Climate action is about competitiveness, not compliance, Mohieldin tells African business leaders

June 6, 2022 in Business, Policy by Editor

African businesses should see the silver lining in the call for climate action because green production will put their enterprises on a more sustainable footing says Dr Mahmoud Mohieldin, UN Climate Change High Level Champion for Egypt.

Speaking during the Founding Meeting of UNGC African Business Leaders Coalition on May31, in Sharm El Sheikh, Mohieldin observed that business had tended to look at green growth initiatives as a matter of compliance rather than as an opportunity for sustainable growth. But a proactive approach to addressing climate change challenges can lead to the development of enterprises with in-built resilience and equity. Such businesses will also be more attractive to international partnerships and capital, he added.

Mohieldin said African businesses were a unique position to make impactful decisions because while Africa as a continent has historically low greenhouse gas emissions, it is already suffering from the impacts of climate change.

He empathized that climate action is linked to growth. “How can you grow in a way that is low carbon and resilient, as well as being equitable,” Mohieldin said, adding that key industries such as agriculture, infrastructure, telecommunications were in a strong growth phase, the investor landscape is now putting pressure on companies for low carbon and resilient growth strategies. He stressed that efforts to address climate change challenges should be in the framework of a holistic sustainable development approach.

He warned that on the flipside, lack of action on the part of business means would mean loss of market share and new opportunities.

“Staying ahead of the transition is fundamentally about competitiveness, not compliance,” he told African business leaders.

Mohieldin stressed that Africa must drive forward and deliver a just transition to a decarbonized economy in order for investors and stakeholders to continue to invest and consume. He added that this change is unfolding exponentially and the pattern of market forces are fairly predictable.

“We have many industries represented here today. The pathway to cleaner more resilient operations may seem more obvious in some than others, but net-zero, resilient pathways for industry are technically feasible for all, and progress along them is already emerging.”

Mohieldin said that the universal truth for this transition is that small head-starts will compound into large competitive gapsrather quickly.

“It’s the doubling rate of new technology adoption that matters. Any organisation that believes they can dictate the pace of change is likely to fall behind the curve.” Mohieldin said, referring to a long list of organisations and late movers that haven’t understood this such as the energy and automotive sectors.

He explained that the transition will be fuelled by private finance and enabling policies, requiring private-public partnerships on a scale rarely seen before.

Private sector net zero capital commitments, according to Mohieldin, increased from USD5 trillion to USD130 trillion over the past 24 monthsalone. He also clarified that the electrification and decarbonisation of heavy industry over the next decade will require additional investment of more than USD2.2 trillion (Vivid economics).

“We believe at least 40pc of this capital is likely to come directly from multinational corporations,” he said.

Mohieldin pointed out that enabling policies – shaped jointly by governments and industry – will help unlock that capital and reward the early movers. “This means that your action to tackle the climate crisis will deliver benefits to your organisation, by meeting stakeholder needs, as well as delivering low carbon resilient growth,” he explained.

“It’s why I encourage you to consider developing strategies to reduce emissions in the context of just transition, to become more resilient and to invest in the clean technologies of tomorrow,” told the captains of African business.

About the opportunities in COP27, Mohieldin told Africa business leaders that they need to remember that “the COP meetings are a two -way window, in a calendar of events. What matters is the year-long work being taken to transform your businesses.”

He said that the world is shifting from counting pledges to counting meaningful actions, “Instead of just bringing new commitments to Egypt this November, invest in the solutions, throughout your value chains and demonstrate that action is happening on the ground, here in Africa,” Mohieldin stressed.

He said that African businesses can achieve a competitive advantage by driving down the costs of new technologies, enhancing good governance and complying with international best practices, adding that COP27 will give Africa the chance to work inclusively with governments and industry peers, to progress actionable, enabling policies for their sectors.

Mohieldin told the meeting that he works on facilitating the participation of businesses that are keen on making a big difference in the climate situation in Sharm El Sheikh conference, adding that “we shouldn’t take current crises such as COVID-19 and the war in Ukraine as excuses, we were far behind in achieving the SDGs – including climate goals – even before the occurrence of those crises.”

He also stressed the importance of domestication of sustainable development and climate projects, saying that Egypt will soon hold a business leaders meeting to set new and more effective domestication mechanisms that bring those projects to every Egyptian city or village.

He revealed that over the past two decades, the UN Global Compact has engaged more than 16,000 companies in 160 countries around the world to step up and take climate action. Of these, 1000 are located in 45 countries across Africa.

“With COP27 shining a light on climate change and Africa, it was fantastic to see the launch of the new UNGC Africa Regional Hub in Abuja earlier this month in support of the UNGC Africa Strategy.”

He congratulated African business leaders for being a part of this innovative coalition, where they have committed to climate action as their strategic focus.

“We look forward to applauding your progress in Sharm el-Sheikh this November, and hope to facilitate your continued growth and collaboration with policy makers,” he said.