away from the traditional leadership style of being driven by greed, short-term goals and self-interest is indeed in the interest of those whom we as Government serve and whom you, as business, rely on.
Thirdly, clearer alignment of national interests, corporations and balancing the economic and social goals and society is that which we aspire to as an unfolding development state. This approach of the meeting of minds is well reflected in our co-ordination of policy development such as the New Growth Path and infrastructural roll out. Partaking in these types of initiatives would ensure that an organisation’s reputation is enhanced and as such the reputation of a country becomes enhanced too. Good governance then makes good business sense and is more appropriate than ever.
As part of the Department of Public Enterprises’ commitment to sustainable development, we held a symbolic signing ceremony on 5th July 2012, for the State-Owned Companies under the portfolio of the DPE to sign onto the UN Global Compact. The UN Global Compact is the world’s largest voluntary corporate citizenship initiative.
Companies join the UNGC so that they can share the conviction that business practices rooted in universal principles contribute to a more stable and global market and help build prosperous and thriving societies. An outstanding feature of being a member of the UN Global Compact is that it not only commits the company as a whole, but specifically its leadership to prioritising disclosing sustainability activities and policies, which is good for any economy because it sends strong signals to the markets that the private sector is pursuing a long-term planning horizon.
The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption, thereby advancing sustainable development. By doing so, business as a primary driver of globalisation can help ensure that markets, commerce, technology and finance advance in ways that benefit economies and societies everywhere. To maintain the company’s status of being a responsible corporate organisation, a “Communication on Progress” (COP) report is required annually by the UNGC.
The significance of today’s gathering is that it promotes the notion that social / national consensus is a critical pillar for the growth of our economy and as government we have been doing this through social compact economic policy interventions like the local procurement, green economy and skills accords.
The DPE takes pride in acting as a leader in this space of ensuring that the State-Owned Companies make the transition to a low carbon economy and are committed to broader sustainable development objectives and philosophies. I encourage the CEOs of all companies present here today to sign onto the UNGC. In so doing, you are raising a hand in favour of a sustainable future for all are further partnering with those globally who are saying that we need to be responsible citizens and we care about that which ultimately sustains us and those around us.
Importantly too, you are partnering with South Africans and, post-COP 17 where we played host and leader to the global climate change talks, you are showing the world that South Africa is firmly on the path of being a responsible, disciplined nation-state that can act as role-model and reliable partner to all. After all, ultimately, solutions to carbon emissions are as much a responsibility for governments as they are for both private and corporate citizens. I thank you.