Herbert Smith Freehills ESG Tracker (SADC Edition)

There are so many ESG-related publications and developments that it is hard to keep abreast of them all. For this reason, HSF publishes a monthly tracker of ESG-related publications and developments, with a primary focus on developments that may be of most interest to or impact our clients in the Southern African Development Community, be they corporates, asset managers or asset owners.

Highlights for this month include:

  • Mozambique: It is reported that Mozambique has amended its labour laws by, amongst others, introducing teleworking, increasing maternity leave from 60 to 90 days, introducing 7 days of paternal leave, providing for alternative work schedules in the mining and oil sectors, and authorising recruitment agencies to hire foreign workers. It has also introduced provisions which address harassment at the workplace. The purpose of these revisions is to increase productivity, contribute to the generation of income and create a positive impact on sustainable development.
  • South Africa: The Minister of Forestry, Fisheries and Environment published the Consultation on the intention to amend the Environmental Impact Assessment Regulations, Listing Notice 1, Listing Notice 2, and Listing Notice 3 of the Environmental Impact Assessment Regulations, 2014. Proposed amendments include requiring compliance with environmental management programmes approved under the Mineral and Petroleum Resources Development Act, 2002 still valid at 8 December 2014, to be audited at least every five years; inserting new definitions into the listing notices (for terms such as residue stockpile and residue deposit); and the insertion of new (mining related) listed activities in the listing notices. The public is invited to submit comments by 4 September 2023.
  • South Africa: It is reported that the South African Prudential Authority has released four proposed guidance notes for comment by banks and other institutions on climate-related disclosures and risk practices. The guidance contains critical recommendations on governance, strategy, risk management, metrics and targets relating to climate-related risk. The guidance notes demonstrate the changing perceptions of climate-related risks. These risks are viewed as having an impact on banking institutions, regardless of their size, complexity, or business model.
  • South Africa: The Companies Amendment Bill [B27-2023] and the Companies Second Amendment Bill [B26-2023] (Bills) were both tabled in the National Assembly by the Minister of Trade, Industry and Competition. The aim of the Bills is to amend the Companies Act, 2008 so as to (among other things) (i) insert certain definitions and amend the definition of "securities"; (ii) to clarify when a Notice of Amendment of a Memorandum of Incorporation takes effect; (iii) to provide for the Commission to publish, as prescribed, the notice of the location of a company's records; (iv) to differentiate where the right to gain access to companies' records may be limited; (v) to provide for the preparation, presentation and voting on companies' remuneration policy and directors' remuneration report; (vi) to amend the time bars, in respect of proceedings to recover any loss, damages or costs for which a person may be held liable in terms of section 77 of the Companies Act; and (vii) to amend the time bar for the bringing of an application to declare a person delinquent in terms of section 162(2) and (3) of the Companies Act.
  • Global: The European Commission has adopted the rules governing the implementation of the Carbon Border Adjustment Mechanism (CBAM) during its transitional phase, which starts on 1 October 2023 until the end of 2025. The Implementing Regulation details the transitional reporting obligations for EU importers of CBAM goods, as well as the transitional methodology for calculating embedded emissions released during the production process of CBAM goods. In the CBAM's transitional phase, traders will only transitional phase, which starts on 1 October 2023 until the end of 2025. The Implementing Regulation details the transitional reporting obligations for EU importers of CBAM goods, as well as the transitional methodology for calculating embedded emissions released during the production process of CBAM goods. In the CBAM's transitional phase, traders will only have to report on the emissions embedded in their imports subject to the mechanism without paying any financial adjustment. This will give adequate time for businesses to prepare while also allowing for the definitive methodology to be fine-tuned by 2026. The Commission also published guidance for EU importers and non-EU installations on the practical implementation of the new rules.

If you have any ESG-related questions, please get in touch with your usual contact at HSF who will be able to direct you as appropriate.

This issue covers the period from 1 to 31 August 2023.

THE COMOROS

31 August 2023

It is reported that the International Solar Alliance hosted its fifth regional meeting in Rwanda on 31 August 2023. Nine solar power demonstration projects were inaugurated in the Republic of Uganda, the Union of Comoros and the Republic of Mali. Four of these projects are in Uganda, two in Comoros and three in Mali. It was highlighted during the meeting that Africa has the potential to become a global leader in renewable energy production and innovation due to an abundance of renewable energy resources, ranging from vast solar potential, wind resources, geothermal hotspots, hydro energy, and green hydrogen. It was also noted that Africa is also home to over 40% of the global reserve of critical minerals which are essential to renewable and low-carbon technologies. By tapping into these resources, Africa can not only meet its energy needs but also become a global leader in renewable energy production and innovation.

DEMOCRATIC REPUBLIC OF CONGO

29 August 2023

It is reported that The Alliance for Food Sovereignty in Africa hosted a convention in the Democratic Republic of Congo between 29 and 31 August 2023. The gathering aspires to forge a path forward amidst the challenges of food systems, biodiversity conservation, and the looming threat of climate change. This initiative aligns with the vision of President Tshisekedi, emphasising agroecology as the cornerstone of sustainable food systems and climate adaptation strategies.

LESOTHO

21 August 2023

It is reported that the New Development Bank (NDB) and Trans-Caledon Tunnel Authority (TCTA) signed a loan agreement for the implementation of Phase II of the Lesotho Highlands Water Project. The NDB will provide a project loan of ZAR 3.2 billion to TCTA under the sovereign guarantee of South Africa. TCTA, a state-owned entity in South Africa, will use the funds to construct the Polihali Dam and reservoir, a 38-kilometre-long water transfer tunnel, roads and bridges, telecommunications infrastructure, and will extend electricity and other development infrastructure to Lesotho. The project will increase the yield of the Vaal River Basin by almost 15% in the long run, which will support economic growth and foster sustainable livelihoods of people of Gauteng, a highly urbanised province with 15 million people, responsible for 36% of South Africa's GDP.

28 August 2023

It is reported that the Department of Housing held a meeting in which it confirmed the implementation of the New Urban Agenda. The Agenda seeks to accelerate progress towards achieving the United Nations Sustainable Development Goals (SDGs) and in particular SDG 11, which focuses on making cities and human settlements inclusive, safe, resilient and sustainable. The Department is in the process of developing regulatory legislation in the form of the National Housing Bill, which is in the consultation stage, and the National Urban Policy, which is in the initiation phase. In addition, efforts are underway to establish a National Spatial Planning Framework.

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