African business executives yet to keep pace in adopting ESG practices

Carbon neutrality, or net-zero carbon dioxide (CO2) emissions, is achieved when an organisation’s CO2 emissions are balanced globally by CO2 removal, typically over one year. Additionally, 80% of African-based executives state their organisations have not yet made a net-zero commitment compared to 73% globally.

By EB Content Studio

Multinational professional services firm, PriceWaterhouseCoopers (PwC) has urged African business leaders to urgently drive effective Environmental, Social, and Governance (ESG) strategies based on research, pointing out that they cannot afford to overlook the societal importance of ESG performance as this could directly impact on people’s living standards.

African organisations appear to be lagging behind global trends in taking action on climate change. According to PwC CEO survey, six out of ten CEOs in Africa are concerned about physical and transition risks associated with climate change. 

The survey reveals that 77% of African CEOs have yet to make a carbon neutral commitment in comparison to a global average of 71%. Carbon neutrality, or net-zero carbon dioxide (CO2) emissions, is achieved when an organisation’s CO2 emissions are balanced globally by CO2 removal, typically over one year. Additionally, 80% of African-based executives state their organisations have not yet made a net-zero commitment compared to 73% globally.

In an interview, Edward Kerich, PwC ESG Lead for East Africa recommended that “African companies should integrate ESG considerations into their corporate and investment initiatives and activities, and internalise ESG holistically to build trust and ensure long-term sustainability, agility, and competitiveness.”

According to the survey, organisations must take immediate steps to future-proof their businesses by implementing and accounting for their ESG matters. Nonetheless, the study noted that African companies have made some progress, noting that such companies are more likely to have non-financial ESG related outcomes included in their long-term corporate strategy than their global counterparts. However, the survey pointed out that this is not yet as prominent in CEOs’ annual bonuses or long-term incentive plans. For instance, it highlighted that only 10% of African CEOs have GHG linked to their remuneration versus 37% globally. In comparison, some 45% of FTSE 100 companies now have an ESG measure in executive pay noting that 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 Africa organisations include human resource capacity, 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 our supply chain, embedding ESG factors into our client engagements, and supporting efforts to develop ESG reporting frameworks and standards.

Leave a Comment

Your email address will not be published. Required fields are marked *

Ethical Business