Africa Business Agenda

Sustainability focus

June 19, 2024

Staying the course on your sustainability journey during times of disruption and uncertainty.

Overview

Sustainability is one of the most relevant issues of our time. Data from PwC’s 27th Global CEO Survey shows that business leaders across sub-Saharan Africa are constantly thinking about and frequently acting on the sustainability needs of their organisations. These thoughts and actions are shaped by a myriad of factors within a polycrisis world of disruption and uncertainty, including disinformation, macroeconomic volatility, climate risks and regulatory change.

Technological disruption is gaining speed and cyber risks are increasing. Technology like artificial intelligence (AI) can create opportunities for African companies but can also pose risks. For example, disinformation campaigns against sustainability reporting and messaging can result in reputational damage. Sustainability reporting is often scientific in nature; this complexity can be exploited to create confusion or spread disinformation. Organisations, therefore, need to ensure that their sustainability reporting is extremely accurate.
Macroeconomic volatility is among the top threats organisations worldwide are exposed to this year, while traditional levers to resolve these issues may not work. Amid this economic volatility, social problems are becoming more prevalent and pernicious across all facets of our world. Under these circumstances, companies face immediate operational challenges that could detract from sustainability priorities. It is precisely at this time that long-term strategy cannot be sacrificed for the sake of short-term interventions. Both time horizons must be included in any organisational strategy and action plan.
Sub-Saharan Africa’s largest companies identify transition risks caused by climate change as the highest financial impact risk to their organisations. Physical risks have a smaller reported impact: this can be associated with different methodologies and systems used across organisations to quantify these risks. Fortunately, there are tools available to companies to help them understand these factors. These include modern imaging technology that allows companies to view the modelled change in climate hazards at an asset level over different time periods and under various climate scenarios.
From a global perspective, this year’s most significant themes in regulatory change include climate change, trade policies and technology. Some 88% of sub-Saharan CEOs say that regulation will have a moderate, high, or extreme impact on how their company creates, delivers and captures value in the next three years. Business leaders need to build the capacity within their organisations to be agile around changing government regulations. Rather than setting on a single fixed course, businesses must continually engage in scenario planning — constructing and evaluating an array of options that offer a broader view of the regulatory landscape.

Sustainability is critical to any organisation’s operational strategy, ensuring long-term economic viability amid disruptions such as cyber risks, macroeconomic changes, and climate risks. These disruptions not only shape the sustainability strategy but also pose challenges to its implementation. Companies that neglect to integrate sustainability into their business strategy risk shortening their lifespan and capacity to operate sustainably.