ESG DISCLOSURE DEMANDS
ESG DISCLOSURE DEMANDS ARE ONTHE INCREASE IN AFRICARisks to infrastructure from climate change are among the more detailed reportingrequirements that African businesses now face, writes Philippa Burmeister, ConsultingPartner and Principal Environmental Scientist at SRK Consulting.Risks associated with climate change now form part of more sophisticated ESG reporting requirements.Sustainability-related disclosure is evolving rapidly across Africa, driven byincreasing awareness of environmental, social and governance (ESG) issues andthe need for greater transparency and accountability in business practices.The Johannesburg Stock Exchange (JSE) has been a leader in this field onthe continent, aligning with stock exchanges in Europe and North America byrequiring listed companies to produce integrated reports that include sustainabilityinformation. The African Securities Exchanges Association (ASEA) is also behindthis important agenda and is working towards harmonising sustainability reportingstandards across member exchanges, promoting best practices and consistency inESG disclosures.Similarly, the African Development Bank (AfDB) is actively promoting sustainabledevelopment and encouraging companies to adopt ESG reporting through variousinitiatives and funding programmes. Most disclosure practices in Africa are beingshaped by international organisations and requirements such as the Global ReportingInitiative (GRI), the Sustainability Accounting Standards Board (SASB) and the TaskForce on Climate-related Financial Disclosures (TCFD).International lenders, responsible for much of the funding for projects withinAfrica, also require assessment and reporting in terms of the TCFD as part of theirinvestment decision-making. While the TCFD has completed its mandate and hasbeen dissolved, the Financial Services Board (FSB) has requested the InternationalFinancial Reporting Standards (IFRS) Foundation to assume responsibility foroverseeing companies’ progress with climate-related disclosures.The IFRS released the IFRS S2 Sustainability Disclosure Standard in June 2023,which guides climate-related disclosures, and this has been issued by the InternationalSustainability Standards Board (ISSB). The standard requires entities to discloseinformation about their climate-related risks and opportunities.The requirements of the IFRS S2 Standard are consistent with the TCFDRecommended Disclosure, but go further. While the TCFD provides a flexible,voluntary framework specifically focused on climate-related risks and opportunities,the IFRS S2 is part of a broader sustainability reporting framework with more detailedand integrated requirements.These two standards require reporting of both transitional and physicalclimate risks. Climate-related transitional risks refer to risks that companies faceas a result of the transition to a lower-carbon economy. Climate-related physicalrisks, on the other hand, refer to the risk of climatic changes on infrastructureand operations.16PHOTO: Sky Pixels/Wikimedia Commons
ESG REPORTINGComplex disclosureThis evolution of more complex and in-depth disclosure requirements – and theneed for assessment as part of investment decision-making – has demanded thedevelopment of specialised expertise in the consulting space. This includes servicesto address both climate transitional and physical risks. For transitional risks, clientsneed access to skills such as greenhouse-gas quantification and transitional-riskassessment. Consulting teams of mining engineers are also developing skills indecarbonisation, so that engineers can draw on their mine-design experience toidentify and design options that are suitable for specific sites.On the climate-physical risk side, skills are required in climate-change projection,preferably incorporating a range of different disciplines and with independent peerreview. These new demands are leading to the development and advancement ofspecialised tools. These tools will be used to create long-term meteorological datasetsand downscale climate-change projections to ensure they are site specific and therisks identified are applicable to the site being assessed. These tools will be critical inthe identification of potential physical risks and inform measures required to adaptto the changes.It is clear that Africa is not being left behind in the global drive for more detailedsustainability reporting. Fortunately, the mining sector has access to considerablelocal experience and expertise which both benchmarks against and contributes toglobal best practice.Philippa Burmeister, partner and principal environmental scientistABOUT THE AUTHORPhilippa Burmeister, an expert in integrated environmental managementwith over 20 years of experience, specialises in air-quality and climate-changeadaptation. Dedicated to innovation and strategic planning, she has developedeffective strategies for addressing climate change, environmental managementand sustainability.ABOUT SRK CONSULTINGSRK Consulting is an independent, global network of over 45 consulting practiceson six continents. Its experienced engineers and scientists work with clients inmulti-disciplinary teams to deliver integrated, sustainable technical solutionsacross a range of sectors – mining, water, environment, infrastructure and energy.For more information, visit www.srk.co.zaClimate-change projection is becoming increasingly important, allowing for long-term meteorological datasets and predictions that are specific to a particular site.PHOTO: Mondi17
