Speaker 0:
Good morning, everyone.

Speaker 0:
Good morning. My name is as he said, I want to say and it gives me great pleasure to chair the far side chart on just transition, creating the South Africa. We want tall order. Let's see if we can achieve it. But I think a little bit of context is important to our conversation this morning. And while we're talking about just transition, we know that climate change is real

Speaker 0:
and that there are economic and social consequences of climate change. I don't think I have to tell anyone about what those are. We see them often drought and the impact that has that that has on food security. We saw a couple years ago when Cape Town had a problem with water shortage

Speaker 0:
that also had an impact on the economy. It had an impact on tourism in that province, so there are real consequences to climate change. But I also think it's important to talk about the context that we're in. We are dealing in a world where economies are moving to a low

Speaker 0:
carbon emission way of doing business or economies, and they demand of us as a country that we also have the same movement that we move to a low carbon emission economy, the trade policy demand of us that we behave differently. In essence, we are being asked to reconstruct the economy

Speaker 0:
and in doing so, to do it in a way that does exacerbate the issues that we already have. I think the deputy president talk talked about issues around economic growth, lack of inclusivity, poverty, et cetera. So our challenge is how do we manage to do just transition in such a way that we actually resolve some of the issues that the economy is faced with?

Speaker 0:
Um, it's it's It's fantastic that we have this panel because we have a variety of views and hopefully by the end of this session will know exactly what just transition is. But secondly, hopefully we'll understand how we can integrate the issues of just transition into our decision making and boards of pension funds and into our investment strategy.

Speaker 0:
But I think it's always good to start at the very beginning. I'll start with Deep Patel, since you are the head of climate, finance and innovation at the Presidential Climate Commission. So in 2020 the Presidential Climate Commission approved a just transition framework for South Africa,

Speaker 0:
I would imagine there's a lot of us here who don't know what that is about. And maybe just to frame our conversation, you can start by just take us through what this just transition framework is about and the principles behind just transition, the just transition. Thank you very much. The first thing I want to say is that you have a male dominated panel,

Speaker 0:
but the good thing is that we are being led by you. So we are truly blessed to be a bunch of hopefully hard working men who are being led by you. Ladies and gentlemen, fellow panellists, let me say at the outset that climate change, as has already indicated, is upon us. I think the debates about whether climate change is happening are long over,

Speaker 0:
and the reality is that the world as a whole needs to do something about climate change. And as the rest of the world, the developed world in particular moves forward with its plans. They do have deep capital markets. They do have the finances that are required and importantly, they have the newer technologies that are required to respond to climate change. I also need to say that the notion of a just transition

Speaker 0:
emanated from South Africa and it emanated, believe it or not, from Cosatu's work in the 2010 2012 period. And it was at the job summit which is convened by the president, that COSATU made a call for a social compact to be created so that while we undertake our decarbonisation journey as a country, we do it in a way that leaves no one behind.

Speaker 0:
And so the imperative for South Africa is not just decarbonisation. As the deputy president also said this morning, The imperative for South Africa is that we deal with the triple challenge of growth, as you have said chairperson. Jobs and poverty as we undertake this journey. But as the rest of the world also adjusts and

Speaker 0:
enables their own transition, there are risks associated in the global economy for countries like South Africa. So we're talking about a just transition that is a very complex navigation of a South African specific programme which allows us to take our rightful place in a world through a contribution to decarbonisation, but doing it in a way that meets our own local domestic economic and social challenges

Speaker 0:
to jump straight into the just transition framework. The Presidential Climate Commission, as you've indicated, was formed. It's a very new organisation. It was formed in the time of Covid

Speaker 0:
and we've operated largely virtually. But the interesting thing about the composition of the Presidential Climate Commission is that it consists of all social partners. Labour is represented, civil society is represented communities. Young people in the faith community is also represented. It is chaired by the president

Speaker 0:
and interestingly, 10 ministers from the cabinet dealing with economic issues, not least of all the most recently appointed electricity minister are also commissioners. And so it is in this format that we formulated the just transition framework and the just transition framework was endorsed by Cabinet

Speaker 0:
and it was endorsed by Cabinet with a mandate to the national treasury as well as to the Department of monitoring, evaluation and planning to begin to integrate it together with the national Development Plan into the country's programme.

Speaker 0:
Now the just transition speaks to three types of justices that are crucial to undertake and embed as we undertake the socioeconomic transition. The first is restorative justice

Speaker 0:
and restorative justice relates to the people who have already suffered the consequences of climate change and provision needs to be made to ensure that those people who have suffered the negative impacts are carried with us in a progressive manner.

