As the climate summit moves into full gear this week, energy transition will be front and centre of the conversations among various stakeholders. Delegates will debate and explore funding and technological innovations around carbon capture and renewable energy as part of efforts to address climate risk.
However, from the perspective of the African continent, there is an additional consideration: the social and economic impact of the energy transition debate. It is an essential context because the continent's socio-economic development and the need to address climate risk are not mutually exclusive.
Therefore, finding the right balance between growth and climate risk remains a delicate dance for leaders and organisations across the continent. This two-prong approach to the energy transition debate should influence how organisations develop and execute their sustainability strategies. Some important considerations for organisations in this debate include the following.
Firstly, there should be a good understanding and recognition that the energy transition debate, while primarily focused on climate risk, is equally an economic and social issue for the continent.
Therefore, organisations should ensure that the energy transition strategies adopted have an accompanying business case across the entire value chain. Organisations should report climate goals and commitments and the positive economic impact and value such goals create for broader stakeholders, such as community development and improving people's livelihoods.
It is not enough to transition but to ensure the delivery of a just transition regarding the socio-economic well-being of people and their communities in the immediate and long term. Secondly, organisations should report the trade-offs made while executing their energy transition strategy.
These trade-offs should also highlight the impact on the financial fortunes of the organisation in the short, medium and long terms. A clear understanding of the decision-making framework will enable stakeholders to evaluate the value system that guides decision-making and how that is balanced with financial sustainability for organisations, communities and stakeholders.
A double materiality lens is also helpful in providing organisations with a comprehensive view of the linkages between non-financial and financial matters.
Finally, implementing outcomes and commitments from the climate conference should be approached holistically from an African context, as this is equally an economic issue.
Akinyemi Awodumila is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.