Spring is a season of renewal, growth and new beginnings. It is also a good time for businesses to pause and take stock of what is working, where there are gaps and what may need to change as the year progresses. For many organisations, ESG is one area that deserves a fresh look.
Environmental, Social and Governance considerations are becoming increasingly connected to the way businesses manage risk, make decisions and plan for long-term growth. While ESG was once often viewed as a reporting or sustainability issue, the conversation has become much broader. Businesses are now having to consider how environmental pressures, people-related issues, governance practices, regulatory changes and stakeholder expectations can influence their ability to operate and remain competitive.
For South African businesses, changes in the local regulatory and business environment are making ESG increasingly relevant to organisations of different sizes and across different industries.
ESG is becoming part of everyday business decisions
It is easy to think of ESG as three separate areas that sit alongside the rest of the business. In reality, environmental, social and governance considerations are closely connected to everyday business decisions.
Environmental factors can influence operating costs, energy consumption, resource efficiency, carbon exposure and supply chain resilience. Social factors can influence employee attraction and retention, workplace culture, customer relationships and the way a business interacts with the communities in which it operates. Governance affects how decisions are made, how risks are managed, how accountability is established and how stakeholders view the organisation.
This means ESG should not necessarily be treated as a separate sustainability project that belongs to one department. When considered properly, it can form part of the wider conversation about how an organisation manages risk, creates value and prepares for the future.
South Africa's ESG environment is changing
The changing regulatory environment provides a practical example of why businesses need to understand how ESG could affect them.
South Africa's carbon tax increased from R236 to R308 per tonne of carbon dioxide equivalent from 1 January 2026, while the carbon fuel levy also increased during the year. These changes form part of the country's broader carbon-pricing approach and are intended to support the transition towards a lower-carbon economy. (National Treasury)
The impact will not be the same for every organisation. Businesses have different operating models, industries, energy requirements, supply chains and levels of exposure to environmental regulation. However, the broader direction is important for business leaders to understand.
Environmental considerations can increasingly have financial and operational implications, while customers, investors, employees, lenders and business partners may also expect organisations to demonstrate greater transparency around how they manage sustainability-related risks and responsibilities.
For businesses that are likely to be affected, understanding these developments early can support better planning around costs, investment, operations and long-term strategy. It can also help organisations avoid finding themselves under pressure to respond to requirements that they have not prepared for.
ESG is about more than environmental impact
One of the most common misconceptions about ESG is that it is primarily about environmental sustainability. While environmental considerations are important, ESG covers a much broader range of issues that can influence the resilience and reputation of an organisation.
The social element of ESG considers how a business treats and develops its people, how it manages relationships with employees and communities, and how responsibly it approaches areas such as human rights, workplace practices and supply chains. Governance considers the systems and structures that support responsible decision-making, including leadership, accountability, ethics, risk management and oversight.
The relevance of each area will depend on the organisation. A manufacturing company may have significant environmental and supply-chain considerations, while a professional services business may have greater exposure to people, governance, data and organisational culture. This is why an effective ESG approach should begin with understanding the individual business rather than simply applying a generic checklist.
From compliance exercise to business opportunity
Another important shift in the ESG conversation is the growing recognition that responsible business practices can create value rather than simply adding another layer of compliance.
For example, improving energy efficiency may help reduce operating costs, while stronger supply-chain oversight can help identify potential disruptions earlier. Investing in employee wellbeing and development can contribute to attraction, retention and productivity, while stronger governance can support better decision-making and reduce exposure to avoidable risks.
There can also be commercial benefits. Organisations that can demonstrate credible ESG practices may be better positioned to respond to customer requirements, tender expectations, investor questions and international supply-chain requirements.
This changes the conversation towards asking how ESG information can help management make better decisions.
The challenge is knowing where to start
For many businesses, the challenge is not necessarily understanding that ESG is important. The challenge is knowing which areas to focus on first.
There are many frameworks, reporting requirements, sustainability initiatives and potential areas of measurement to consider, and trying to address everything at once can quickly become complicated and resource-intensive.
A more practical starting point is to establish a clear understanding of where the organisation is today. This means identifying the ESG issues that are most relevant to the business, understanding existing strengths and weaknesses, considering stakeholder and regulatory expectations, and identifying where better information or action may be required.
Once that baseline has been established, the organisation can make more informed decisions about what needs to happen next.
Starting with an ESG Risk assessment
Crowe DNA's ESG Advisory approach is designed to help organisations take this practical first step. Rather than approaching ESG as a one-size-fits-all exercise, the ESG Risk assessment provides an opportunity to assess the organisation's current position, identify important gaps and opportunities, and establish priorities for moving forward.
The assessment considers relevant standards and frameworks, including the Global Reporting Initiative (GRI), IFC performance standards, and the United Nations Sustainable Development Goals (SDGs), together with relevant local regulations. The outcome is a data-backed roadmap that provides greater clarity around the actions that should be prioritised. (Crowe DNA ESG Advisory)
This type of starting point can be particularly valuable for organisations that know ESG needs greater attention but are unsure where to begin. Rather than investing time and resources into initiatives without a clear understanding of their relevance, businesses can first establish their current position and use that information to guide the next stage.
Five questions worth asking this Spring
As businesses review their ESG approach, there are several practical questions that can help create a clearer picture of where attention may be needed:
- Which environmental, social and governance factors are most relevant to our business and industry?
- Where are our most significant ESG risks and opportunities?
- Do we have reliable data to support the sustainability claims and commitments we make?
- Are we prepared for relevant regulatory, customer, investor and stakeholder expectations?
- How can ESG considerations be better connected to our wider business strategy?
The answers do not need to be perfect. In many cases, simply identifying where information is missing or where responsibilities are unclear can provide valuable insight into the next steps.
A more practical approach to ESG
ESG does not need to become another complicated project sitting alongside the rest of the business. The most effective approach is one that is relevant to the organisation, connected to its strategy and focused on the areas where it can make a meaningful difference.
For some businesses, the starting point may be understanding environmental exposure and carbon-related costs. For others, it may be strengthening governance, improving employee practices or gaining greater visibility across the supply chain. There is no single roadmap that works for every organisation, which is why establishing a clear baseline is so important.
This Spring, consider taking a fresh look at your organisation's ESG position. Understanding where you are today can make it easier to identify the risks that need attention, the opportunities that could create value and the practical steps that can help build a more resilient business.
Crowe DNA helps organisations move from ESG intention to practical action by identifying gaps, assessing priorities and developing a clear roadmap for progress.
Request a meeting with our ESG Advisory team by completing the enquiry form.