Speaker 0:
Secondly, procedural justice and here in particular all of society, communities as well as Labour insist that this is not a top down programme. It is a programme which needs to be procedurally, just procedurally, just not by way of just information sharing but by creating mechanisms where people themselves can participate in the journey to their contribution and well being

Speaker 0:
as we undertake the just transition. Thirdly, very importantly for this audience, very, very important. The notion of distributive justice distributive justice speaks to who bears the risk and reward of the just transition as we unfold it. And we all know that the communities society and lower levels of the economic value chain, whether it's informal sector SMEs, stand,

Speaker 0:
stand the risk of losing the most as we undertake this journey and therefore we need to find creative, innovative solutions to financing as well as undertaking development parts that deal with the issue of a proper

Speaker 0:
sharing of the risk and reward in distributive justice. We are also seeing how we can begin to package in a very creative way, the projects that are very difficult for banks using their own commercial means to fund. And here we are asking

Speaker 0:
the global community to make their fair share contribution to allowing the just transition in South Africa to be financed and assisted. But secondly, we are also calling on corporate South Africa to begin to undertake through the ESG mechanism

Speaker 0:
the journey that requires a growth in both our livelihoods in communities as well as in our value and supply chains. Final point is that we, as a country I think, stand poised to collectively undertake the multi system transformation called the just transition in order to create a lower carbon but also climate resilient economy and society.

Speaker 0:
Thank you so much for that. I think for the longest time, I must say when I heard about just transition and time and I was like, Oh my gosh, we're now being required as trustees to think about something else. We just now grappled wrapped our mind around SG. But what I'm hearing from you is that the just transition journey is actually an integral part of EG and the priorities that we have as a country as a nation around job creation are actually an integral part of that. So you're saying

Speaker 0:
whether jobs lost, how do we invest in other things that create jobs? But I'm I'm also glad to hear that Labour was very involved in the journey because to me, labour is a proxy for societal issues that need to be taken into consideration when we are implementing just transition and it be interesting to hear from ya Cosatu's perspective around what your key concerns are when we implement just transition.

Speaker 0:
Uh, what are the key things that we need to be mindful of that we need to solve for that, um, Labour is keen to see as an integral part of of the just transition journey

Speaker 0:
thank you about things and we

Speaker 0:
I appreciate the fact that you are invited here.

Speaker 0:
I hope my colleague on my right when he was reminding us that who are the proponents of just transition was not to make some of us

Speaker 0:
to keep quiet

Speaker 0:
and we shall not keep quiet.

Speaker 0:
That is a latter note, but chair

Speaker 0:
the

Speaker 0:
the issues for us are the following

Speaker 0:
that we are workers. And, uh, we are community members first and workers and back to to to communities.

Speaker 0:
Now, if you're talking about the just transition, then it must be a just transition.

Speaker 0:
You cannot talk about the just transition and move many miles ahead of us. To the extent that when your just transition is not transparent, it's not just and it leaves behind

Speaker 0:
society, which is in the main vulnerable

Speaker 0:
workers in serious serious um

Speaker 0:
um, our environment. And therefore we'll have to ensure that

Speaker 0:
you move with communities. You move with workers because you can't switch from one system to the other the following day, for example, and live about 10 towns in Mpumalanga, you know, in dire situation.

Speaker 0:
The second issue is the

Speaker 0:
is the transparency around the the funding and the loans. Sometimes there's a thin line we are told about. No, there's a funding. Then there's a loan. Who's going to pay these loans except

Speaker 0:
us as taxpayers, there needs to be a transparency around that not only about how they are going to be paid back, who are the real beneficiaries of this kind of debt that was subjecting, you know, generations to come. Um um through. And thirdly,

Speaker 0:
it must be equitable

Speaker 0:
that there's going to be less than 5% budget for 10.

Speaker 0:
And sometimes when you ask a question as to where is this training going to take place In the context of the 10 towns that are spoken about? In Mpumalanga, for example, somebody told me that

Speaker 0:
there's a TV college in Western Cape.

