Less than half of South African businesses are considering switching to green energy sources, despite overwhelming dependence on reliable power and water supply to sustain growth strategies, an international study by advisory and outsourcing services provider Grant Thornton has shown.
The Grant Thornton 2014 International Business Report (IBR) entitled ‘Sustainability: Changing the debate in emerging markets’ surveyed 2 500 companies in 34 economies and highlighted that South African businesses trying to use sustainable technologies to reduce operating costs will face a number of challenges.
In the IBR survey, the supply of energy was identified as crucial for growth among 85% of South African businesses. However, only 43% stated that they would endeavour to switch to energy efficient alternatives.

Of the companies surveyed, 74% said the availability of raw materials, particularly water, was vital to growth and 63% said they would consider whether it came from sustainable resources.
The findings make for interesting reading considering the widespread issues that have plagued South Africa’s power and water supply ability.

Among the most serious recent developments were a double-digit increase in electricity tariffs for 2015; continuous power shortages; State-owned utility Eskom’s financial crises and the delay in bringing the Medupi power station on line.

Further, a recent water supply crisis, in urban centres of Gauteng, all point to additional concerns relating to the securing of a reliable water supply.
Grant Thornton Johannesburg sustainability associate director Loshni Naidoo says the challenges facing energy and water supply would result in substantial increases to operational costs for companies and this further emphasises the importance for businesses to look at sustainable alternatives.
“Even though we are saying the reliability concerns are high on the list from a South African perspective, we are not seeing many companies switching,” she says.

“Electricity supply is more of a concern in South Africa than in emerging economies, such as Nigeria, Mexico and Brazil, but it is surprising that so few South African companies are considering switching to greener energy sources, compared with these economies,” adds Naidoo.
While there had been a shift towards better monitoring and efficient consumption of key resources, such as the widespread corporate buy-in for reducing carbon emissions, the awareness for water and energy supply, alternatives had not been as vociferous.

The IBR report also revealed that business leaders in emerging markets were more focused on the sustainability of their operations, compared with their peers in developed markets.

The report explained that momentum was building towards the United Nations’ Climate Change Conference, which will take place in Lima, Peru, this month. The report said cost, reliability and sustainability of energy were priorities for the expansion of developing countries’ growth.

About 76% of the surveyed African business leaders, 72% in Latin American and 67% in South-East Asia said the cost of energy was important to their growth strategy over the next 12 months, compared with just over half in Europe.
Reliability of energy was also seen as being critical. Businesses in Africa and Eastern Europe cited energy availability as extremely important. As much as 71% of African businesses and 71% of Eastern European businesses cited that energy supply was vital to their growth strategy.
South Africa is one of the main respondents in the report from Africa, being among the largest three economies on the continent. It recognises the need for reliable sources of energy. The report found that South Africa and other African and emerging market countries were too reliant on traditional nonrenewable-energy sources like coal.
This dependence continues while European and North American countries have and continue to shift to green renewable-energy sources.
Grant Thornton energy and clean technologies leader Nathan Goode says people need to realise that sustainable business practices actually lead to long-term cost reductions as opposed to higher costs for operations.

“Sustainability has traditionally been seen as a cost to business; the burden of supporting the common good. However, recent research shows that business leaders are increasingly motivated by the cost management benefits of moving towards more socially and environmentally sustainable practices,” he adds.

Goode says that even without a global agreement on lowering carbon emissions, it is encouraging to see businesses promoting sustainability.

“The political leaders of major emerging economies continue to affirm that their number one priority is the eradication of poverty,” says Goode.

“However, the growth of these economies increasingly relies on how they manage access to scarce resources such as water. There is no choice to be made on whether to focus on sustainability or poverty; the two are mutually dependent,” he concludes.