Eskom

Eskom has committed to achieve net-zero emissions by 2050, but this commitment is not backed with a detailed transition plan. The company has also set a target for 38% reduction in carbon emissions by 2035, but it has provided no scopes or other details for these targets. Eskom should set intermediate targets no more than five years apart to incentivise near-term action on its long-term goals. Additionally, it should clearly report its base year emissions and any offsets it intends to use to allow for a complete analysis of its targets and progress against them. It should also increase the ambition of its targets to align with a 1.5°C pathway.

Eskom’s emissions intensity marginally decreased between 2017 and 2022 due to about a 6% increase in its renewable energy production. This does not align with the company’s 1.5°C pathway, which requires reducing its emissions intensity by approximately 33% by 2027. Eskom does not report the proportion of its total capital expenditure (CapEx) on low-carbon mitigation or carbon removal technologies. It also does not disclose its research and development (R&D) expenditure, including expenditure on low-carbon technologies.

Eskom does not plan to phase out its coal-fired power stations by 2035 but expects that coal will contribute less than 30% of its energy generation by 2040 and less than 20% by 2050. The company does not provide alternative generation sources to coal. The company’s transition strategy includes repurposing and repowering coal-fired stations for solar PV, wind power, battery storage and gas; and delivery of clean generation projects, but the company does not specify what it means with “clean projects”, and no evidence was found that it has actively undertaken such actions. The company needs to scale up its low-carbon activities to demonstrate a commitment to transition.

Eskom announced a goal to achieve net-zero emissions by 2050 and 38% reduction in carbon emissions by 2035, but it provides no information on the emission scopes covered or other details for these targets.

Eskom’s transition plan is embodied in its Just Energy Transition (JET) strategy set in 2019. The plan includes accelerating the repurposing and repowering of coal-fired stations for renewable energy production and storage, pursuing a share of renewable energy allocation and implementing an integrated socio-economic strategy, including reskilling. In 2022, the World Bank approved a USD 497 million concessional loan facility to Eskom for repurposing the Komati Power Station as a renewable energy station. However, according to Eskom’s financial estimate, the transition requires a total funding of USD 63 billion by 2035. The company is collaborating with the South African government to drive the transition, including identifying targets and funding mechanisms.

No evidence was found that Eskom invests in low-carbon solutions. The company states that it runs research projects for hydrogen and new energy storage solutions, but it does not disclose its R&D spending in this area and does not provide further details about these projects.

Eskom’s emissions intensity marginally decreased between 2017 and 2022 due to a small increase in its share of low-carbon electricity. The company is expected to exceed its 1.5°C carbon budget by more than 60% by 2037. Eskom is state-owned, so its strategic direction is set by the government. For South Africa, coal has historically been a cost-effective source of primary energy; thus, most of Eskom’s coal‐fired plants will continue operations for at least another decade.

The lack of a clear transition plan and financial commitments towards decarbonisation calls into question the credibility of the company’s ambition to become net zero by 2050.

The company commits to engaging in social dialogue with workers and unions. It also discloses the categories of stakeholders it engages with on a just transition, including employees, affected stakeholders, and communities. Additionally, the company discloses the steps it takes to engage with these stakeholders. No evidence was found of the company undertaking low-carbon transition planning to mitigate the social impacts of the transition on workers, affected stakeholders and its business relationships. Additionally, no evidence was found to demonstrate the company’s engagement in social dialogue and with stakeholders in its just transition planning.

The company has a commitment to create and support access to green and decent jobs as part of the low-carbon transition. Furthermore, it discloses the actions it takes to create jobs including the expansion of new renewable generation. Moreover, no evidence was found of the company’s action to promote these jobs in a way that ensures gender balance and inclusion of vulnerable groups. Additionally, no relevant disclosure was found of the company’s assessment of employment dislocation risks. The company has a commitment to re- and up-skill workers and stakeholders affected by the low-carbon transition and discloses the actions it takes in this regard. For instance, it offers training for workers and the local community in collaboration with the South African Renewable Energy Technology Centre. However, no relevant disclosure was found of the company embedding equality of opportunity for women and vulnerable groups in these actions. Furthermore, no evidence was found of the company having a process for identifying skills gaps for workers and affected stakeholders.

No relevant disclosure was found to show if the company identifies impacts of the low-carbon transition on social protection for workers and affected stakeholders, nor how it contributes to social protection. Additionally, no evidence was found that the company expects its business relationships to contribute to the social protection of their workers and affected stakeholders. No relevant disclosure was found to show how the company identifies any misalignment of its lobbying activities with policies and regulations that support the just transition, nor of the measures it takes to address misalignment. Furthermore, no evidence was found that the company lobbies for policies and regulations for green and decent job creation; retention, education and reskilling; and social protection for workers.

No commitment of the company related to respect for human rights was found in the public domain. However, the company does have a grievance mechanism available to workers and external stakeholders.

The company commits to respecting the health and safety of its workers and expects the same commitment of its business relationships. However, no evidence was found of a time-bound target for paying all workers a living wage. While the company discloses the proportion of its direct workforce covered by collective bargaining agreements, no relevant disclosure was found of the company’s required working hours. The company discloses some indicators of workforce diversity. Nevertheless, the company commits to gender equality and women’s empowerment.

The company has a policy prohibiting bribery and corruption, and it includes corresponding clauses in its contracts with business relationships. However, no other policies or commitments of the company related to key ethical business topics – personal data protection, tax, bribery and corruption, and lobbying and political engagement – were found in the public domain. This includes ensuring ethical business conduct throughout its operations and in its relationships with business partners.