Speaker 0:
Now I said, Are you going to pass these thousands of workers to Western Cape and train them? So there's a problem there, and I think we don't agree. We train people where they are so that you know, um, whatever you are doing is is equitable. And there's enough budget to train people to be able, um,

Speaker 0:
to do

Speaker 0:
to be skilled in a way that will be able to get jobs in your just transition, so that it's not again the project, which we have seen in the public domain, where millions of rands are spent and it's a training

Speaker 0:
uh, A for 10 days, and we are told that workers are trained, we should not take communities and workers for for for granted I think that is a problem for us. These are very, very important and work with us, work with communities and so that your just transition is exactly that. A just transition. Lastly, we woke up in East Rand and Gauteng. You know, um,

Speaker 0:
yesterday morning that all of a sudden there was a an earthquake.

Speaker 0:
Um, it's not something that has happened in South Africa. I think of late. Um are this part of the contributions to that? We are not sure. But I think we just need to take issues of just transition, you know, properly. And but for the benefit of South Africans in particular the vulnerable not necessary the rich to be more richer. Those are some of our key concerns in terms of the

Speaker 0:
the the just transition and lastly, chair as the last. The gender component

Speaker 0:
very critical human rights component is very important, because otherwise, whatever we're talking about, if it's not going to talk, among other issues, those two components is not going to take us anyway. Thank you.

Speaker 0:
Thank you very much. Uh, for that perspective, I mean, I think as you talk, I'm thinking this is not gonna be an easy journey because as well as when you trade, there has to be jobs for those people. So, you know, uh, it's it's, uh, all the initiatives coordinated so that we don't find ourselves with a lot of trained people that do nothing. But I think what you're saying is that the core of just transition is that people we need to be addressing the issues of people and ensuring that we build an economy that is, that is inclusive.

Speaker 0:
We come to some of what you raised, uh, young around funding and some of the issues. Because as I sit here as a pension fund, um, decision maker, I keep thinking some of these things don't fall within our sphere. And we we'll come to that as a debate around who funds what?

Speaker 0:
Uh, so that we understand what our mandate is as pension funds and what what we think should happen from a from a funding of this, uh, just transition. But what is the new, um, uh, as, um, the CE

Speaker 0:
of the Eskom Pension and Private Fund, the second largest pension fund in the industry. And also as seen as you're seen as a pioneer, we all know that. Um, I'm just trying to get a sense from a practical point of view, how you have integrated just transition into your investment strategy, sharing that sort of example and some of the challenges that you've gone through.

Speaker 0:
No, thanks. Let let let me start by saying the EPPF like many pension funds, its primary responsibility is to be able to honour uh, that pension plan promised to its members. Right?

Speaker 0:
But the just transition is more closer to us as the Eskom pension fund because many of our members are affected by the core value chain. So we have a direct interest in the discussion.

Speaker 0:
But in order to to honour that pension plan promise, we also recognise that you need to be able to generate investment returns on a sustainable basis

Speaker 0:
and that investment returns is generated within the system and that system is society.

Speaker 0:
Now, if any part of society is not functioning, whether it be social inequalities, climate change, economic disparities, we find expression in the valuations of the assets. At some point, you will find tax has been increasing carbon taxes coming through even diesel and load chaining affects our terms

Speaker 0:
and so as an intergenerational institution across many generations and the EPPF our life of fun is about 80 years. We got to think across the 80 year generation as well.

Speaker 0:
And so our philosophy and approach is slightly like major asset owners globally is that you got to adapt a four dimensional approach to invest in which is risk return, cost and impact. And our sustainability investment strategy is aimed around extending the fiduciary responsibility beyond just risk return

Speaker 0:
and costs. To understand the impact of society, we framed it around three key key features. Key dimensions is climate change, and most probably, the issue is not climate change because we believe climate change is a symptom of something bigger. We need to talk about regeneration and sustainable environmental practises. It's about social inequality and particularly in South Africa

Speaker 0:
and economic disparity both on the race and geographic perspective. So when you approach the investment decision, we need to approach it on all three fronts, taking both the impact on climate change, the social inequalities that confront us as well as economic issues that we need to get right both from economic policy and planning perspective as well.

Speaker 0:
And so some some Some priorities may be more immediate, like unemployment growth in our country, but some are more, more longer term, like climate change and the transition to carbon neutral. So they're all important is how you time release it and take an approach.

Speaker 0:
And so to bring it all, we believe that the investment decision must be yes. It must promote justice in terms of the restorative end of redistributive elements as well as proceed. But pension funds are critical in terms of allocating capital that can drive those agendas. They can drive the narrative of social returns that one's expected,

Speaker 0:
uh, and how to shape that conversation within the asset management space within the industry space. Uh, but critical to that is that we need to be sensitive to the jobs that's created the jobs that are lost, uh, the skills that are required. And I think the skills that need to be shifted and I think in South Africa we speak a lot about the reprogram, which was a great programme.

