#BizTrends2025: Mainstreaming sustainability
Human reaction to the effects of climate change has gone through the phase of initially dismissing it as a hoax from scare-mongering scientists, to the phase of cautiously acknowledging that adverse climatic conditions are because of climate change, and finally, to the phase of admitting that human actions contributed to climate change.
This latter phase has resulted in heightened emphasis on the risks and opportunities to humanity as efforts are made to reverse course on greenhouse gas emissions (GHG) and chart a path to transitioning to a low carbon economy and sustainable development.
The sectors that are designated as high emitting will likely lead the adoption of sustainable practices at scale. While this may sound logical in that reducing GHG emissions in these sectors will have greater impact on climate change, there are other themes that will drive this shift in sustainable practices, namely:
- Regulatory requirements
- Competitive pressure
- Energy cost
- Water
- Social justice
Regulatory requirements
Most governments are signatory to the Paris Agreement, which seeks to limit the global rise in temperature to well below 2°C. These governments have committed to transitioning to a low carbon economy through the nationally determined contributions (NDC), long-term low emission development strategy (LT-LEDS), and other national and sub-national initiatives.
To achieve these commitments, governments will have to collaborate with the private sector in determining and implementing sectoral emissions targets and other decarbonisation commitments.
These will likely require policy and regulatory changes, or new policies and regulations, to create the necessary enabling environment for both public and private sector entities to contribute to achieving these commitments.
Some of the instruments that are being implemented by governments and regions are carbon taxes and carbon border adjustment mechanism (CBAM).
Competitive pressure
The ability to attain resilience has become a competitive advantage for businesses that are able to adapt to, or mitigate, climate change impacts. Resilience is thus a valuable capability that cannot easily be replicated by competitors.
In the agriculture sector, transitioning from traditional practices to climate smart agriculture (CSA) is a globally recognised way of building resilience for own business while contributing to reducing emissions intensity, and absolute emissions, and hence reduction of climate change impacts. This is sometimes referred to as ‘green credential’, and businesses involved in international trade have been most pressured to demonstrate their green credential.
This does not absolve local businesses from the pressure, as many of them participate in the value chain that ultimately results in exported goods. The pressure simply gets passed down the value chain.
Businesses involved in both primary and secondary agriculture will need to adopt sustainable practices to be able to compete in a low carbon economy. Same goes for other sectors of the economy to varying degrees.
Energy cost
The cost of electricity has become a key driver of the adoption of renewable energy solutions, especially solar.
In the last couple of years, there has been a steady increase in electricity cost in most countries. In South Africa, the escalating cost of electricity was masked by the load shedding crisis. Consumers (businesses, and individuals alike) are happy to pay high tariffs just to have electricity.
However, now that load shedding is resolved the focus has rightfully shifted to the escalating cost of electricity. This coincides with the reduction in the cost of key components of solar systems, which makes the adoption of solar systems a compelling proposition for any business.
There is every likelihood that this trend of escalating electricity cost versus decreasing cost of solar systems will continue into the near future. The adoption of renewable energy alternative also enables these businesses to compete in a low carbon economy, as well as be better placed to meet regulatory requirements.
Water
The unavailability of water will be a key trend that drives the adoption of sustainable practices going forward.
While water shedding has not reached the same level of crisis as load shedding, the impact of drought on the Kariba dam and the consequent power crisis in Zambia and Zimbabwe has given governments that rely predominantly on hydropower a reason to start thinking about diversifying their renewable energy mix.
In the agriculture sector, drought and consequent water scarcity has a multipronged effect on food security, livelihoods, employment, poverty, economic growth, and balance of trade.
Going forward, it is either that industry, agriculture, and households learn to reduce, reuse, and recycle water or they will be forced to do so at a much higher cost.
Social justice
There is a growing realisation that transitioning to a low carbon economy can be achieved in two ways, namely, an equitable and socially just way; or in a way that maintains or increases current injustice, inequality, and vulnerability of poor and marginalised groups.
The need to avert this second scenario has led to increased scrutiny of global and local adaptation and mitigation interventions. This is also the key focus of the ‘just’ in just transition.
In both the public and private sector, there is an increasing demand to integrate social justice into any LT-LEDS and other low carbon development initiatives. Businesses will increasingly be required to demonstrate the social impact of their climate-related activities.
While this will inevitably lead to some incidences of ‘social washing’, the trend will predominantly be in favour of trying to achieve a just transition that markedly differentiates the future low carbon economy from the current high carbon one, from a social justice point of view.
To conclude
In conclusion, while these five themes are not exhaustive, they will significantly drive the mainstreaming of sustainability at global and national levels.
