For more than a decade, South Africa has proudly positioned itself as an emerging-market leader in responsible investment. The Code for Responsible Investing in South Africa (CRISA) 2 reinforced this view, urging investors to actively influence environmental and social outcomes and to contribute to an economy that is both green and inclusive.
Yet evidence suggests the gap between ambition and action is widening.
A recent benchmarking report by Just Share, drawing on ShareAction’s internationally recognised assessment framework, found that many of the country’s largest asset managers are trailing their global peers and failing to demonstrate even the basics of responsible investment practice. In some cases, there is so little publicly available information that it is impossible to tell whether firms are under-reporting, under-disclosing, or simply under-performing.
This raises a deeper set of questions:
- How do South Africa’s local constraints shape responsible investment?
- Can global best practice be applied in the same way here?
- And what will it take for the industry to close the growing credibility gap?
A framework of principles, not pressure
South Africa’s responsible investment environment has long been values-based rather than rules-based.
CRISA 2 sets high-level expectations around stewardship and ESG integration but remains voluntary and unenforced. Regulation 28 “encourages” ESG but does not require a measurable demonstration of sustainability risk management or impact.
By contrast, the EU enforces strict sustainability disclosure under SFDR. The UK mandates climate-risk reporting (TCFD) for major asset managers, and even the US is moving towards more prescriptive ESG oversight.
South Africa still relies on nudges rather than requirements. The recent CIPC move to require ESG disclosures starting in 2025 is a meaningful shift, but it remains a light-touch approach compared to international norms. Without regulatory pressure, good practice becomes discretionary. And discretionary good practice rarely grows.
The data dilemma: poor disclosure or poor performance?
The Just Share findings highlight a persistent problem: South Africa’s ESG data ecosystem simply isn’t mature enough to support high-quality responsible investment. Many JSE-listed companies publish sustainability information due to King IV and now King V, but the data is often qualitative, inconsistent, incomparable, and incomplete.
For smaller companies, the gaps are even greater, with limited reporting on carbon emissions, water usage, workforce indicators or community impacts. Asset managers face the resulting uncertainty, costs, and time associated with data collection and verification.
Globally, investors are moving towards a world of structured, standardised ESG reporting through CSRD, ISSB and TCFD frameworks. South Africa is following, but at a slower pace. Until our disclosure ecosystem matures, ESG integration will remain uneven and difficult to execute with confidence.
A small, concentrated market limits global approach
South Africa’s investment market is relatively small and concentrated in a few key sectors, particularly mining, resources and other carbon-intensive industries. This makes it difficult to apply global investment best practices without adjustment.
If investors exclude heavy emitters, they often move significantly away from local market benchmarks. Divesting from these sectors can also reduce portfolio diversification and may affect short-term returns. In addition, limits on offshore investing and alternative asset classes have historically restricted access to greener investment opportunities.
Recent reforms, including increased offshore limits and the creation of an infrastructure asset class, open new avenues for green investment. But global peers still benefit from deep clean-tech markets, large green bond markets and plenty of low-carbon companies.
South Africa’s responsible investment model cannot be a copy of Europe’s. It must be engagement-led, transition-oriented and responsive to local realities.
Legacy business models: ESG as gloss, not glue
One of the most uncomfortable truths is that ESG in South Africa is still too often bolted onto business models rather than embedded into them. The symptoms are well known. ESG teams that operate in silos, inadequate stewardship, incentives tied to quarterly performance, not long-term value and a reliance on “responsible investing” language in marketing without substantive changes in investment decision-making.
Global peers have moved on. Major UK and EU managers have portfolio-wide net-zero targets, fossil-fuel policies, sector strategies and transparent stewardship frameworks. South Africa needs a similar shift, from principles to practice.
Capacity constraints are slowing progress
A final constraint is human capital. South Africa has a limited pool of ESG specialists, climate analysts, social impact evaluators and stewardship professionals.
Many firms rely on a single ESG generalist to support dozens of portfolios. Meanwhile, trustees, board members and retail investors often lack ESG literacy, meaning asset managers face little pressure from clients to improve.
Globally, asset-owner demand has been the driving force behind sustainable investing. In South Africa, asset owners have not yet become the catalysts they need to be.
So why are local managers lagging? Not because they lack motivation, but because they operate in a system not yet designed to reward long-term sustainability outcomes. The constraints are structural, including market size, data quality, voluntary regulation, skills, board commitment and legacy business models. Until these structural issues shift, South Africa will struggle to match global leaders.
South Africa has the principles (CRISA), the ambition (a greener, more inclusive economy) and pockets of excellence. What is needed is the infrastructure, capability and collective will to move from aspiration to action. By acknowledging and addressing our unique constraints rather than applying global models, we can build a responsible investment ecosystem that is credible, impactful and authentically South African.
How to close the gap?
- Treat ESG data as a public good and build shared industry datasets, sector benchmarks and collaborative analytics tools.
- Move from “encouraged” to “expected” by introducing clearer stewardship requirements, climate-risk disclosures and sector policies.
- Align incentives with long-term outcomes and include ESG KPIs in remuneration and reshape fee structures to reward long-term value.
- Build national sustainability skills by investing in ESG training for trustees, Boards, analysts and investment professionals.
- Develop a distinctly South African approach and focus on engagement rather than exclusion, prioritise the just transition and integrate B-BBEE and community investment more meaningfully into ESG strategies.
Contact: Tina Playne
