The effect of sustainable living in everyday life

Nedbank Business Banking’s Maluta Netshaulu explains how the agriculture business development division is building solutions around three UN Sustainable Development Goals: clean water and sanitation, affordable and clean energy, and responsible consumption and production.

CIARAN RYAN: Sustainability is a word much used in business today, and it has different meanings for different people. It encompasses renewable energy, agriculture and, of course, water use. Businesses across the country are investing in – or at least investigating – renewable energy as a way to reduce reliance on an overloaded power grid. Farmers are having to manage scarce water resources; a task made more difficult by both legislation and drought. This has implications for crops and food security and impacts the everyday lives of all South Africans. Joining us to explore this subject is Maluta Netshaulu, senior manager for agriculture new business development at Nedbank. Hi, Maluta. Just tell us a little bit about your role within Nedbank and how environmental challenges are impacting business and agricultural sustainability.

MALUTA NETSHAULU: Hi, Ciaran. I am based in Johannesburg, looking after the client value proposition for Nedbank that sits within Business Banking – but in the new business development division. My core role is more around packaging Nedbank solutions, where we’ve got products and solutions and all those things. So, my job is to package all those and then present them to the market, to say that as Nedbank this is what we can do for the agricultural sector, primarily, as well as for the value chain. It’s also about conducting research internally with our staff, and then externally with clients to understand what the pinpoints are, and then use that to develop new solutions.

It also goes further to engage the industry itself in terms of industry bodies like the Agri SA, Agbiz as well as their associations in order to forge partnerships for co-creation of solutions and co-funding of opportunities in order to increase the development of the sector.

I am also expected to represent the bank in forums such as this, in terms of podcast or radio, as well as TV, thought leadership articles in the media, and so forth. That is my role.

And then there are some general sustainability trends. For 2021 there are a lot of talks going on in terms of global leadership. There are a lot of agreements like the Paris Agreement, the EU and the SDGs [United Nations Sustainable Development Goals], the WEF [World Economic Forum] Global Risk Reports, all seeking to get consensus in terms of the way forward with the environmental impact and sustainability, to reduce that in terms of fossil fuels and biodiversity and so on.

We also see young people in terms of young voices that are requesting transparency and trust.

You also have these ones called the digital natives – the guys living on the Net who are seeing all these things going on; they don’t have to be travelling to those places but they can see what’s going on – like the likes of [Swedish activist) Greta Thunberg [are] a good example of those that are advocating for a better future because they can see what’s going on and they want more sustainability practices to come to the fore.

There’s also disruptive technology that is being developed and launched in order to improve efficiency [of] old and outdated systems and processes. And then these techs like, for example, virtual platforms that are coming in and helping to reduce the carbon footprint, as people are able to have these types of discussions or meetings wherever they are – as opposed to driving to work – which sort of reduces the carbon footprint.

We are also seeing energy and climate being among those trends that are really coming in very strongly.

We are seeing renewables becoming very cheap in comparison with power from the grid, like an Eskom for example, which then sort of fast-tracks and necessitates that whole switch from fossil fuels.

You might’ve seen as well lately the trend – during the time of AGMs, we are seeing a lot of investors questioning the business of lending by businesses like banks into sectors that are very much fossil-fuel-dependent and generating [emissions] like the mining houses and all that. So there’s a lot of that – the way people are asking if they should change their strategy to support more environmentally friendly operations or even [encourage] their clients to take a different path.

There’s also the whole circular economy where we are seeing a lot of convincing going on in terms of the reduction of single-use products like plastic in order to reduce the impact on the environment to more sustainable products like paper or recycled plastic as well and all that.

Water is also one of those trends coming through because, when I was in varsity some 10 or so years ago, our professor used to say the next conflict is going to be around water.

And although it is not as pronounced, we now see water scarcity in South Africa and even around the world – and the quality of it, for that matter.

And then the last one will be around the global food security and biodiversity crisis, where the current food systems are said to be very inefficient; they are wasteful and all that. People are looking for new ways to move and produce food and make sure that it is also affordable and accessible.

Those are the trends around sustainability.

CIARAN RYAN: We’ll come back to the whole issue of renewable energy. That’s quite important. But can you outline some of Nedbank’s offerings to assist in promoting sustainability?

MALUTA NETSHAULU: I’m going to put it this way – if it concerns the CIB [Nedbank Corporate and Investment Banking] [then it relates to the] renewable energy bond that has been listed at the JSE that encourages investment in that space to facilitate installation of these renewable energy solutions. But at business banking, where I sit, in terms of our solution-development, we’ve adopted three SDGs.

SDG 6, which is clean water and sanitation, then we’ve got solutions that assist our clients in terms of water – with water recycling, greywater treatment, efficient irrigation systems, like certain … boards, drip irrigation, micro-irrigation and all that. So, we’ve got tailored funding solutions there.

And then under SDG 12, which is responsible for consumption and production, we’ve got funding solutions that assist clients when it comes to recycling. And then we’ve got a solution that assists our farmers in terms of installing shade netting, which assists in combating the impact of climate change. There’s also food security or waste solution. There is not really a funding solution, but we have a partnership with the food force, South Africa, because in this time that we live in there’s a lot of food insecurity, especially at the household level. So, we are encouraging our farmers to divert the food that would have been going into the landfills – to donate that. Obviously, it needs to be edible and nutritional. So we are sort of creating awareness among our clients to perhaps donate that to food for security so that it can be packaged in a food basket for those who are less fortunate.

