Zooming in on the 'S' in ESG: Reflections from South Africa

I'm British, and have been living in South Africa for almost three years now.

As someone who focuses on the 'S' of ESG in the built environment, which is gaining increasing traction in the European context , I thought that moving to the global south would be a matter of applying some of this good work.?

There is certainly demand. From infrastructure failure to taxi strikes, South Africa is a country struggling to emerge from an endless cycle of penalties and protests. These often hit people who are worse off - leading to systemic risks emerging from compound vulnerabilities: i) high unemployment; (ii) low levels of educational attainment; (iii) poorly located and inadequate infrastructure.

It is easy to argue that what South African businesses require is increased access to finance - principally from the global north. Indeed, there is arguably insufficient funding (in the context of South Africa’s greylisting ) now sloshing around for South African businesses, and less capacity to address the 'S' than ever before.

However, businesses also need clarity on how focusing on the 'S' is in their interest - because it e.g. mitigates social risk and drives real opportunities through linking community development with business prosperity. Furthermore, there are plenty of initiatives focusing on the 'S' within South Africa. However, these are stretched across multiple areas of interest - from Broad-based Black Economic Empowerment (B-BBEE) to Corporate Social Investment (CSI) to Social and Economic Development (SED). This can lead to confusion and duplication, which itself can prevent progress.?

With tight budgets, no clarity on the business case, and a plethora of existing targets and measures, zooming in on the S is regarded as another layer of bureaucracy with which stakeholders must grapple while navigating an already complicated system.?

Nevertheless, some good work is being done in South Africa across the value chain:

• Finance: Impact investing in South Africa is on the rise. There are some excellent examples of South African investment management firms identifying and directing capital to real estate that addresses social challenges - from education and healthcare to digital innovation and water treatment facilities.??

• Energy: Renewable energy sector is already proficient in measuring its social impact. Social performance assessment is mandatory in relation to the new Renewable Independent Power Producer Programme, aimed at bringing additional megawatts onto South Africa’s electricity system through private sector investment.

• Planning and Architecture: Re-thinking the notion of place-making is important and necessary. There have been efforts to re-ground an understanding of what it means to make a place in South Africa, by taking inspiration from the stories of African cities - and finding ways to include the voices of those people that are historically marginalised.

The question, then, is what lessons can be learned? Clearly, access to finance is a major challenge for businesses with an interest in the 'S', but so is the lack of business case and proliferation of initiatives that prevent the industry from taking a joined up approach. Does access data also play a role here?

I recently travelled to New York to attend climate week, and helped to deliver a workshop focused on decarbonising the built environment. There, we took a systems change approach and identified the key stakeholders and their main barriers in order to identify areas for action for the industry in the next one to three years. In one case, an action was to bring together different parts of the value chain (finance, real estate, manufacturing, architecture and construction and occupiers) to create a task force that identifies unequivocal near-term goals for the sector.??

Is this approach possible in South Africa? Together, we need to define where and why we can each intervene in the 'S', but also what we’re trying to achieve - and the root of our ambitions. What is the human problem we are trying to solve? Indeed, there is an emerging conversation about human rights as well as how businesses might align with new economic models focused on wellbeing and social and solidarity.

Identifying common barriers within the built environment, and actions to overcome them, is definitely something we can do together. Let's start by starting.

Want to explore further? I'd love to hear from you.?Get in touch with me [email protected]