Speaker 0:
But I think we also need to reflect on what was not so a lot of social studies that says maybe the social impact of the reprogram could have been done better. I think as we go through the just transition programme, we need to be able to track the learnings of the programme and recommend to enhancing social impact around infrastructure and other transitional arrangements going forward.

Speaker 0:
And I think as the EPPF those are our our our front and foremost in our decision making is that we can orchestrate the social change that we want through our investment decisions as well.

Speaker 0:
Just a follow up. Uh, can you tell? Tell us some of the investments you've done that in your portfolio that would speak to just transition. I'm also going to challenge you on one thing and we'll speak about it. As you know, we must be good words. We must be aware of the social challenges and deal with them. What does that mean? You know, but But we'll come to that just just one or two investments that you've done that you think speaks to just transition.

Speaker 0:
So so so Part of our portfolio is to be able to dedicate impact investments that we've done across the spectrum, whether it's around education, health, renewable energy, small micro medium enterprise, finance and largely through our private equity and infrastructure programmes. We've also allocated done investments that look at how can we create jobs? How can we drive gender equality? How can we

Speaker 0:
support local procurement and then to be able to collect all the data and understand the impact that we're making in the societies? And it speaks to student housing across different key parts of our society. But I think a lot of work has been done around the impact and we've used the private equity allocations to drive that and infrastructure.

Speaker 0:
But we also need to step up our work around ESG and how we engage listed environments to commit to more credible plans to make that impact. Because I think that's where the critical shift and change will come from is on the listed side and so moving beyond screens and corporate engagement. To have much more active and activist and stronger approach on EG is the area that I think the will continue to work on going forward.

Speaker 0:
Thanks. Norton, you come with what is it an international perspective on just transition? I think for the longest time, even in the South African context, when you spoke about EG There was actually quite a lot of resistance issues around job creation. I'm hoping that as a as a full body that has such a responsibility and power to make change to the economy that we don't see those many voices. People

Speaker 0:
would say to me, Well, creating jobs is government's job, But it isn't because the context is we live in this society and we need to contribute to how or or the environment that our members, um, are gonna be retiring in now. From your international perspective, as someone who advises pension funds on issues around just transition, I'm just We're just curious to understand what's the sort of conversation that are taking place at the table

Speaker 0:
in some of these, uh, forums. Uh, the challenges that, um, the trustees are talking about. And, uh, yeah, what are the issues?

Speaker 1:
Thank you very much. Um, very good questions. And and so

Speaker 1:
it's an honour. We looking forward to share this panel with you all some of the really great things that have been happening overseas, particularly in the UK, North America and Europe.

Speaker 1:
A lot of the conversations about achieving Net zero investing in the right way in order to do that have been happening. Lots of our plans have been lots of pension funds, and other institutional investors have also been investing towards that kind of net zero target. 2050

Speaker 1:
One of the challenges, however, is this whole just transition process. A lot of these conversations are still in their infancy. There are lots of frameworks being set up. There are lots of policy documents being set up, lots of conversations going on behind the scenes,

Speaker 1:
but nothing necessarily in terms of a full bone blown set of examples. And lots of initiatives have actually taken place just yet. However, we've seen some very good

Speaker 1:
positive signs recently with some of our clients and also some of our UK pension funds. So one live example quite recently is there's a consortium of around 12 UK pension funds that have come together

Speaker 1:
some of the largest ones. They represent around 400 billion of assets and representing around 18 to 20 million beneficiaries, and they have decided to work as part of an emerging market, just transition initiative. They've been setting out their stall, so to speak, over the last year or so,

Speaker 1:
and they've now come up to almost their final stage of their planning and then their framework. But just to set out some of some examples of their of the principles that they that they've set out, one is the one who makes sure that they are increasing transparency so they don't just necessarily want to operate on their own as single pension funds but work together, collaborate

Speaker 1:
across different, different regions across different, different pension funds, fostering alignment, collaborating often and so on. So working in partnership, obviously with larger, larger pool of assets will go far away. So that's one of one of the things that they're doing. The second thing is supporting

Speaker 1:
actually real world emission reduction, right? So it's not just investing in renewables and so on. But it's also about building new clean energy, investing in the right kinds of companies that are actually transition transitioning from high emissions to low emissions. And I'm just making sure that jobs are secure and so on.

