This is the eighteenth in a series of articles about sustainability and specifically sustainability within Stellenbosch University. What are our staff members contributing in their fields of expertise; in which sustainable projects and initiatives are they involved and what contribution do they make to this important issue in the rest of South Africa?
Sustainability is not about only environmental aspects but also about the impact it has on society. The bigger picture must always be kept in mind. This and the fact that companies are more willing to strive towards sustainability if it is financially viable, are some of the important aspects addressed in the post-graduate Business in Society courses presented at the SU Business School.
Sustainability … keeping the bigger picture in mind
He is liberally "green" and tries to make the students in his classes excited about sustainability issues, says Jako Volschenk , lecturer in Environmental Finance and Business in Society. He tells more…
What does your work involve?
The SU Business School has been offering the course Environmental Finance since 2007. At first I lectured only components of it, but since 2010 I have been presenting the entire course. This course is also offered by the Sustainability Institute but under another name and with a greater focus on renewable energy. I also lecture research methodology for MBA students as well as the environmental side of the course Business in Society.
I also do work for USAID (United States Agency for International Development), primarily providing financial training in energy issues. This concerns the type of financial competencies and knowledge required by energy regulators in Africa to enable them to start promoting renewable energy. Once a year I travel to France to teach students from Europe, India, China and other countries.
Our goal is also to make our MBA course more inclusive by presenting worldwide environmental issues so that our students are better equipped to solve these problems.
What does environmental finance mean?
Suppose you start a wind farm. In a normal financial course this would be regarded as new high risk technology for which a high discount rate is required in order to facilitate assessment. People will typically say that its price is very high.
Environmental finance entails looking at the damage caused by, for instance, coal to the environment, and the type of work we create with coal-generated power as opposed to the low environmental impact of wind turbines or solar energy. There is typically a difference in costs but it makes sense, as society is in fact carrying the cost of coal-based electricity in the form of air pollution, respiratory diseases, acid rain, etc.
Students usually don't know how to defend sustainable energy from this point of view. We also investigate energy efficiency projects that present a far lower risk. I often act in a consulting capacity for companies replacing bulbs – this is low risk, because you know for certain that you will save energy.
The course also studies the risk profile of projects and what additional income streams are generated, such as inter alia carbon financing. This affords post-graduate students from various disciplines who have never dealt with climate science or sustainability a new perspective on development finance.
An important part of the course in addition to the environmental aspects, deals with its link to society, such as for instance the fishing industry – if fewer fish are caught, fewer people will have work. So on the one side there is the pressure to catch more fish, which is not in the interest of society since fish will become scarcer and scarcer or even extinct in 30 years' time.
But if the price of fish is increased in order to change the consumption, it will impact the poor communities since sardines are the cheapest form of protein available in South Africa. It is that bigger picture that must always be kept in mind. Carbon financing specialists often try to convince companies to reduce their carbon footprint without paying heed to the fact that it might impact somewhere else in the system.
Take for instance the fact that recycling projects in South Africa were avoided in the past because it was alleged that it would result in loss of work opportunities for people creating work for themselves at landfills. The City of Cape Town overcame this problem by advising that people have to put all their waste to be recycled into one bag. This could then still be sorted by people looking for work. Consequently it did not result in the same number of work losses as would otherwise have been the case. On the contrary, recycling creates typically six times more job opportunities than traditional refuse handling, whilst at the same time solving an environmental problem and being profitable as well. It is a win-win-solution.
Do businesses have a moral obligation to promote sustainability?
Yes, definitely, but it will still happen quicker if it makes financial sense to them. For instance, for a company targeting the higher income bracket, it is financially more viable to have a green trademark than for a company targeting the lower income bracket. Lower prices are more important to this income group than supporting sustainability.
While people in both income groups have the moral sense to promote sustainability, only those in the higher income group have the means to support green trademarks. Research shows that while people are prepared to pay more for green electricity, there is a cut-off point where it is no longer about willingness but rather about the means to pay.
In Zambia people are felling trees in the rain forests for wood to be able to prepare meals. They know it is not sustainable to do this, but the immediate need weighs more than their concern about the sustainability of the forest.
In our Business in Society course we focus on the reasons why companies are taking steps to support sustainability. For them it is mainly about risks, business opportunities and to a lesser extent about moral aspects, although there are exceptions.
So what is to be done?
If you wish for any environmental change to take place, you firstly have to change behaviour. Let me take an example with which most of us will be able to identify. To be able to reduce the carbon footprint of your household, you can for instance change your children's behaviour by turning off the lights. This is the cheapest way to change, but at the same time the most difficult.
The next step is efficiency – replace your bulbs for instance with energy-saving bulbs. A next step could be to get renewable energy or purchase carbon credits in order to reduce your carbon footprint. This third step, however, is usually costly.
How far have South African companies progressed on the road towards sustainability?
Systemically they have shown much progress. Sustainability concerns people and one of the legacies of apartheid is that South African companies have a much greater awareness of and responsibility towards society than those in many other countries.
What are the greatest challenges ahead?
I think many challenges concern policies. Companies for instance may not distribute power that they generate themselves through the Eskom network and must therefore purchase coal energy from Eskom.
The challenge is like getting a donkey out of a ditch – someone has to dangle a carrot in front of the donkey while someone pushes it from behind. Legislation is typically the push from behind, while the carrot represents the possible growth in profit. We have to know when we need a carrot and when we need to push from behind.
* Are you busy with sustainability actions? Let us know at groen_green@sun.ac.za so we can inform the rest of the campus about it.
