The European Union has long been South Africa’s most important trading partner, taking about R430 billion, or €23 billion, in goods a year and accounting for more than a fifth of the country’s total goods trade. Under the Southern African Development Community-EU Economic Partnership Agreement, around 98% of South African exports enter the bloc duty-free, giving local producers a powerful commercial advantage.
That advantage is becoming harder to preserve. Europe’s sust...
Continue Reading This Article
Enjoy this article as well as all of our content, including reports, news, tips and more.
By registering or signing into your SRM Today account, you agree to SRM Today's Terms of Use and consent to the processing of your personal information as described in our Privacy Policy.
ainability drive is turning supply chain disclosure into a business requirement, not just a regulatory exercise, and South African exporters now face growing pressure to prove the environmental and social credentials of what they sell. In Forvis Mazars’ 2026 C-Suite Barometer, 27% of executives cited tighter regulation as one of the external forces most likely to affect operations over the next year, while 22% said they were already reworking supply chains, operations and procurement over the next three to five years.
At the centre of this change is the European Union’s Corporate Sustainability Reporting Directive, which requires in-scope large and listed companies to publish regular information on environmental and social risks and impacts. The first companies had to apply the new rules for the 2024 financial year, with reports published in 2025. In February 2026, the Council of the European Union approved further simplification of sustainability reporting and due diligence requirements in an effort to ease administrative burdens and bolster competitiveness.
For exporters to Europe, however, the direction of travel remains unmistakable. The Carbon Border Adjustment Mechanism, which moved into its definitive phase in 2026, places a carbon cost on selected imported goods, effectively narrowing the gap between European producers and foreign suppliers. For South African exporters, that could chip away at the duty-free edge offered by the trade deal, because EU importers may have to account for embedded emissions in covered products.
The rules also overlap in ways that matter commercially. Data gathered for CBAM can support the product-level carbon information needed for Scope 3 disclosures under the CSRD, making supply chain traceability central to both compliance and customer relationships. In practice, this means buyers increasingly want detailed proof of where materials come from, how they are processed, and what environmental and labour conditions sit behind each stage of production.
For many companies, the challenge is no longer confined to direct operations. It extends upstream to suppliers and downstream to customers, requiring a much broader view of emissions, inputs and labour practices across the value chain. The 2026 Barometer says business leaders are becoming more alert to that reality, with regulatory readiness and ESG preparedness both improving, yet still needing to translate into operational action.
The stakes are especially high for South Africa because of its exposure to carbon-intensive exports such as iron, steel, aluminium, cement, fertilisers and hydrogen, all sectors likely to feel the pressure of EU carbon rules. The country’s coal-heavy electricity mix adds to the problem, as power remains a major production input. In energy-intensive industries such as steel, compliance costs could erode or even erase the price advantage exporters have traditionally enjoyed.
The pressure is also spreading beyond heavy industry. Better Cotton is one example of a sector framework that helps textile businesses monitor water and chemical use in supply chains, while precious metals producers can draw on responsible sourcing systems used by the London Bullion Market Association and the London Platinum and Palladium Market. At the same time, buyers are asking more searching questions about labour compliance, including outsourced activity, and about how African supply chains are managing social as well as environmental risk.
Financial services are not immune. Banks and insurers may generate relatively low direct emissions, but they are increasingly judged on financed emissions and on the credibility of their green commitments. As scrutiny over greenwashing rises, the mix of green and high-emission assets under management is becoming more important than the headline value of sustainable finance.
For South African firms, especially those serving Europe, the message is clear: transparency has become a condition of market access. Companies that can map their value chains, quantify carbon exposure and provide credible evidence on sustainability will be better placed to defend their position. Those that cannot may find that regulatory change, rather than tariffs alone, becomes the biggest threat to growth.
Source: Noah Wire Services