Speaker 1:
Um, and one of the other things is

Speaker 1:
whenever they're investing in emerging economies, especially like South Africa and others is, they want to make sure that they are dovetailing their policies and making sure that it's relevant for the local market. So any kind of local policy initiatives that are taking place initiatives with any kind of multilateral development banks or other financial institutions and make sure that they're working with them

Speaker 1:
each country at a time.

Speaker 1:
So it's very promising,

Speaker 1:
Um,

Speaker 1:
but is still in its relative infancy stage with some of these overseas, overseas, large donors, but very positive.

Speaker 0:
Well, thank you very much, I think in South Africa we do have some sort of collaboration happening, and I think this journey could be a lot easier when you are collaborating. So maybe this is something that the Asset Owners Forum could look at as well. One more question that I want to ask you before I open up the floor to

Speaker 0:
questions you can ask, there'll be a mic that will roam around, and then there will, like in the past panel there'll be a place where you can log in to ask questions. But just one more question. It really is around investment, and I'm going to ask the same questions of all of you.

Speaker 0:
The question is, uh, from you. How do you want us? What? How what would you like to see integrated in I in in the way we invest as pension funds to deal with just transition. Is there space for that?

Speaker 0:
Thank you very much for that. In fact, I was going to jump in to try to give some guidance. I use the word guidance very guard, right, because firstly, while my background is in finance, I have never had the fiduciary responsibility of looking after members' money.

Speaker 0:
So that's where I want to start off. I want to start off by saying that the way in which the savings industry is structured in South Africa at the moment we are blessed that there is a functional life savings industry in South Africa.

Speaker 0:
I do want to caution, though, that as we do the numbers with respect to what our transition is going to cost by way of investment, need our own domestic savings rate alone is insufficient, which then leads to the question. What do we who are charged with the task of not

Speaker 0:
not only investing domestically but the domestic institutions that are charged with the task of long term sustainability to Shafik Point that will ensure multi generational sufficiency of funds to be able to live up to your obligations. We cannot run away from the fact that we have to take not just the

Speaker 0:
3 to 5 year view on what the economy is doing, not just the 3 to 5 year view on what financial returns we expect on an annual basis, but we need to take a much longer 15 2030 in this case of the just transition, a 50 year view of what the future might look like. And it's here. I think,

Speaker 0:
that trustees, particularly of pension funds who are charged with and have the responsibility to look after multi generational well being of their members, need to be a little more pinpointed with respect to what kind of guidance and investment mandate they give to the broader asset manager

Speaker 0:
institutions in the environment. As we know, the asset managers will take a fee. The asset managers will invest in those things that reach or achieve minimal return, et cetera. But what we also know is that in the South African environment, asset classes and the need to develop new asset classes are very, very important. I'm going to pause here to say that there are certain asset classes might be deemed risky,

Speaker 0:
but they are in fact innovative and forward looking. And we need to find the mechanism where trustees of pension funds not only give permission to, but in fact instruct the asset managers and in fact, the financial system to begin to do at least part of their portfolio some of the innovation that is critical and is required. What is this innovation?

Speaker 0:
This innovation cannot only be measured by an internal rate of return in a project. It cannot only be measured on the basis of an average portfolio return of a particular let's existing portfolio of assets. What it must also do take a forward looking view and understand that as long as the risk that is being taken is conceptualised carefully and is done in aggregate, we could set up a virtual cycle. What do we mean by that? To Young's point,

Speaker 0:
we need to find a way of internalising in the project, cost the cost of being caring to workers who might be negatively impacted. What does this mean for communities? It means that as we unfold and roll out renewable energy projects, we need to find creative mechanisms through which we decentralise and widen the base of ownership of these assets. So in the PCC, we're beginning to talk about social ownership

Speaker 0:
in the PCC. We're beginning to talk about worker participation in ownership in the PCC. We're talking about an issue that has raised, and that is the negative impacts are going to be in Mpumalanga. The renewable resources are in the Northern Cape and for wind in the Western Cape. How do we reconcile the spatial imbalances that occur as we undertake this just transition? They, in my view, are not

Speaker 0:
are not intractable problems, but there are problems require creative solutions. And there are problems require all trustees and all executives of asset managers to begin to understand that even a small portion of an entire portfolio's value can begin to make a really direct impact on not only

Speaker 0:
us moving forward collectively as a society, but us also developing a virtuous cycle and a momentum that keeps this up. Last point, I wanted to make on risk, and then I will stop.

