CEOs of 55 African businesses with a combined revenue of $150 billion on 9 November 2022, released a statement committing to climate action. The UN Global Compact helped rally these companies to issue the joint statement. In an interview with Africa Renewal’s Kingsley Ighobor at COP27, UN Assistant Secretary-General and CEO of UN Global Compact Sanda Ojiambo discussed, among other issues, the effects of climate change in Africa and why an increasing number of African businesses are taking climate action. These are excerpts from the interview.
Why should African businesses care about climate change?
African businesses need to care about climate change for a number of reasons: First, the continent contributes the least to climate change but suffers its effects the most. We hear from African CEOs that their businesses are feeling the impact of the climate crisis in terms of the cost of inputs.
Second, it’s always a challenge to access finance related to renewables.
And third, because we’re aware the climate catastrophe will continue to impact the African continent the most, business leaders are concerned that the present and future of business are at stake.
One of the things that resonated very strongly in September when we had the Global Africa Business Initiative was that there’s so much belief in Africa as a business and investment destination; it’s important that we take proactive actions now to secure prosperity for business.
About 55 CEOs with earnings of about $150 billion and employing nearly a million workers today issued a statement committing to the climate fight. What are the highlights of their statement?
Let me highlight why this is such an important milestone for us at the UN Global Compact. It’s the first time the private sector from the North, South, East, and West Africa has come together, united around one issue. Thanks to the convening power that we have as the UN, we were able to bring this group together.
The statement covers two things: first, it adds to the voice calling for accountability, calling on global actors to fulfill commitments to secure Africa’s climate sustainability.
Second, it is about their [CEOs] own commitment towards climate action within their companies, within their industries, and for the continent.
So it’s essentially a two-part piece. Let’s hold people accountable, but we will also do our part.
Let me highlight why this is such an important milestone for us at the UN Global Compact. It’s the first time the private sector from the North, South, East, and West Africa has come together, united around one issue. Thanks to the convening power that we have as the UN, we were able to bring this group together.
How do these African businesses connect their work on climate to what their governments are doing?
Very important. A good number of the business leaders here at COP27 are actually part of government delegations because, as you know, these delegations consist of representatives of both the private sector and the public sectors. So, companies contribute towards nationally determined contributions. It’s very clear that the private sector plays a role in the economic development of these countries.
Many of these companies have overseas partners, some of which are big multinationals. Are they able to engage these multinationals to be involved in climate action on the continent?
Let me flip the question. I’ll tell you what we hear from most global companies. They say that sometimes they’re not very sure of what happens down the line because they don’t have full visibility of their supply chains. And that is their primary concern.
You can make a big commitment to taking climate action at your headquarters but you’re not sure what happens with subsidiaries because a lot of them are indigenous national companies.
So if anything, they [multinationals] have their own supply chains to worry about and they want to be sure that the commitments they make at the headquarters hold throughout the supply chain.
What are your views regarding ‘just transition’ because the business leaders mentioned it in their statement?
It depends on which side of the table we’re sitting on. What is ‘just’ or what is ‘equitable’ depends on where you want to focus. We find there are some real key business and economic decisions around what just transition is.
I hear from many African business leaders and Heads of State – people recognize that we stop exploiting fossil fuels and move to green and renewable technologies. I don’t think it’s a principle that is under contention.
The point is, it’s not that simple because of the cost of financing renewables, which is high. And some countries may be in the middle of economic transitions to middle-income manufacturing economies. I think it can be just and equitable when we understand the barriers to implementation.
The statement [by African CEOs] covers two things: first, it adds to the voice calling for accountability, calling on global actors to fulfill commitments to secure Africa’s climate sustainability. Second, it is about their [CEOs] own commitment towards climate action within their companies, within their industries, and for the continent.
From the statement, it appears the African CEOs would like a constructive, incremental disengagement from fossil fuels.
What I know is that the private sector leaders have said that if finance and capital are accessible, it would be much easier to make these transitions. Business leaders tell me they’re not keen to continue on a path that is unsustainable for their business and country. What they’re asking for is equitable access to the resources that will enable transitions.
That is a focus of COP27 because Africa is asking for a lot more access to financing.
What is very clear, and I’ve heard this from the UN Secretary-General [Antonio Guterres], is that there is a need to reform the global financial architecture.
There’s talk about access at the national level for economies, but in other discussions, it’s about access to financing for adaptation, resilience, and so on for people. I think for African economies, it’s adaptation and resilience financing that really makes a shift in how businesses can build their resilience.
How challenging was it to get all these CEOs to agree to adopt 27% renewables by 2030, given that they all do different kinds of businesses and their individual transition plans may not unfold at the same pace?
It’s interesting that when we first held a meeting and decided we wanted to do this [issue a statement], we actually said to leaders, ‘let us know what you think is of the most pressing urgency.’
The consensus was on climate. It was very easy and quick. I think there was a recognition that an important climate conference was being held on the continent, as well as the important role that climate action plays in business.
Now that the statement is out, what next?
Now that the statement is out, the business leaders will have to hold themselves to account. We’ve asked them to drive climate action within their own businesses and their industries.
They will continue to grow momentum around climate action.
Fifty-five companies signed the statement. That is not the endpoint. We want more companies to commit to taking climate action, to commit to following the principles of the Global Compact, and ultimately to be able to make that change within their industries and their countries.
The private sector leaders have said that if finance and capital are accessible, it would be much easier to make these transitions. Business leaders tell me they’re not keen to continue on a path that is unsustainable for their business and country. What they’re asking for is equitable access to the resources that will enable transitions.
Do you have a way of monitoring the climate actions of these companies?
First, companies that are part of the Global Compact are required to report to us annually on their progress in many areas, including climate.
Second, there are scientific methodologies for assessing companies that have signed up for science-based climate targets or initiatives, and they are required to be transparent about their progress. So, there are some accountability mechanisms. But you know, the work doesn’t end.
Now that we released a statement, we’ll continue to dialogue with the business leaders. They’re still accountable at the national level, to their governments, on the global stage, to consumers, their staff, etc.
How serious is the climate crisis in Africa?
I come from western Kenya. We’re in November and the weather patterns are now very erratic. When I was last in my village, people said they didn’t know anymore the season for harvesting or planting. This is because everything has changed. Even at the domestic subsistence level, I can tell you that definitely something is amiss. This obviously extends much further to large-scale farming, which is critical for Kenya’s economy and for domestic and international earnings.
In addition, right now we have the most significant drought in Africa. It’s very clear that we are feeling the effects of climate change.