Banking on sustainable development: the role of development finance institutions in advancing constitutional obligations in light of South Africa's just energy transition

Omar, Zahra

Banking on sustainable development: the role of development finance institutions in advancing constitutional obligations in light of South Africa's just energy transition

Thesis / Dissertation

2024

Publisher

University of Cape Town

Department

Department of Commercial Law

Faculty

Faculty of Law

Abstract

Four decades since the warning bells first rang for climate change, South Africans sit in the dark amidst an energy crisis, an environmental crisis and a development crisis. For too long has the country been unable to generate energy in a way that guarantees security of supply and affordability for its people, and in a manner that is environmentally and socially sustainable. It is no secret that the burning of fossil fuels for energy generation is the biggest contributor to greenhouse gas emissions; and this finds itself in a region particularly vulnerable to the impacts of climate change and already crippled by the triple challenge of poverty, inequality and unemployment. The minerals-energy complex – a legacy of South Africa’s colonial era – has played its part in these interlocking crises by trapping the economy into a fossil fuel-dependent energy system that has failed to protect our environment and our people. Enabling this system is a set of South African Development Finance Institutions mobilizing the financial resources for major energy development projects in the country. These institutions have sustained the minerals-energy complex through their support for the fossil fuel industry – a reflection of public policy that continues to prioritise economic growth over environmental and human welfare. Not only does the financing of fossil fuels in this context undermine the right of South Africans to sustainable development, but also violates the rights to equality, dignity and to life. A continuation on this development path would, furthermore, undermine South Africa’s international human rights and climate change obligations, and in particular, its commitment under the Paris Agreement to make finance flows consistent with a pathway to a low-carbon economy and climate-resilient development. Alongside these international obligations, section 24(b)(iii) of the Constitution imposes a clear obligation on the state to protect our environment for the benefit of present and future generations through ‘securing ecologically sustainable development and use of our natural resources while promoting justifiable socio-economic development’. As state-owned institutions endowed with an evolved legislative mandate to promote sustainable development in our constitutional era, Development Finance Institutions have a crucial role to play in advancing these obligations by redirecting their finance towards development that is ecologically sustainable, economically sound, and socially just and inclusive. South Africa’s journey to a low-carbon economy places these Development Finance Institutions in a unique position to foster a transformative Just Energy Transition and to shift the development paradigm to one that is centred on the interdependency between the protection of the environment and the fulfilment of human rights.

Keywords

Human Rights Law

Reference:

Collections

PhD / Doctoral

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