Speaker 0:
We don't have the luxury of sitting back. The EU has already implemented what is called Sea Bank, the carbon model adjustment mechanism. The United States has their inflation reduction act. The EU, the United Kingdom have already announced that there will be a ban on internal combustion engine vehicles from 2035. All these are sectors that we depend on for our own economic and trade

Speaker 0:
to competitiveness. We have to then respond in a way that speaks to the inevitable risk that we are facing now already as an economy, and begin to creatively find ways firstly of protecting these economic sectors. But secondly, not protecting them in the old fashioned way but protecting them through investing in the innovation that is required.

Speaker 0:
Thank you and thank you. See

Speaker 0:
any

Speaker 0:
long term view in investment in the context of a just transition

Speaker 0:
outside re industrialization of South Africa?

Speaker 0:
We are saying nothing

Speaker 0:
because

Speaker 0:
if we are going to entrench thousands of mine workers

Speaker 0:
and we are saying no, no, no, let's look, you know, 10, 50 100 years to come. What are you talking about? Because thousands of workers are existing. I mean, they're going to extend the system that is very important. And I think the Department of Trade,

Speaker 0:
Industry and competition is very critical, and I think because we can't work with this in. That's the one point that we want to make and which is very critical. Otherwise we're going to have a very good you know, conversation which is not taken taken us. Anyway. My colleague is talking about talking about the United Nations. You see here

Speaker 0:
they do as I say

Speaker 0:
and not as I do. It's something that we have been subjected to as South Africa. We, we, we, we we can't link to. That is that I'm told that

Speaker 0:
the mining sector, the coal is leaving South Africa, not to the west, only to the west and the east. Now

Speaker 0:
what has that been? And in the context of a just transition, we are told that you know, by some fundamentalists going to say switch off now and we'll see what happens tomorrow and nothing is going to happen. I mean, in so far as that is concerned. And I think these are issues that we need to address but chair when you look at the projects where practically you are investing in, my colleague on my extreme right from Eskom have touched on the issues

Speaker 0:
because we have failed

Speaker 0:
to transform the economy of the country to reflect the demographics. The following has happened.

Speaker 0:
See, we are told that there is something called When we establish a project they come. They demand 30% with big guns. Otherwise, we are not going to continue that project. I think we need to take responsibility to South Africans. And why this is wrong is leading us to a Mafia and a failed state. But we have created this monster

Speaker 0:
because how then, are these trustees? By the way, these are wages. When we talk about you know, these retirement funds, how are they going to invest when you have, you know, such gangster? I post for me. We call them, you know, gangsterism. But to the extent that we're not seeing law enforcement agencies taking action, to the extent that you say they are going behind bars, it's going to send a very wrong message to to trust this post. There is a party.

Speaker 0:
There are those people. Otherwise it's going to be what you're struggling.

Speaker 0:
You must then add to that the cost of that for for for the criminals, I think it is a problem, something that we we need to deal with. And I wish I I wish. Uh, Comrade Lau was here so that he can tell us what he's doing in in in that regard. Lastly, the Deputy President spoke about

Speaker 0:
of the Republic. That is

Speaker 0:
about a MA meeting with the minister. Ensure that that meeting that meeting will take place.

Speaker 0:
All stakeholders are around the table so that we can engage. You know, around these issues because sometimes you get, you know, different messages.

Speaker 0:
No, there are no criminals in the sector tomorrow. No, there's corruption in the sector now. This, um, different signals are creating a lot of confusion in particular in the context of your your your transition. So that all of us we could say No. No, no. But, Minister exactly what are you saying? As a politician, we need to to know and understand that

Speaker 0:
I hope that

Speaker 0:
the my favourable product, the two system is not going to mud water in the context of the discussion we are talking about here. Thank you. Thanks, guys. Yeah, we have a lot in our hands as stress to, uh to to to think about I I and I think you're right. You know, I, I we've had that. That's where part of the resistance came from when we spoke about. Do as we do not do as I say, not as we do.

Speaker 0:
One of the concerns was this drive for us to disinvest from coal. Uh, but you're seeing demand. Not long ago, Germany was here looking for for coal. But II, I think the context is timing is what I understood is that you're not saying, Let's disinvest Now you walk the journey with the people that you're investing in, but over the long term, you understand that that there's that transition.

Speaker 0:
But the the one thing I, I want to come back to you. So there's a lot of social challenges that come with transition. We spoke about training and so on. Uh, that come, we talk. We spoke about some. Actually, some some communities are going to be killed that are, for example, communities or economies that are based on coal. Those communities are going to be very, very cha cha.

