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Ninety One: SA could get shut out of capital markets

South Africa faces pressure to cut carbon emissions, as it is the world’s twelfth-highest emitter.
Ninety One CEO Hendrik du Toit. Image: Supplied

According to Ninety One CEO Hendrik du Toit, products from carbon-intensive economies such as South Africa face punitive measures in large markets like the EU. However, the move to net zero also offers opportunities.

‘South Africa is facing the challenge of climate change. We could lead on climate change and accessing capital [to deal with it]. If we don’t, we could be shut out of capital markets, and capital flows to South Africa could be penalised. As a result, the cost of capital will rise, and economic growth will stall further,’ he added during a webinar.

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Ninety One advocates for South Africa to use this once-in-a-generation opportunity to reposition its economy for long-term growth, Du Toit said.

IPCC report 

The latest Intergovernmental Panel on Climate Change (IPCC) report, which scientists from 195 countries put together, highlighted the environmental challenge South Africa and many emerging markets faced.

‘It is unequivocal that human influence has warmed the atmosphere, ocean and land,’ the report stated.

‘It is a consensus report,’ said Ninety One marketing director Jeremy Gardiner. ‘It is not a couple of alarmist scientists or professors making these statements. They agreed that human-induced climate change leads to more frequent and more extreme weather and fires.

‘So, let there be no doubt that this is affecting our planet. The evidence is all around us. We have just had the hottest July in 146 years.’

According to The Washington Post, the report, released earlier this month, is nearly 4,000 pages and includes 234 authors and about 14,000 citations to existing scientific studies.

Considering this information, Gardiner said that South Africa had to act fast.

‘There is a massive threat or a massive opportunity. We have to make sure it is an opportunity,’ he added.

Carbon penalties and scores 

Du Toit said the drive to net zero was resulting in larger markets imposing punitive measures. The EU has introduced border taxes for imported carbon-intensive products, for example, penalising countries like South Africa.

Gardiner said that from 2023, Europe was going to have carbon scores on every imported product.

‘You will see the sugar, carbohydrate and carbon content on every product,’ he added.

Such carbon scores could harm South African exports, as the country is one of the highest carbon emitters in the world.

‘It gets worse,’ Gardiner said. ‘Each citizen will also be under pressure to keep their personal carbon footprint down. So, do you go on holiday to a place with a high carbon footprint, or do you go to Sweden? Do you buy your oranges from South Africa, or do you buy them from Spain?’

Enormous pressure 

Gardiner added that countries were going to be under enormous pressure to cut carbon emissions. South Africa faced particular strain, as it has the world’s twelfth highest emissions.

‘We are one of the most carbon-intensive economies in the world,’ Du Toit said. ‘But there lies an opportunity. If South Africa grabs the opportunity to be one of the first large emerging markets to do the right deal, we could access finance. That could give us the right capital injection.’

Disclosure: Justin Brown owns five shares in Ninety One Ltd.

This article was first published on Citywire South Africa here, and republished with permission.

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Guaranteed the ANC will make the wrong choices !!

If the river of capital shows signs of drought then the kickbacks will inevitably need to increase to 100% across the board in order to keep the broad based corrupted in the manner to which they are accustomed.

SA is more likely to get shut out of capital markets through a possible pending default caused through ANC corruption and incompetence.

That is my concern; the slide to junk ends in a cliff.

Great opportunity to modernise our energy supply.

Yes nuclear…. The cleanest energy of them all.

It makes perfect sense. You have to leave SA and live elsewhere unfortunately very often to appreciate just how seriously this is taken in the First World. The only surprise so far is that we don’t have a climate change denier commenting yet

What is a climate denier? Is it someone who says the data does not support the hypotheses?

Science is about observation. Name one doomsday prediction of the last 40 years that has been correct. Don’t refer to models but actual real world data. Sea level rises have been consistently about 1mm per annum for over 100 years. The Arctic and Antarctic ice volumes are above their 30 year averages. The upper Tropical Troposphere temperatures (satellite and balloon measurements) are flat for about 50 years of measurement.

The Great Barrier Reef is thriving despite all the doomsday reports.

The climate models only allow for about 5% of the energy coming from the sun and hopelessly over compensate for carbon dioxide. Without CO2 there is no life!

The number of scientific papers published over the past 2 years showing that the sun is the primary driver of climate and that CO2 is negligible runs into many, many dozens.

Garbage in, garbage out.

Stop hurting Duncan’s feelings.

A “climate denier” is much like those who slavishly believe everything the regime tells them about, say, how masks actually do something to mitigate the impact of Covid. He’s somebody who dares to point out that scientific models are nothing more scientific guesses, 99% of which have, to date, been totally wrong.

