Page 68 - IRMSA Risk Report 2023
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TOP 5 CHALLENGES TOP 5 RISK TREATMENT OPTIONS AND OPPORTUNITIES
TARGETS ▶
Honest and well-researched scenario analysis needs to be performed by all that take
TO ACHIEVING ▶
Continued carbon-intensive the climate risk seriously. There needs to be a partnership with corporates to get a
industries in South Africa well-informed landscape/context as to what the threats and opportunities are under
hampering the move towards different climate change scenarios.
a low-carbon economy in the Timeous review and alignment of company strategies in line with the lessons learnt
from the risks and scenario analysis will benefit the early adopters. They will be in a
country. The mining and energy 01. position to generate success in the early adoption of this transition of decarbonisation
industry (electricity, oil and gas) by:
are going to be significantly • Dealing with difficult and significant policy changes way in advance.
impacted by this transition. • Future-proofing their technology interventions and investments.
• Quick alignment to expected consumer behaviour changes.
The world is moving much faster on the just transition to a low-carbon economy
An increase in cross-border than South Africa, which brings measures like cross-border carbon tariffs into play. In
tariffs because South Africa addition, this slower rate of transition may result in the global markets penalising our
is not transitioning quickly 02. exports. This would reduce our export potential, resulting in job losses and further
inhibiting the South African economy.
enough according to global Committing to the reduction in fossil fuels calls for investment in renewable energies
just transitioning standards. and related technologies. This includes the introduction of electric vehicles in both the
private and public domains, including transportation specific to sea, air and rail.
There are extremely close correlations between the impacts of climate change and
the consequences of greater inequality. Climate change is going to impact the poor,
An inadequate response more vulnerable areas of our population. In the case of floods and the areas that are
going to get hotter and drier, rural communities and those dependent on subsistence
to greater inequality and 03. agriculture are going to be impacted severely.
to climate change, leading
unemployment and resulting in All organisations, including local government, the private sector and civil societies, have
to start looking at the physical implications of their operations as a result of committing
social bankruptcy and unrest. to climate-change adaptation. Continuous risk and scenario analysis will provide the
insight and foresight needed to look at the different threats and opportunities that will
present themselves.
The rise in extreme weather events such as floods and droughts may increasingly
disrupt infrastructure (road, rail and sea/ports) in that the supply logistics of goods
are either delayed, damaged and/or routed differently, impacting on cost. It also has
a negative outcome on exports and food security, as well as public health and safety.
An increase in severe weather The public and private sector can learn from the investor community. The investor
conditions due to climate 04. community understand the threats and opportunities that climate change presents,
as well as the impact it may have on the future value of companies. They are asking
change impacting the economy the right questions and are expecting companies to report on their climate change
and public safety. response strategies, plans and targets. They are requesting insights to be reported
based on what has been learnt from their risk analysis and scenario work.
These investment companies are moving towards expecting companies to financially
quantify their threats and opportunities, as well as how they may unfold and translate
into growth and sustainability moving forward.
Compliance to the Bill of Rights from 1995 demands the right for individuals to live
in a healthy environment specific to factors such as air quality. Some cities and towns,
especially towns that are known for producing coal and/or electricity, are negatively
impacted by emissions and the subsequent air quality. Again, there is a dichotomy of
An inadequate response to addressing compliance to basic human rights and the shutting down of industry and
ways of doing business by 05. associated employment, as well as the cost to transform or transition.
adopting new and innovative
The funding for a just transition will be critical in expecting South Africa to drive towards
carbon-intensive companies making the climate-change targets committed to by the government. Some funding
will be derived from sponsors and some from investors. The risk-response strategies
creating a continued health risk asked for by both public and private organisations are to prove that they are going to
to the public. be as profitable or productive in the future as they are now, under different climatic
scenarios. In essence: what is the cost to do business into the future?
Investment for restructuring and adopting new technologies will be critical for that
change.
68 IRMSA RISK REPORT 2023/24
