How can renewable energy impact SA businesses positively?

Mitigating load-shedding, saving on rising electricity costs and being in touch with public sentiment are some of the core reasons why SA businesses are benefiting from investing in renewable energy.

Climate risk and sustainability have become key pillars for many businesses around the globe, as industries wrestle with changing climate conditions, unreliable energy security and changing policy or legal frameworks.

Added to that is the growing call from a public demanding that businesses take better care of the planet and their responsibilities to society at large.

For many SA businesses, the need to address climate risk and sustainability has led inevitably to businesses relooking their practices. According to Mark Boshoff, Head of Sustainability at?Nedbank Business Banking, some noticeable trends indicate that businesses are investigating ways to alleviate these risks.

"There has been a large increase in interest of commercial, industrial and agricultural businesses investigating renewable energy alternatives. With the impact of load-shedding and larger climate risk considerations, energy security is top of mind for many businesses," says Boshoff.

In the agriculture sector particularly, it is unique in that it is a major contributor to climate change while, at the same time, is one of the sectors hardest hit by its effects.

"In South Africa particularly – where the sector accounts for 10% of total foreign exports and employs 785 000 people – it is already being severely impacted by higher temperatures, flooding and more frequent and intense droughts,” says Nedbank’s Head of Agriculture John Hudson. "Our ever-present energy crisis sees costs of electricity increasing exponentially as its supply becomes less reliable. In short, for the agriculture sector to survive requires addressing climate risk."

Addressing risk and impacting business

Renewable energy and sustainable practices help businesses by strengthening a business’s climate resilience and mitigating against worsening conditions.

Climate resilience is defined as the capacity for a system to absorb stress and maintain function in the face of external stresses imposed upon it by climate change. Sustainability meanwhile is defined as the ability of a system to maintain itself over time.

"The benefits of renewable energy or water efficiency mechanisms are obvious in this regard: not only do these innovations save precious resources, but they also reduce costs significantly, increasing a business’s profitability," says Boshoff.

According to Boshoff, the major benefits of businesses investing in renewable energy include:

• Potential to offset surplus electricity to the grid, resulting in cost-reduction;
• Mitigation of rising energy costs on cash flows and bottom lines;
• Avoiding power interruptions, load-shedding and maintaining production;
• Contributing to a positive impact on the environment and easing public pressure;
• Benefitting from carbon credits and selling electricity to green energy companies;

In agriculture for example, the need to produce food sustainably has gone beyond being the right thing to do - it is now a business imperative.

"Improving soil health for instance produces soil with dramatically improved water-retaining abilities that is vital during droughts, and promoting biodiversity means reduced fire risk, natural pest control and improved crop pollination," says Hudson.

And looking forward, embracing sustainable practices may also result in innovation and new market opportunities in the long run - both drivers of business growth.

Doing more with less

Banks and financial institutions play a critical role in providing both finance and expertise. Financial institutions assist businesses to transition away from practices that undermine their SDGs, and commercial banks in particular are key to financing the substantial investment required to attain new machinery.

"Doing more with less is imperative and will benefit us all. Making this transition requires funding upfront before the enormous benefits take effect. Through lending, banks can drive change so much more than through corporate social investment and can be a core part of the solution that transitions South African industry for a resilient future," says Hudson.

Known as the 'green bank', Nedbank has been leading the change in finding innovative funding solutions to assist businesses in investing in sustainable practices, equipment and technology. It has also made its own commitments to meet United Nations’ SDG goals ahead of 2050, including becoming 100% carbon neutral.

The bank offers a wide range of funding products to solve for the funding of many of the SDGs including renewable energy, water, food production, and waste recycling, and solutions can be tailored to individual business needs.

"Climate change and sustainability are at the core of everything we do at Nedbank and our focus on renewable energy, water, and soil health are examples of how we are encouraging our clients to transition to sustainability through our lending," adds Hudson.

To learn more about Sustainability at Nedbank, click?HERE.

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