He’s a dangerous person, who thinks for himself.

Don’t be that guy.

Listen to the Command Council and the IPCC and obey, comrade.

Duncan stop liking yr own comments

I didn’t like my own comment. Twit

“We have just had the hottest July in 146 years.” In 2018 we had the worst drought in a 100 years in Cape Town and it was attributed to climate change. However, currently the dams are 99,7% full. The same was said about the Australian bush fires in 2019. Yet in 2020 Melbourne had one of the coolest summers in decades. There is no law that says Earth temperature should be fixed. If Climate change is really the catastrophic disaster which it is made out to be, then why is neither the Netherlands nor the Maldives under water and why hasn’t the polar ice cap melted as predicted by Vice –Pres Al Gore in his 2006 film “An inconvenient truth”? If a lie is repeated often enough, it is later accepted as a fact. Rather tell me who is benefiting from alternative energy sources.

Does the author realize this morning we have snow on table mountain and even in parts of Durban….. Yes Durban.
I still remember my dagga smoking geography teacher predicting the worlds end at 2020 due to the ozone layer and grobal warming. The only thing that ended was him….
Ninty one is gifting .

I’m sure that a banker at Canary Wharf, Frankfurt, or in Zurich is going to care less about snow in Durban. If he can even remember where it is. If he or she ever knew or cared. My point was to reinforce that this is where investment is headed. If you don’t please the investor, you simply don’t get the investment. You might not like their justification, you may dispute it, but it isn’t coming your way and will simply go somewhere else. You don’t believe the consensus, too bad. SA doesn’t have a particularly good record at dodging sanctions whether from governments or corporates. Again, this is taken particularly seriously right now in the First World and they are not going to invest in killing their children and grand children in much the same way that they divested from tobacco, etc

Well said Duncan; you cannot swim against the tide, regardless of whether you are Canute or not. SA’s real issue is the ANC, as usual. I think there are enough experts in SA to put together a strategy for renewables, and a plan to clean up coal in the interim (although “Prof” Mike Mulder believes SO2 emissions are good for us and the World Bank mandated scrubbers are not needed!). But the ANC wants a finger in every pie and dithers and thieves. As well as, through Eskom, still wanting to hog renewables.

If it were truly privatised, with an efficient (ha ha) utility run grid, the “problem” would be solved within a few years at a competitive cost.

The catchphrase has morphed from global warming to global weather change.

Is the recent instability normal? Weather patterns have definitely changed in my lifetime.

Many years ago thunder showers in Gauteng would interrupt sunny days and the clouds would come from the south. These days clouds come from the north west (Angola) and cloud cover persists for several days.

Capital markets are probably driven by bond investor greed more than carbon – otherwise the big emitters should not be sitting with 1.5% cost of capital.

There is a fairness problem when low-absolute high-relative countries are penalized. The US and EU and China might be progressing faster than we are but in emissions we are tiny.

Also, if life was fair, the big economies would first be paying the rest of the world for their excesses history. Hardly right that we must develop clean economies when they have developed economies that got the world where it is!

Compared to many places in the world, South Africa has a relatively benign climate (no tropical cyclones, the occasional floods and bush fires are generally less devastating than in many other countries, no F3-F5 tornadoes unlike the US etc) so it’s perhaps understandable for some people here to be sceptical about extreme climate events and climate change. To correct some of the misconceptions made by Bacchus and jnrb, firstly, it is important to understand that climate is defined as the 30 year average of conditions observed at WMO-certified weather stations which record temperature, rainfall, pressure, wind at least every minute all day and every day at thousands of locations around the world. Secondly, there has always been natural climate variability (such as due to El Nino) which leads to particular summers or winters being warmer, colder, wetter or drier than the 30 year average. So the fact that Cape Town has now had a relatively wet winter compared to the Day Zero winters or that Melbourne had a cool summer in 2020 after devastating bush fires does not argue against climate change. There have always been periods of wet and dry conditions but climate change is now acting to amplify these natural changes in conditions. The recent trend of temperature increase of around 0.2C per decade seems slow when humans only live for a century at most but it is in fact very fast compared to the rates of change that naturally occurred after the end of the ice ages or in other geological epochs.

