Taking action on your ESG strategy - Africa

Africa’s business leaders must urgently drive effective ESG strategies

Overview

Less than half of the African respondents to PwC’s 25th Annual Global CEO Survey believe that the macro-environmental forces in their society were moderately or very favourable towards their company’s ability to create financial value. This includes the influence of environmental, demographic and technological change.

Download the Taking action on your ESG strategy - Africa report

Businesses in Africa cannot succeed if their societies fail

^{Source: PwC’s 25th Annual Global CEO Survey}

From an environmental perspective, the latest report by the Intergovernmental Panel on Climate Change (IPCC) warned that at 1.5°C global warming, heavy precipitation and associated flooding are projected to intensify and be more frequent in most regions on the African continent. On a regional basis, the report warns about increased monsoon precipitation in West Africa, higher incidence of agricultural and ecological drought in Southern Africa, as well as reduced rainfall in some parts of East Africa.

It is clear - now more than ever before - that African organisations simply cannot afford to downplay the importance of Environmental, Social and Governance (ESG) issues. However, our survey shows that African companies are lagging behind their global peers in adopting ESG goals and strategies.

Our CEO survey showed that the majority of CEOs in Africa are concerned about physical and transition risks associated with climate change. Nonetheless, despite this concern, most African CEOs said their company had not made a carbon-neutral or net-zero commitment.

PwC’s inequality (stemming from various factors like gender, race, ethnicity and wealth) negatively impacted their company over the next 12 months. However, addressing these issues are often absent from goals linked to executive remuneration.

Organisations can help to build trust in their societies and deliver sustained business outcomes by implementing effective ESG strategies. At the same time, stakeholders increasingly expect organisations to communicate and deliver convincing, measurable and sustainable ESG strategies.

We are aware that there are challenges to implementing ESG-related strategies. Some of these obstacles could include a lack of staff with sustainable business expertise and the absence of an empowered Chief Sustainability Officer (CSO) to drive transformation from the top. From a financial perspective, responding to ESG issues might still be treated as a cost line by some businesses instead of being seen as an investment.

Our latest Africa-focussed ESG report outlines practical steps that African companies can take to address these and other challenges, and ensure their actions speak louder than words. PwC’s view is 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.

At PwC, we are proud ESG ambassadors and have aligned this approach to our global strategy, The New Equation. This enables us to build trust in society and deliver sustained outcomes. Through this lens, the global PwC network has committed to achieving net-zero GHG emissions by 2030, decarbonising our supply chain, embedding ESG factors into our client engagements, and supporting efforts to develop ESG reporting frameworks and standards.

^{Source: PwC’s 25th Annual Global CEO Survey}