By: Amy Musgrave
The impact of the planet’s warming is changing weather patterns and ecosystems. As a result, today we are seeing threats to food security, more health risks, and poverty and displacement. But just as worrying is the impact that climate change has on SMEs including rising insurance costs, infrastructure nightmares, and disruptions in value supply chains.
Over the last month, climate change has made headlines in South Africa. The Climate Change Bill was passed by the National Council of Provinces and must now be signed into law by President Cyril Ramaphosa. While some have described it as watered down, it will require all spheres of government to have climate change plans and set sectoral targets to reduce greenhouse gas emissions.
The Bill is critical in helping guide the country’s response to climate change. The inaugural South African Climate Change Report has found that incoherent policies and inconsistent actions by government and other stakeholders is hindering the country’s commitment to curb climate change and facilitate a just energy transition.
Trade & Industrial Policy Strategies (Tips) Sustainable developmental economist Dr. Michael Hector doubts that the Bill will see any quick wins for SMEs in the short term because it takes time to implement legislation and see results, and transitioning to the green economy is a long-term endeavour. “However, it may open new opportunities for SMMEs, especially local green entrepreneurs that have been active in the green economy, especially in our local communities. But they do need greater support to ensure that they have the tools to benefit from the greater green economy,” he told Vutivi News.
Tips sustainable development researcher Elize Hattingh agrees with her colleague, saying that while the Bill introduces new regulatory challenges for small businesses, it also opens up avenues for innovation, support, and long-term sustainability. Adapting to these changes proactively can help small businesses thrive in a greener economy.
For small businesses, the legislation has several implications. These include regulatory compliance, opportunities for green innovation, access to support and resources, long-term savings, and participation in climate forums to voice their concerns and contribute to policy development. On regulatory compliance, they will need to align to new regulations aimed at reducing carbon emissions. “This might involve adopting more sustainable practices, utilising energy-efficient technologies, and possibly adhering to new reporting requirements concerning their greenhouse gas emissions,” Hattingh told Vutivi News.
The Bill includes provisions for the development of climate change response plans at provincial and municipal levels. These plans can offer support and resources to small businesses to help them adapt to new regulations and transition to more sustainable practices. Hattingh says this support might be in the form of grants, subsidies, or technical assistance.
Also, she says that while initial compliance might require investment, small businesses that adopt energy-efficient practices and technologies can benefit from long-term cost savings through reduced energy consumption and improved operational efficiencies. Additionally, being compliant with the new legislation can prevent potential fines and penalties associated with non-compliance.
While the Bill should have a positive impact on enterprises involved in the green economy, Hector points out that the reality is that SMMEs face a myriad of challenges, but also those green entrepreneurs who are referred to as just transition entrepreneurs. They are the innovators and informal businesses that provide services to their communities. They have to deal with external barriers such as government red tape, troublesome regulation, and access to finance and markets.
“In our current work, we have found these to be particularly burdensome to green enterprises. However, we have also found that they face some internal barriers such as creating business models, managing their finance, etc. Those non-financial aspects that make a business,” he said. “But we need to remember that many of these green entrepreneurs are innovators by nature and not necessarily businesspeople, and thus they require the necessary business skills required to succeed.” There is a greater need not only for accessible funding but also for support programmes and structures that could help make them bankable and sustainable, especially for newcomers to the green economy.