The statement about the Arctic ice volume being above average is factually incorrect. In the Antarctic, some areas have shown increasing areas of sea ice extent but more show decreasing. The statement about CO2 being negligible completely misunderstands basic atmospheric physics. Yes, the sun is the primary driver of the climate system but the Earth radiates energy absorbed by the surface back into space. CO2 in the atmosphere (even though a small fraction by volume) is very efficient at absorbing that energy so increasing CO2 in the atmosphere inevitably leads to increasing temperatures in the lower atmosphere and at the surface. There are a number of well written books that explain the basic physics of climate change as well as the observations that provide overwhelming evidence that it is happening if you would like to be well informed about this issue.

The bottom line is that numerous countries and multinational companies are taking it seriously when making political and economic decisions so if South Africa ignores it, this country will be even further disadvantaged in terms of trade and foreign investment than it need be.

Sorry but you are dead wrong. Current EUMETSAT data shows ice extent for both Arctic and Antarctic is above average and same applies to Greenland. Also total global sea ice extent OSI satellite data) on 26th August 2021 was also higher than on the same date in 1969 and 1995. So no radical ice melt. Actually about on average for the last 50 years.

Not sur which books you are reading but the CO2 story is such a fairy tale of misinformation. Water vapour plays a much larger role in temperature modulation.

There are a lot of peer reviewed and published research papers that have come out over the last two years discounting the CO2 story.

Everything ultimately comes to measured data and that does not support the global warming story. Climate is cyclical and we have periods of cooling and warming and there are cycles within cycles too.

In fact a paper published in the Journal of Atmospheric and Solar – Terrestrial Physics on the 13th August 2021 could find no correlation between CO2 and temperature but did find a correlation between solar energy and global temperatures. Many other papers with similar findings.

Please urgently rush this insight to the people with the money making the decisions. The consensus is international merchant banking and asset management is that you are wrong. You could be right, who knows, but – let’s face it, it isn’t going to make the slightest difference. When people deface and damage the HQ of HSBC for financing fossil fuel use, and get let off by a jury in London with the judge even warning the jurors that there is no lexus causa to let them go, you have already lost the battle. Then they get celebrated in pubs across Londona. Sorry for you but whatever the science, the money is moving towards what some people call “sustainables”. I don’t pretend to be an expert but that is a reality

You say “The recent trend of temperature increase of around 0.2C per decade seems slow when humans only live for a century at most but it is in fact very fast compared to the rates of change that naturally occurred after the end of the ice ages or in other geological epochs.” If we accept that the Pleistocene Epoch was the last ice age, this ice age started about 2.6 million years ago and lasted until roughly 11,000 years ago. Please tell me how the temperature was measured 11,000 ago and who did this work. I tend to think that the number 1 priority of the humans who lived 11,000 years ago was to avoid being eaten by wild animals and not measuring the temperature.

I agree with all but most with Duncan. Ignore the facts about climate change, because we can argue about that forever. Rather just follow the money, and the money are moving to renewables and sustainability. The sooner we adapt the better off we’ll be. As easy as that. Beerus, over and out..kgggg….

I do not deny that man’s actions have a negative influence on nature. The pollution of rivers and the sea is very visible, but I am not so certain when it comes to actual measurement of temperature, etc.
When I did my first laboratory experiments about 50 years ago, the best measuring equipment available were analog meters with a moving needle or mercury in a tube and a very small scale. Parallax errors were easily made and it was very difficult to read fractions. Now we have highly accurate digital meters that can give you a number of digits after the decimal point.
My problem is that people are comparing the readings of those very inaccurate analog meters with readings of very accurate digital meters and than claim it as proof of increases or decreases of fractions of a degree.
Sometimes it seems to me very much like a case of the stupid are cock sure and the intelligent in doubt.

This specific photo angle of the picture of CEO Hendrik du Toit, had me to look twice……as he closely resembles the Austrian-born actor, Christoph Waltz 😉

Arguments about whether or not the climate is or isn’t changing aside.

We have a huge opportunity; to use the shifts to “green” energy as a major economic driver.

Why not accelerate our abilities in this field, electric cars, etc etc etc and take advantage of a global trend!?!?

I agree 100%. The debate or argument rather, about climate change is stupid from a South African perspective – here’s some serious money to be made if we were clever!

Climate Change (or was it Global Warming?), Social Justice, New Vaccinations, Automations via AI, Confiscated private properties, “Clean” energy initiatives. These are all the hallmarks of a Great Reset that was ushered by Billionaires at Davos. I pity the next two generations.

I’m sure they will pity you too

“Tulips” might be a spanner in the works for these billionaires yet.

The important point is that, regardless of whether you believe in climate change or not, the majority of large multinationals and economies are pivoting their economies away from fossil fuels so if South Africa continues to fight this trend, foreign investment which is crucial for our economy will decrease further and many opportunities will be lost.

