By Dr Rafique DAUDI & Mawuli ZOGBENU
Discussions on Environmental, Social, and Governance (ESG) issues are perhaps the most topical issues engaging the world’s attention, today. Across businesses, governments, and non-governmental organizations, in the world over, ESG principles are being embedded in day-to-day organizational practices as a demonstration of commitment to organizational and national sustainability and well-being.
In the coming not too distant future, ESG will become the bases of individuals, groups, organizations, and nations’ selection of business partnerships. Thus, organizations and nations alike, now more than ever, will need to either embrace the ESG wave or perish! The world needs ESG to survive!
Climate change
There has been widespread global reporting on the effects of climate change, which is underpinned by the low regard for ESG initiatives. Many countries are experiencing worse forms of drought, unprecedented magnitude of rains, hunger and starvation, wildfires, destruction of forests and water bodies, hurricanes, typhoons, tsunamis, and many more devastations that continue to threaten the human survival. The following are some accounts of these devastations from different parts of the world:
Amazon basin dryness
There has been reports of the Amazon basin experiencing an unprecedented drought since the austral summer of 2022-2023, which has continued into 2024. In October 2024, rivers in the Amazon basin reached record low levels, affecting Brazil, Bolivia, Colombia, Peru, and Venezuela. The Solimões River in Brazil dropped to 254 centimeters below the gauge’s zero mark.
The drought has led to a surge in wildfires, especially in the southern Amazon and Pantanal regions. The Pantanal region experienced one of its worst fire seasons in decades. The drought has isolated human populations along Amazonian rivers, stripped them of their livelihoods, and left them without necessities. The United Nations Children’s Fund (UNICEF) estimates that US$10 million is needed to address the most urgent needs of communities affected by the droughts.
Oil Rocks
Similarly, the Cable News Network (CNN) recently reported on the Soviet-era oil rig city of Neft Daşları, also known as Oil Rocks, which is in the Caspian Sea. The city is an industrial settlement that is “floating” on the Caspian Sea. It is guarded by military vessels and has been described as “like a motorway in the middle of the sea”. The city is sealed off from outsiders and is now slowly crumbling into the sea.
Volcanos
Just early November 2024, the British Broadcasting Corporation (BBC) reported that Japan’s iconic volcano and highest peak, Mount Fuji, still awaited the first snowfall of the season. When white did appear on its flanks on November 6, 2024, it was the latest in the year for the mountain’s first seasonal snowfall since records began 130 years ago!
Cuban earthquake
Very recently, the CNN again reported of a 6.8 magnitude earthquake that struck off the coast of eastern Cuba, causing material damage in several regions as the island continues to recover from widespread blackouts and the impact of two hurricanes over the past few weeks.
Blue Lagoons on the Sahara Desert
On October 8, 2024, AP News reported that a rare deluge of rainfall left blue lagoons of water amid the palm trees and sand dunes of the Sahara Desert, nourishing some of its driest regions with more water than they had seen in decades. South-eastern Morocco’s desert is among the most arid places in the world and rarely experiences rain in late summer.
Southern African drought and hunger
Similarly, on October 15, 2024, Aljazeera reported that millions of people across Southern Africa are going hungry due to a historic drought, risking a full-scale humanitarian catastrophe, the United Nations has warned.
Countries like Lesotho, Malawi, Namibia, Zambia, and Zimbabwe have all declared a state of national disaster in the past months as the droughts had destroyed crops and livestock. Angola and Mozambique are also severely affected. The UN’s World Food Programme (WFP) has warned that the crisis may deepen until the next harvests in March or April 2025.
Thirteen years ago
In a January 2011 study published in the Journal of Environmental Science & Engineering (5:1229-1238), Kouadio et. al, posited that the rainfall recorded in several weather stations of Côte d’Ivoire was in great deficit during last decades.
This situation was related with the severe drought which occurred early in the seventies in the Sahel and with the intensive deforestation registered in the tropical forest of Côte d’Ivoire.
Thus, one must better apprehend the rainfall variability in this tropical area of West Africa, to outline its main causes and to ensure its forecast that is necessary for the food farming period.
There are several other examples of how climate change seems to be mutating thus making it difficult to make sustainable business decisions within the framework of ESG principles and embedding them into business practices and operations.
Ghana is not spared in this global phenomenon as the country keeps experiencing dry spells in some parts with marked effects on food security and supply.
Effects of carbon emissions on Africa
If one ever thought the issue of climate change was far-off Africa, there is, therefore, the need to rethink it. The paradox is that, though the African continent is said to be the least in terms of carbon emissions globally, their effects rather are negatively impacting Africa the more.
Where do were go from here?
Ghana’s insurance regulator, the National Insurance Commission (NIC), in collaboration with other development partners such as the United Nations Development Program (UNDP) and the German Development Cooperation (GIZ), have been providing training support and guidance to regulated entities on the significance of embedding ESG principles in the practice of insurance in Ghana.
With the obvious threat of climate change to business sustainability, insurance entities must, as a matter of urgency, rise to the occasion and embed ESG principles in their day-to-day business operations to ensure they contribute significantly towards safeguarding the environment, which is a pre-requisite for business sustainability.
We are, perhaps, running against time and it is refreshing to note that the NIC together with its development partners including FSD Africa keeps engaging industry players in fine-tuning a draft directive in this regard!
NB: This write-up is only a teaser on the growing need for ESG in business practices. The authors’ views and conclusions were primarily and purely based on some reports across the world and the recent stakeholder engagements on ESG organized by the NIC and its partners.
About the Authors
Dr. Rafique DAUDI is the Country CEO of Metropolitan Life Insurance, Health and Pensions
Mawuli ZOGBENU is Senior Manager & Head of Public Relations of the National Insurance Commission (NIC), Ghana
