Sunday, January 16

Ninety-one: SA could be left out of the capital markets

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

‘South Africa faces the challenge of climate change. We could lead climate change and access to capital [to deal with it]. If we don’t, we could be left out of the capital markets and capital flows to South Africa could be penalized. As a result, the cost of capital will rise and economic growth will stagnate even more, ‘he added during a webinar.


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

IPCC report

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

“It is unequivocal that human influence has warmed the atmosphere, the ocean and the land,” the report states.

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

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

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

Given this information, Gardiner said that South Africa had to act quickly.

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

Carbon scores and penalties

Du Toit said the push toward net zero was leading to punitive measures from the larger markets. The EU has introduced border taxes for carbon-intensive imported products, for example, penalizing countries like South Africa.

Gardiner said that starting in 2023, Europe would have carbon scores on every imported product.

“You will see the sugar, carbohydrate and carbohydrate content in each product,” he added.

Such carbon scores could hurt South African exports, as the country is one of the world’s largest carbon emitters.

“It gets worse,” Gardiner said. “Every citizen will also be under pressure to keep their personal carbon footprint low. So are you going on vacation to a place with a high carbon footprint or are you going to Sweden? Do you buy your oranges in South Africa or do you buy them in Spain?

Huge pressure

Gardiner added that countries were going to be under enormous pressure to cut carbon emissions. South Africa faced particular stress as it has the twelfth highest emission in the world.

“We are one of the most carbon intensive economies in the world,” Du Toit said. But there is an opportunity. If South Africa seizes the opportunity to be one of the first big emerging markets to do the right deal, we could access financing. That could give us the right capital injection. ‘

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

This article first appeared on Citywire South Africa hereand republished with permission.

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