Many of the African CEOs or directors of multinational companies have mentioned that, in terms of ESG, they spend much of their time explaining the importance, complexity and uniqueness of the social dimension and challenge of ESG in Africa to their counterparts in other territories. They explain that “it is different here” and that the social dimension of ESG is material to the sustainability of the business and uniquely interlinked with the environmental and governance elements.
This quite often goes unheard and fails to shift their mindset. This drastic clash of realities between a corporate ESG manager or board member in London and a CEO or ESG manager in Mali must be understood, accepted and integrated into our approach to ESG and ambition for ESG to support transformative impact for the continent and its people.
Let’s spend some time understanding the continental context in which ESG must deliver value. Progress has been made towards achieving the Sustainable Development Goals in Africa and the Africa Union’s Agenda 2063.
“Africa’s high levels of poverty and its infrastructure, education, and healthcare gaps have driven entrepreneurs to have a deep sense of purpose and social impact.”
The Agenda 2063 sets a strong vision and direction for “the Africa we want”, which supports inclusive and sustainable development, the pan-African drive for unity, self-determination, freedom, progress and collective prosperity pursued under Pan-Africanism and African Renaissance. However, the continent still faces significant systemic challenges. From a social perspective, access to land, security, migration, lack of access to basic services, poverty, inequality, health, inclusivity, education, sustainable livelihoods, food security, lack of social cohesion, lack of individual agency, youth employment and digital inequalities are some of the key challenges framing the daily life of most people living in Africa.
By 2030, an estimated 479 million Africans (28.1% of the population) will live in extreme poverty. According to the Institute for Security Studies (ISS), Africa has the largest share of extreme poverty rates globally, with 23 of the world’s poorest 28 countries and with extreme poverty rates above 30%.
The ISS also indicates that the higher initial poverty levels coupled with low asset ownership and restricted access to public services make it difficult for households to take advantage of growth. Notably, Africa will account for more than half (54%) of the 2.4 billion global population growth in the coming decades. The United Nations predicts that between 2015 and 2050, Africa will add 1.3 billion people, more than doubling its current population of 1.2 billion. This population growth translates into smaller per capita income increases.
Access to essential services remains a significant challenge for people living in Africa. Currently, an overwhelming majority of Africans have access to mobile phone services, but fewer than two-thirds have access to piped water. The climate and biodiversity crisis, land and soil degradation, unstable natural resources use, waste, pollution and stress on water resources all affect people, their health, security, livelihoods, well-being and ultimately their ability to develop.
Meanwhile, 85% of people’s livelihoods are reliant on natural resources. This reliance is a huge risk as Africa is the region the most affected by climate shocks. According to the State of Climate in 2021, in just 2020 and 2021, 131 extreme-weather, climate change-related disasters were recorded on the continent.
Climate change, therefore, poses substantial risks to African economies and threatens the lives and livelihoods of millions of people. It is not only the physical impacts of climate change but also the economic consequences of changes in required resources and global value chains because of decarbonisation that will further impact African economies and cause higher poverty levels.
Inflation, rising costs of living, lack of electrification, and access to finance and technology are critical economic systemic factors impacting the ability of most people in Africa to develop and grow. Corruption, lack of ethical leadership, lack of inclusive development, environmental justice, loss of agency, trust deficit, and lack of good governance are also contributing to the inability of most people to take part inclusively and productively in the economy. Bad governance, corruption, and highincome inequality also lead to increasing poverty levels.
Anyone who has worked in Africa knows that, unfortunately, there is no silver bullet to address the current situation. “Africa’s sustainability challenges must be viewed and addressed in an integrated and systemic way,” argues Wendy Poulton, Director at Strategic Mindsets.
The long-term challenges Africa faces are interlinked and mutually reinforcing. However, stakeholders tend to work on one aspect and not face the complexity of working on multiple fronts simultaneously. Therefore, it is essential to take a system thinking and long-term impact approach to understand and act on the deep-rooted systemic causes of the current situation to achieve real change.
An integrated and transformative approach is needed to tackle poverty, the demographic transition, climate change, corruption, bad governance, infrastructure shortage, lack of regional trade integration and poor quality of education. Sustainability is at the core of the continent’s inclusive, resilient, sustainable, regenerative development.
“Africa’s potential as a growth market means that business can and should play a transformative role in solving the continent’s biggest challenges,” emphasised Joshua Low, Co-Founder of the ESG Africa Conference and Business Consultant.
Africa’s high levels of poverty and its infrastructure, education, and healthcare gaps have driven entrepreneurs to have a deep sense of purpose and social impact. Accordingly, for ESG to be meaningful and create real value for Africa’s people, it should become a catalyst for business engagement in delivering transformative effects.
“ESG should stimulate businesses in addressing the African systemic challenges and add value to the continent in an inclusive, equitable, sustainable and African way,” states Justine Sweet, an African safety, health and environment (SHE) legal expert.
It, therefore, seems essential that such a transformative approach to ESG be driven by Africans for Africans, underpinned by African values. The incredible diversity, cultural richness and collective value systems are significant assets for Africa to shape the ESG conversation, approach, and indicators necessary to deliver real value for Africa, building on African successes, experiences, and best practices.
In this context, we require an African narrative and leadership to ensure that the continent has a strong voice in the ESG space at the global level. Join us at the first ESG Africa conference, at the Sandton Convention Centre on 25-26 October, as well as at the ESG Masterclasses, to build this narrative and leadership voice together in an inclusive way, as well as develop our African ESG community of practice.
Dr Marie Parramon Gurney is CEO of Skultcha, a purpose-driven company (shifting culture for a better world) based in Johannesburg, South Africa. She is also a co-founder of the Africa ESG Africa conference, supporting a purpose-driven, transformative and systemic approach to ESG in Africa.
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