Speaker 0:
But our our biggest challenge as pension funds is very often we don't invest in development costs. You know, we have brown field investors. Most of the time. So how do we deal with it? Every single time we have a a panel of this nature We speak, speak about it and and talk about and financing where to from here,

Speaker 0:
in terms of of ensuring that we unpack or resolve the development, uh, component part of investment so that we can pull in money from from from pension funds. But I do think maybe what's coming out of today There is a few things, right? First thing, the need for collaboration.

Speaker 0:
And I think as asset owners, we started to collaborate. Firstly, uh, the second thing you need innovation, uh, around product types, how we use blended financing where DFIS come in, where this government coming in first last, etcetera, etcetera.

Speaker 0:
But I also do think as you pull funds and you get a pool of assets,

Speaker 0:
you're more inclined to take allocation and say, Let's go for development costs in the portfolio a small portion because you right, and you put that with DF or government funding, you can make something happen

Speaker 0:
with a portion of that portfolio allocated to and allocated to development costs, and you crowd in.

Speaker 0:
So

Speaker 0:
the second thing in in in terms of collaboration. And like I said, I think we must challenge ourselves to have this round table with other investors. Let government come let come that pension fund come together and say, What's your risk appetite? Where are you willing to go? Take a bet? Where are we willing to bet how we make this work? Well, as an ecosystem of investors. And I think this is critical of us. The next step,

Speaker 0:
the the third, uh, point, Jan, you make the point. What's gonna make trust? This shift

Speaker 0:
is that every trust is approaching the decision on their own and they look at it and they say EPPF is going alone.

Speaker 0:
But I think we go together, we can go further. And I think that that alignment is critical for us now

Speaker 0:
and then. Then lastly, you need role clarity. You know, you can't do this without policy makers. So the construction mafi need to be dealt with.

Speaker 0:
Trust is going to say. But if I put my infrastructure down there, it's gonna be stolen crime C. So we need to deal with this. And this is where collaboration with policy makers and government becomes critical

Speaker 0:
and maybe. Lastly, I think when you get pulling of effects, the risk to each each pension fund is less as we share the risk in a pooled fund, and I think most probably later on we'll talk about that. But I do think there's some momentum coming through in the Forum, but we need to lock this down, clear dialogue and action. We're going to facilitate that roundtable of investors soon.

Speaker 0:
I

Speaker 1:
think one of the one of the awful things that is really important is asset managers have a huge role to play as well. And so what we find is

Speaker 1:
when we're trying to allocate, um, like new products and new solutions or strategies for our plans, ask them. The right kind of questions

Speaker 1:
for those asset managers is hugely important. How you considering the whole trust transition in your decision making, How do you select different companies to allocate money to? How

Speaker 0:
do you do it? What are the practical things? But I think that's what I want to hear from you.

Speaker 1:
So one example that you've seen recently is

Speaker 1:
there's a a job that was, um, allocating money to to a cement company, one of the largest cement producers and and, you know, has emissions and so on. And they challenged that company, um, in terms of their framework, in terms of their transition to zero. they had, um, target dates and and so on.

Speaker 1:
Um and it wasn't just green washing, right? They weren't just lying. They they actually started the transition process. And that asset manager decided, Well, we're not going to wait for for the next five years before they prove out and everything. They they initially allocated money right there and then

Speaker 1:
So the initial kind of, in a sense, taking a gamble. But looking at the experience that they have doing the right kind of due diligence, asking the right kind of questions that is hugely valuable in achieving this whole

Speaker 0:
just transition in terms of integration of just transition. Just can you take us an example of how you

Speaker 0:
taking that pension fund through assessing that and integrating that into into that solution into the investment strategy?

Speaker 1:
Yeah, so

Speaker 1:
So what? We you know, we we look, look through, um

Speaker 1:
kind of a framework, so to speak, But looking at policy documents, they can show that the just transition is embedded within those policy documents, like their statement on principles and so on, straight through to their how they model their investment strategy. They can

Speaker 1:
account of high emissions or low emissions, et cetera, et cetera, and tweaking the different assumptions that they employ when they're making allocation decisions and also looking at the manager conversations as well. I think that's really, really important. So

Speaker 1:
so you know, you jump that live example of

Speaker 1:
when the managers, when we're taking clients through that kind of process, it is a very, very challenging process. We make sure that it's a very short period of time, and we also make sure that we ask the right kind of questions that managers before they start allocating the funds to a particular strategy, whether it's infrastructure or emerging markets or any kind of new initiatives that

Speaker 0:
thanks. I think we manage risk, adjust transition. You must also grab the opportunities that are presented. There's lots of opportunity for innovation, for private equities, type of work and deals, and I think it's an interesting place to be in terms of how you would invest in those businesses to transition the economy as well. So I do think there lot of opportunity in it as well. Thank you. Can we hear a question?

