Well-respected in the local and international market as someone willing to take on a difficult job and do what needed to be done despite political opposition, it was widely accepted that the JET IP deal and confidence in the Transition Plan was very closely tied to de Ruyter’s role as lead implementer thereof.

It is therefore to be expected that our collective confidence would be shaken by his impending departure from Eskom and overall leadership changes at the SOE. However, what has not changed is the overall objective set out by de Ruyter and his team over the past three years to get to Net Zero by 2050. SA reiterated this at COP27 through its JET-IP and again just after COP27 as a member of the G20, when the group restated their commitment to a Paris-aligned future. Therefore, the long-term target is unchanged, and the strategy proposed to achieve this has been submitted to our international funding partners. These are not easily amended, even if the person leading the charge to get to the finish line changes.

Finding a replacement to match de Ruyter’s experience, expertise and gravitas will of course be a challenge. But regardless of who comes next, we should not expect significant changes to the strategy, as this has largely been solidified. There may, however, be some changes in implementation of the strategy – specifically with respect to efficacy, which is truly something that we cannot afford to at this stage of our energy crisis.

So, let’s look at the scenarios that might play out in 2023:

1. We blow off this whole Net Zero by 2050 thing, abandon the transition entirely and reject renewables. In this event, we make ourselves a pariah in the global marketplace and the country falls apart, until we are forced to see reason and get on board again, late to the party, therefore missing out on the majority of the potential socioeconomic benefits and blamed by the international community for the inevitable negative environmental consequences of our actions. In the end, the transition still happens.
2. We remain committed to Net Zero by 2050, but fumble along on our transition plan implementation and don’t make strides to achieve this goal, leaving us open to intervention by external parties who impose measures to get us to renewable energy dependence by ‘force’ – think draconian financing conditions, as an example. In the end, the transition still happens.
3. We remain committed to Net Zero by 2050, but fumble along until it’s almost D-day and then have no choice but to implement incredibly disruptive interventions (in renewable energy industry development) ourselves, which have disastrous social consequences. In the end, the transition still happens.
4. We remain committed to Net Zero by 2050 and build a massive renewables industry, but deviate from the Just Energy Partnership principles and therefore achieve environmental targets at the expense of social objectives. In the end, the transition still happens.
5. We stay on course with our JET-IP and manage to achieve a just transition to low carbon, inclusive, sustainable economies. Year-on-year, our progress acts as an example for other emerging markets and fossil-fuel dependent markets on how to finance and implement a sustainable transition and we are held up internationally as a beacon of light in the darkness of the climate emergency and its associated geopolitical and socioeconomic tensions.

Ultimately, any way you slice it, the transition still happens. It is inevitable. The nature of the transition though – how disruptive it is, how we handle the circumstances of those disproportionately impacted – is up to the decisions we make now and along the way. And very little of that has anything to do with whoever the Eskom CEO is. 

What will be more dependent on how the transition plays out, is how investors across the market respond to the pressure to transition their current investments – regardless of renewable energy industry investment opportunities.

Institutional investors are critical to the success of the transition. It remains up to us, as allocators of capital, to keep things on track in the chaos of the current environment. We need to be the voice that rises above the noise and unites various stakeholder groups toward a common aim: a transition that is just. As investors we have a responsibility to our clients to deliver maximum risk-adjusted returns in a sustainable way. This necessitates keeping our eyes firmly on the end goal, and that we don’t let ourselves get distracted by political drama along the way. 

An Eskom without de Ruyter may see a delay in some of the projects coming online that we would have hoped to invest in. But that shouldn’t stop us from making progress outside of those projects. Instead, we should use this as an opportunity to look at our existing portfolios. As investors, we should be asking ourselves what we can do, what leverage we can activate, to transition those investments already on our books? The new, shiny, renewable projects will come online soon enough, and when they do, we will run with those; but in the interim, there is a tremendous amount of work that needs doing within our existing investments. We need to be reviewing what we’ve got to work with and assessing which investments are at greatest risk and which present the greatest opportunity given the inevitability of the transition.

This is where the role of stewardship becomes critical. Stewardship, or active ownership, is core to the transition. This process is especially relevant now that there may be a delay in accessing some of the expected greenfield projects. There will never be a better time for institutional investors to roll their sleeves up and start acting on their responsibility to be an active owner of their assets. 

The shift that is currently in play impacts every company in every sector. No one is immune. It has become an imperative for investors to step up as stewards of these assets and to shepherd companies through the transition into the new order. And if the companies we invest in won’t, or can’t, adapt, then it is our role to guide them toward sustainable closure and responsible exit (and, where appropriate, rehabilitation and remediation). 

We need collaborative, deliberate, solutions-focused engagement with companies that drive the attainment of real-world impact. We need this, regardless of how the future unfolds for Eskom’s leadership and regardless of what delays we may see in the growth of the renewables industry. Without stewardship now, we will have forced, disruptive change later. Because, just as the sun continues to rise, no matter how the Eskom story unfolds, in the end, the transition is happening despite all the odds. DM/BM