All this points to the need for South Africa to take real action to speed up its Just Transition and increase momentum towards its green economy aspirations. The event offers a valuable platform on which our country can demonstrate its commitment to accelerating decarbonisation, addressing financial gaps in climate adaptation, and fully leveraging the international backing we have received, such as through the US$8,5 billion Just Energy Transition Partnership, to drive our energy transition.

Importantly, this narrative needs to show that South Africa’s Just Transition is not merely a decarbonisation plan but a pledge endorsed by all South Africans – businesses, government, and individuals alike – to transform and diversify our economy within the parameters of environmental sustainability. We need to show the world that our Just Transition journey focuses on fostering an economy that alleviates poverty, reduces inequality, and combats unemployment.

While the energy transition is a key element, it is one of several pillars facilitating broader transformative change. South Africa has the highest Gini coefficient (a measure of inequality) in the world, so it is clear that a transition to a green economy cannot be discussed without addressing these significant social issues. The urgency is amplified by the looming threat of climate change, which poses severe risks not only to our natural ecosystems but also our social and economic fabric. As a result of our location in the southern hemisphere, the Southern African Development Community (SADC) region is experiencing warming at twice the global average rate. The Intergovernmental Panel on Climate Change (IPCC)'s latest findings show that the potential repercussions of this include a dramatic reduction in agricultural output and a decline in gross domestic product (GDP). If we fail to act now, the future could be even bleaker, with up to a 50% drop in South Africa’s GDP by 2100 and millions of people displaced due to adverse climate conditions.

A Just Transition is rooted in four pillars: equitable distribution of risks, inclusive decision-making, active support for affected workers and communities, as well as opportunities for structural economic changes. Overlaying these pillars is the principle of distributive, restorative, and procedural justice (the ‘just’ in ‘Just Transition’), ensuring fairness and empowerment for all. Achieving this requires that we break out of traditional silo thinking and recognise that the 'E' and 'S' in ‘ESG’ (environmental, social and governance) are interconnected components of a larger puzzle.

Financial institutions, particularly banks, play a pivotal role in this Just Transition journey. It is imperative to intentionally channel capital into sectors that diversify the economy and effect significant environmental change.

Nedbank recognises the delicate balance required for achieving a net-zero economy by 2050. By aligning our investment and lending practices, we are fulfilling a key strategic business commitment that acknowledges the role of concentrated capital in social inequality. We are committed to directing our sustainable development finance (SDF) towards supporting businesses, projects, and transactions that equitably distribute capital for the broader benefit of society. At the end of June 2023, we had a purpose-led business baseline of R134 billion in SDF, and it is our ambition to increase this to over 20% of total gross loans and advances by 2025.

Ultimately, the success and potential for the positive impact of South Africa’s Just Transition will depend on our understanding that the components of ESG are not meant to be trade-offs; the still-prevalent notion that pursuing one of them inevitably comes at the expense of the others is misguided. A Just Transition encompassing all 3 dimensions is a strategic necessity for the sustainable future of South Africa and presents a unique opportunity to materially address our nation’s triple challenges of poverty, inequality, and unemployment. Nedbank remains committed to playing a leading role in the Just Transition.