Speaker 0:
Yeah. Good. Good afternoon, colleagues.

Speaker 0:
My name is I'm the trustee for the Eskom and Pension and Private and Funds.

Speaker 0:
Mine is not a question. Perhaps it's a

Speaker 0:
a comment that the panel can take further,

Speaker 0:
um, with regards to

Speaker 0:
yes

Speaker 0:
or the speed of the just energy transition.

Speaker 0:
Whether the panel would have a view on the lessons drawn from

Speaker 0:
mm.

Speaker 0:
The global space,

Speaker 0:
the big boys of the economy. I know that China is currently working on

Speaker 0:
the implementation of 43 coal plants

Speaker 0:
that they have approved a budget to to construct.

Speaker 0:
And when I look at that, um, versus what Africa is

Speaker 0:
Yeah,

Speaker 0:
to be present to move towards,

Speaker 0:
um, I see a serious contra,

Speaker 0:
uh, in the sense that the drivers

Speaker 0:
of a

Speaker 0:
pace of Africa to move towards decommission of coal plants are doing otherwise.

Speaker 0:
And I don't know whether that is from a policy perspective of Africa on its own, not aligning with the global trends because they are not moving. They are not desperate to move as we want to

Speaker 0:
What what is the driver around that and our preparation as a country, I won't mention the obvious, which is load shedding.

Speaker 0:
Uh, are we Are we ready? Coal is the mass employer commodity, uh, in the country and, uh, the pace of Decommissioning versus

Speaker 0:
current pool of employments. There's there's not much that will be coming from other spaces. Perhaps that's a comment that the panel can can look at, But primarily I'm I'm prioritising, uh, the the lessons drawn from, uh, the global spaces. Thank you, Chair.

Speaker 0:
Thank you. I think that's a very important question in the context of South Africa and the challenges, I don't know if you want to start, I would say it's a mix bag of experiences with food

Speaker 0:
on one hand. Some are moving within their own time frames within their own programmes, having set themselves. But they are also setting agendas for others and say this is how fast we need to move. So those are some of the contradictions that I've raised earlier on. When I say do as I say and not as I do, you know, that's one of the areas.

Speaker 0:
Yeah, are are we forced to move at that speed or can we take a context into consideration? We have a we have a

Speaker 0:
so that that is the

Speaker 0:
the question of the day as we sit here because in the context of the electricity crisis that we're experiencing, anyone who says shut those power stations down is actually then not taking stock of the need to have a just transition. So as the presidential Climate Commission, we appreciate that

Speaker 0:
having said that, we've also made recommendations with respect to what we think the electricity or the energy mix should look like going forward. And here on a least cost basis. It is still clear that we need to roll out renewables as fast as we can, regardless of what short term decisions we make with respect to the coal fired power station fleet.

Speaker 0:
And I think in a meeting with of the PCC last week, we reached agreement with the presidency that the pace needs to be at a pace that we can implement, and at a pace that we can afford and needs to take into account that it must not make load shedding worse. One second any other comment from

Speaker 0:
OK, uh, there was one other uh question from the floor. This is the last one, so we ran over time. But it's more. I see it as a comment. It says the pension funds, uh, present today how many have signed up to net zero?

Speaker 0:
Um, I think that's a challenge to the industry if you signed up or not. But I don't think it's something that many many of us can buy up. The big ones we sign up to net zero. But there's a challenge that's post out out there as an owner alliance. Is it as an owner alliance? Where else can you your members see what you have you have committed to?

Speaker 0:
So I think that is where the Asset Owners Forum, uh would would would, uh, play a role? Um, with this we come to the end of our panel that I think we could have gone on and on and and and unpacked many of many other things that I think that were raised. But I would like to thank the panellists I. I think they've given

Speaker 0:
us as asset owners a lot to think about in terms of integrating some of these things into our investment strategies. I can only say all the best as you as the asset owners, Uh, try and balance between risk, return, cost and impact All the best. We have our work cut out for us. But these are the things that we need to grabble with. Thank you to the panellists and thank you to, um, to the conference. Thank you.