ESG Litigation Guide
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South Africa

Governance

Corporate and social policy

In force

Any organisation

The primary purpose of the Act is to increase the participation of black people in the management, ownership and control of South Africa's economy by measuring the economic involvement of black people over a range of specified BEE elements. The BBBEE Act does not impose legal obligations on entities (save for BBBEE compliance reporting of Johannesburg Stock Exchange listed entities) to comply with BBBEE targets however an entity’s BBEE rating will affect its ability to successfully tender for government and public entity tenders and in some instances (i.e. mining) applying for licenses.

Environmental
Governance

Corporate, social and environmental policy

In progress. The final taxonomy has been issued by National Treasury but it is currently just guidance and does not have the force of law.

Any organisation

The Taxonomy seeks to provide an ESG regulatory framework. It defines a minimum set of assets, projects, and sectors that are eligible to be defined as ‘green’ in line with international best practice and national priorities. It can be used by investors, issuers, asset owners and other financial sector participants.

The Taxonomy classifies economic activities according to two objectives:

  • those making substantial contributions to climate change adaptation, and
  • those making substantial contributions to climate change mitigation.
Environmental

Environmental policy

In force

Entities engaging in activities that produce direct greenhouse gas emissions

The Carbon Tax Act has been implemented to provide for the imposition of a tax on the carbon dioxide equivalent of greenhouse gas emissions. Any natural or juristic person who exceeds the allowances prescribed in the Act will be subject to the carbon tax.

Environmental

Social and Environmental policy

In force

All organs of the state

NEMA is the principle act that governs environmental management in South Africa. NEMA was enacted with the objective of ensuring sustainable development and use of natural resources. NEMA requires that development must be socially, environmentally and economically sustainable, taking ‘sustainable development’ factors into consideration such as, amongst others, mitigation of pollution, waste and degradation of the environment.

Environmental
Governance

Corporate, social and environmental policy

In force

Any organisation

The Draft Taxonomy seeks to provide an ESG regulatory framework. It defines a minimum set of assets, projects, and sectors that are eligible to be defined as ‘green’ in line with international best practice and national priorities. It can be used by investors, issuers, asset owners and other financial sector participants.

The Draft Taxonomy classifies economic activities according to two objectives:

  • those making substantial contributions to climate change adaptation, and
  • those making substantial contributions to climate change mitigation.
Social
Governance

Corporate, social and environmental policy

In force

Pension funds

Clause 2(c)(ix) of the Regulation requires a pension fund and its board to consider any factor which may materially affect the sustainable long-term performance of the asset including, but not limited to, those of an environmental, social and governance nature, before investing in and while invested in an asset.

There is no specified list of ESG factors that need to be considered but rather more general environmental factors, social issues and governance concerns.

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