Entitled; ‘How ESG has become the driving force in the energy sector,’ the panel discussion was moderated by James Carter, Partner at DLA Piper, UK and included Jorian Hamster, Senior Associate, DLA Piper; Festus Kapembe, ESG Manager, ReconAfrica; Michiel Coenraads, Partner, DLA Piper UK; Julien Perez, VP Strategy and Policy, OGCI and Liesl Esau, HSE & EC Lead, bp Southern Africa, as speakers.

According to Hamster, “ESG is not just decarbonization, it is not just renewables. By only focusing on decarbonization, we are missing the meaning, importance and benefits of ESG in maximizing energy developments, ensuring energy security and in transferring the benefits associated with the exploitation of resources to the local communities and economies. Today, we are seeing global investors just signing deals when they see that it is renewables and stepping back when it is hydrocarbons, yet even in massive renewables developments ESG is not being prioritized.”

Speaking in regard to how ESG is shaping energy market trends, Coenraads stated “What we are seeing is a huge change of capital from fossils to renewables. Focus on ESG projects is about $600 billion and on non ESG at $400 billion. Banks are moving away from investments in carbon chains and many internationals have committed to net zero meaning it is difficult for majors to finance infrastructure to get oil out of the ground because they need to decarbonize hence they are now diversifying assets. Shell for instance has been told to reduce emissions by 45% by 2030.”

Commenting on the increasing exits by majors across some of Africa’s hydrocarbon-rich basins in prioritizing ESG targets set in home countries, Hamster added that “Risks does not mean you have to diversify, you have to work together with all parties involved including governments and develop mechanisms to work around maximizing both ESG and energy developments.”

Perez added that with companies prioritizing ESG, there will be a continued increase in renewables investments and in electrification but if investments in gas and new baseload power capacity additions stops, it will cause a huge crunch on the energy system. He said “We should continue investing in fossil fuels and at the same time use new technologies such as drones, data analytics and satellites to track the environmental impacts of these projects. We need to develop and employ innovative decarbonization mechanisms and strategies in our oil and gas projects. World players need to be guided on what ESG means.”

The panel also explored what Africa as a continent needs to get out of the upcoming COP 27 summit in Egypt. Hamster said “There is something circular about these COP summits especially around climate financing and the commitments keep on being not delivered. There needs to be practical solutions and implementation not just promises. African voice in ESG, the energy transition and environmental issues needs to be heard and included in global frameworks.”

According to Kapembe, “In addition to just maximizing commitment and budgets in environmental and social spending, African companies and leaders need to raise issues around what is affecting the African population at COP 27. In as much as we can explore renewables, we need to make use of the resources available in vast quantities in the continent. The African team needs to have a united voice from the African background and have commitments that can help us sustain developments that will address both the environmental and socioeconomic development goals. Africa has a lot to contribute to addressing global energy transition but needs to be listened to.”

Perez added that “It seems Europe and the west are talking to each other and not listening to the whole world. If we do not resolve the issue of ESG, climate change and energy poverty together, we are all going to lose. In terms of ESG, Africa has a lot to benefit in regard to accelerating renewables investments and developments as well as the implementation of smart technologies. For climate activists, the fossil fuel industry is not a threat and for the fossil fuel sector, ESG is not a challenge but a business opportunity.”

Esau highlighted the need for the implementation of campaigns aimed at increasing ESG awareness across the entire energy value chain from policymakers, energy producers, retailers, transporters and consumers.