However, to inform jnrb and Bacchus:

jnrb – temperatures in pre-instrumental times are derived using a variety of proxy methods (cores drilled into ice, sediments, cave deposits etc). You can read more about this in any geological or palaeoclimate textbook. It is a widely accepted method used by thousands of scientists worldwide and used for many varied applications. As you humourously pointed out, people 11000 years ago weren’t measuring temperature. However, they and any other living thing as well as other natural processes were leaving markers behind which scientists can analyse and have done so for many decades so these aren’t unproven or questionable new techniques.

Bacchus – you can see the ice data for yourself on the US National Snow and Ice Data Center https://nsidc.org. You can also plot sea ice concentration and sea ice extent for yourself on https://climexp.knm.nl. What you seem to be doing is cherry picking a particular day (26 August) on 3 years (you mentioned 2021, 1969 and 1995) and then making long term inferences from three data points. That is like assuming a particular stock price in x years in the future will be a value based on its price on 3 days (today, about 25 years ago, and about 50 years ago). You did the same cherry picking with your reference to a particular paper in the Journal of Atmospheric and Solar- Terrestrial Physics. Without giving the authors names and title of the paper, one can’t tell if the work is relevant or not. However, I can tell you that journal is not one that climate scientists typically publish in because it’s meant for scientists working on the outer atmosphere and space physics rather than the lower atmosphere where we live and feel the effects of climate directly. It also does not have a very good impact factor (only 1.7) meaning that scientists do not rate it very highly. If you are interested in reading scientific papers on the physics of climate change and the reliability of climate models then I’d recommend Journal of Climate, Journal of Geophysical Research-Atmospheres, Climate Dynamics (impact factors of over 4 each) where most leading climate scientists tend to publish their work.

You are correct that water vapour is a much more important greenhouse gas than carbon dioxide. But you miss the point that water vapour is a natural part of the climate system. What humans are doing are adding extra carbon dioxide, methane, and other greenhouse gases via our industrial, transport and agricultural activities. It is those extra gas emissions by us that are causing climate change. My suggestion about books was to read about the basic physics of these gases in the atmosphere. Then it would be clear to you why the increase in carbon dioxide that we are putting into the atmosphere is very important. Any undergraduate textbook on Atmospheric Science (and
perhaps even a high school geography textbook) will do. Alternatively, there are numerous popular science books written in layperson’s language – John Gribbin wrote several, there is also a more recent one called The Layman’s Guide to Climate Change by Farija.

I’m glad that we agree that climate has cycles within cycles, that was part of my point last time. However, superimposed on those cycles are the trend which is largely due to human activity. By analogy with stock prices, there are various cycles within cycles as well as hopefully a long term trend upwards if your investment strategy is to buy low and sell high some years down the track. You can also plot temperatures either over the globe or any region of your choice during the period when we have reliable data on the climexp.knmi.nl website given above to convince yourself of the trend on top of the natural cycles in the last 70 years if you feel that pre-World War 2 thermometers were inaccurate. However, I would point out that scientists are very well aware of the accuracy of various instruments, measurement design as well as locations of the instruments and have corrected for biases (one common one being that instruments for a particular area may have been sited in a built up area during one period which tends to be warmer than open field sites out at airports where many official weather stations are now located).

Who is cherry picking more, the ones comparing data of the now to historic data, or the ones saying the data isn’t fitting their hypothesis because previous measurements might have been done in a hot street.

As for the supercilious tips on where to become informed, that’s like asking snake oil sceptics to read the latest findings of snake oil science enthusiasts monthly. The fact that their vocation and funding is predicated on there being human induced CO2 global warming should tell you something about their independence.

Lastly, who decides who are the leading scientists on this matter? There are Nobel laureates in science that have labelled climate change pseudo science. Are they not leading scientists now that they don’t fit the agenda?

It makes zero difference. The people with the money think differently. They have the mega-capital to invest. You don’t. It is totally their prerogative as to what they do with it and they disagree with you and are going to spend it how they like and in support of how they think. Why not phone the head of asset allocation at a big bank like Credit Suisse or Deutsche to talk to them about pseudo science? Let us know how that works out for you

Not much of a follower of history are you….

“Let not any one pacify his conscience by the delusion that he can do no harm if he takes no part, and forms no opinion. Bad men need nothing more to compass their ends, than that good men should look on and do nothing. He is not a good man who, without a protest, allows wrong to be committed in his name, and with the means which he helps to supply, because he will not trouble himself to use his mind on the subject.”said by philosopher John Stuart Mill,echoed in French Revolution by Edmund Burke and more recently by JFK. They were all correct

End of comments.

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