Those are our main solutions outside of renewable energy [SDG 7] – we’ll talk to that separately.

CIARAN RYAN: Right. And you use the term SDG – is that sustainability development goals? Is that what it means?

MALUTA NETSHAULU: Yes. The United Nations sustainable development goals. That’s how we group our sustainability finance solutions.

CIARAN RYAN: Right. Let’s turn to renewable energy now. How can that be used to adapt to environmental changes?

MALUTA NETSHAULU: As you are aware, our grid is very inefficient. It is very, very expensive. So it is important that that switch is made from renewable energy to this cheaper source of energy, which is renewable energy that doesn’t emit much pollution. Economically it makes sense because after some time, in two years, you reach break-even and then you start making savings.

By making this switch our clients will then be able to benefit from unnecessary interruptions like load shedding, theft and vandalism of the national grid infrastructure. They’ll be able to self-generate power so that they don’t have downtimes, they don’t lose stock – stock that is perishable. And then to always make sure that they protect their margins. We are very much advocates of renewable energy at Nedbank, where we solve with tailored solutions that also assist our clients to install renewable energy.

And we even go further to say that sometimes you don’t have to finance with us. You can also use power-purchase agreements so that you can sort of almost rent the infrastructure from the IPPs, the independent power producers, and then benefit from that.

So, it’s more [a case] of assisting our clients to be more climate-resilient, which then assists them to be financially sustainable, and environmentally so.

And then ourselves – it sort of protects us. It reduces the risks of defaults. Then we’ll know that our clients are not going to be impacted by this load shedding and all those things. It sort of helps us in terms of our bottom line, because we won’t have defaults as a result of power insecurity.

CIARAN RYAN: Just as a point of interest, is there a lot of demand from Nedbank customers for renewable energy sources now? Are they starting to make enquiries about how they can finance these systems?

MALUTA NETSHAULU: Yes, I think it’s because the economics is starting to make sense and I think the inefficiencies of the grid are also giving the clients that push, because some have been reluctant over the years in that they would rather use the grid or even supplementing that with the likes of diesel generators, which are very costly to run.

So now I think we see a lot of clients coming to us. It could also be a factor of the levels of power producers out there and installers that are also doing their marketing and making sure that the farmers or the clients sort of buy into this; they’re selling those futures and benefits. We’re seeing a lot – not as much as we would want – but definitely we are seeing it, especially in Agri, even high energy-demanding sectors like abattoirs which use a lot of electricity and water and all that, as well as in the horticultural space, guys that are irrigating, and guys that are using it in their pack houses and all that. There is also a farmer in KZN who is storing renewable energy, solar PV in his mushroom-processing or production plant. He is using it to make sure that everything – the temperature in the environment – does germinate growth of his produce.

So to answer your question, yes, we are seeing it – but not as much; I think the time will come when for everyone it will be a no-brainer to do it.

Also, when we do our cash flow modelling, we also factor in that whole cost-saving, call it cash flow neutrality, where the cost that you would have spent at Eskom will be used to motivate your affordability of the solution, because sometimes we find that it’s much cheaper to install solar in terms of when you’re looking at the payment. A bit of the solution and then that cost saving would then support your affordability of this solution.

CIARAN RYAN: Legislation and drought have teamed up to make water scarcity a reality for farmers, so how’s this going to affect crops and food security going forward?

MALUTA NETSHAULU: As I mentioned earlier, time is very scarce and with the whole climate change, with droughts that are more prevalent now than perhaps a decade ago, things are getting worse. We are seeing farmers having to find innovative ways.

But we are also finding that there is more stringent regulation or legislation that is being placed in order to regulate the usage of water in terms of water licences. And then there are also things around the meters that need to be found so that when the authorities visit the farmers, they are able to see how much water is being used and be able to audit that. That also comes at a cost. It’s not simply to install the meter – there’s a whole load of other things, you need to employ the right people and make sure that everything is connected, so that all the water used at the farm level can then be recorded.

So, there’s a whole lot going on in that space. But there’s also the whole thing around the turnaround time when you apply for these water licences, water-use rights. And there’s a whole cost implication for the meters. There is a whole lot going on, which at the end does impact the clients’ or the farmers’ performance in terms of their enterprises, if this is a very long turnaround time in terms of when you apply for water-use rights.

So you might end up with farmers not being able to adequately irrigate their farms or their crops or having sufficient water for their livestock. And then it’s also going to impact the performance of the orchard or the quality of the produce, which means that the bottom [line] is going to be impacted and they’re not going to be able to deliver on their contracts.

That then has a sort of a chain reaction in terms of the supermarket or the grocery store not being able to get that food.

It does then speak to food inflation, if there is not enough food that is flowing in the value chain. So, it does sort of link up and cause some food-security issues if water availability and the legislation are not speaking to each other and also facilitate for a good production at a farm level.

CIARAN RYAN: Okay, we’re going to leave it there. That was Maluta Netshaulu from Nedbank.

Brought to you by Nedbank Business Banking.

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