Weekend Argus (Saturday Edition)
Synergy: City toes green line
Cape Town to be on the right side of history.
This is the object of its May campaign, aimed at “scaling up the momentum of the divestment movement and intensifying our demand for the City of Cape Town to do what is necessary for climate action by divesting from fossil fuels”. In particular, it is focusing on water.
GDM says in a statement: “While we applaud mayor Patricia de Lille for acknowledging the crisis, stepping up actions, implementing household water restrictions and attaining a daily consumption target, the city (has) yet to demonstrate bold actions required to confront the water climate crisis and urgently halt catastrophic climate impacts.
“That is why we have launched an online petition asking the City of Cape Town to put its money where its mouth is.”
GDM argues that fossil fuels “consume a large share of precious water” and that the coal mining sector’s “impact on water is beyond 11% a year, and much of the water used ends (up being) polluted and not easily re-useable”.
The city appears to be in agreement on the essentials.
Mayoral spokesperson Zara Nicholson commented: “The city definitely wants to play a proactive role in driving the green economy and living up to our global responsibility in fighting issues such as climate change.
“In that regard, we see the important role of sustainable investing and we have been exploring with the divestment campaign and our Finance Department ways in which we can understand and move towards minimising our portfolio’s exposure to activities which are directly responsible for exacerbating climate change.”
Nicholson added: “This is a complex issue, though, and we want to make sure that we take the right decisions both in terms of our financial sustainability and global responsibility, but we should be in a position relatively soon to make decisions in this regard.”
Cape Town, Nicholson pointed out, was going one step further.
“In addition, we will also soon be launching our own green bonds so as to give ethical investors an opportunity to invest in products that are directly pushing forward green economy objectives.”
De Lille announced last month that she was going on a roadshow in June and July to entice investors into buying a R1 billion green bond to finance projects aimed at mitigating or adapting to the effects of climate change.
These would include accredited, certified projects for buying electric buses, funding water-saving projects and getting electricity from cleaner sources.
De Lille reportedly told the full council on Wednesday she was confident of finding moneyed takers on the grounds of the city’s AAA+ credit rating – which stood in contrast to the country’s “junk status”.
Green investment is evidently complex, and, when it comes to doing the right thing, cause and effect are not always what they seem.
This is underscored by the observations of Lea Sarah Kulick, a postgraduate student in climate change and international development, in August – specifically in relation to a research project on climate responses in the City of Cape Town.
She noted that “one of the Climate Bonds Standards criteria for bus rapid tansport systems is that the project will substantially reduce greenhouse gas emissions per passenger-kilometres”, and that “a project on the purchase of electric buses immediately qualifies, without any further investigation”.
That said: “In the case of South Africa, the vast majority of electricity in the grid is generated through coal-power plants, and the use of electric buses will not contribute to a cleaner form of transport
“Therefore, it can be questioned whether such international standards make sense in a local context.”
This appears to underscore the importance of alternative sources of electricity – one of the objectives of the city’s green bonds.
In contrast, advisers to GDM argue that while “BRT systems such as MyCiTi cost “in the region of R50 million per kilometre”, the emissions footprint of minibus taxis (the transport mainstay of some 80% of the population) is less than “people in private cars, because they move many people in one vehicle”.
No less bedevilling, it appears, is the question of how effective disinvestment really is.
Writing in the New Yorker in October 2015, William MacAskill, associate professor of philosophy at Oxford and author of Doing Good Better: How Effective Altruism Can Help You Make a Difference, examined this question directly.
He took, as his initial example, the disinvestment campaign against apartheid, and, drawing on the findings of economists Siew Hong Teoh, Ivo Welch, and C Paul Wazzan, found that “in fact, political pressure turned out to have no discernible effect” on the public market valuations of shares of companies that remained in South Africa”.
“According to the authors, a possible explanation of this finding is that ‘the boycott primarily reallocated shares and operations from socially responsible to more indifferent investors and countries’.”
MacAskill suggested that strategy mattered more than principle.
“If the aim of divestment campaigns is to reduce companies’ profitability by directly reducing their share prices, then these campaigns are misguided. Suppose that the market price for a share in ExxonMobil is $10, and that, as a result of a divestment campaign, a university decides to divest from ExxonMobil, and it sells the shares for $9 each. What happens then?
“Well, what happens is that someone who doesn’t have ethical concerns will snap up the bargain.”
MacAskill argued: “Divestment campaigns have the potential to do good, but only with caveats. To avoid the risk of misleading people, those running campaigns should be clear that the aim of divestment is to signal disapproval of certain industries, not to directly affect share price.
“They should be clear that they aim to stigmatise the organisations (like fossil fuel companies) that are being invested in, not those that do the investing (like universities, pension funds, or foundations).”
Where possible, he urged, “they should bundle the campaigns with actions that have larger direct effects, such as fossil fuel energy boycotts, or with calls for specific policy changes”.