- 77 per cent of CEOs in Africa say their companies have not made a carbon neutral commitment
- Only 10 per cent of CEOs in Africa have GHG linked to their remuneration versus 37 per cent globally.
Organisations in Africa are behind in global actions on climate change and governance, a new report by PricewaterhouseCoopers shows.
In the PwC global survey on Environmental, Social and Governance (ESG), 77 per cent of CEOs in Africa say their companies have not made a carbon neutral commitment compared to the global average of 71 per cent.
Up to 80 per cent of them further revealed that their organisations have not yet made a net-zero commitment compared to 73 per cent globally.
According to the survey, six out of ten CEOs in Africa are concerned about physical and transition risks associated with climate change.
Carbon neutrality, or net-zero carbon dioxide emissions, is achieved when an organisation’s carbon emissions are balanced globally by carbon dioxide removal, typically over one year.
Edward Kerich, PwC ESG lead for East Africa has asked African companies to integrate ESG considerations into their corporate and investment initiatives and activities to build trust and ensure long-term sustainability, agility, and competitiveness.
''The risks associated with climate change, especially in African countries, have many socio-economic implications such as unemployment, food insecurity, increasing health risks, and migration,'' Kerich said.
Research conducted by the University of Oxford’s Sustainable Finance Programme found that an increase in company-level ESG performance can result in a positive effect on a country’s living standards – both in developed and emerging markets.
''Organisations must take steps now to future-proof their businesses by implementing and accounting for their ESG matters,'' Kerich said.
The PwC survey, however, acknowledges the progress made by African companies in adopting what Oxford University's research terms as 'new corporate order', saying those companies are more likely to reap ESG dividends including their long-term corporate strategy than their global counterparts.
However, this is not yet as prominent in CEOs’ annual bonuses or long-term incentive plans.
For instance, only 10 per cent of CEOs in Africa have Green House Gas (GHG) linked to their remuneration versus 37 per cent globally. In turn, some 45 per cent of FTSE 100 companies now have an ESG measure in executive pay.
PwC says including ESG metrics in executive pay packages is a tangible way to close the say-do gap.
Some of the cited key challenges in embracing ESG in the continent include human resource capacity and the lack of a sustainability champion at the top of the corporate ladder
Local regulation might not require reporting of sustainability metrics and responding to ESG issues is seen as a cost, not an investment.
The global PwC network has committed to achieving net-zero GHG emissions globally by 2030, decarbonising the supply chain, and embedding ESG factors into client engagements.