For most of the past decade, environmental, social and governance (ESG) analysis was treated as a slow‑burn, almost inevitable evolution of capital markets. ESG finds itself increasingly caught in the crossfire of global politics and trade tensions, 2025 has been a year of reckoning for sustainability-minded investors and businesses. New data from The Conference Board shows that 80% of corporations are recalibrating their ESG strategies, not because the fundamentals have changed, but because the political and regulatory headwinds have grown stronger. In particular, tariffs—once purely economic instruments—are now reshaping how and where sustainability efforts can take root.
South Africa has long taken a measured—some would say pragmatic—approach to integrating sustainability factors, yet recent events prove we are not insulated from international pressures. The recent US tariff on South African exports has reminded us that global trade decisions have very real consequences locally, especially when they clash with long-term sustainability goals.
ESG is not a fad. Nor is it a marketing exercise, or a nice-to-have. It is fundamentally a non-financial risk management tool that must be systematically incorporated into investment processes. While the terminology may evolve—some companies are even dropping the term “ESG” in response to political backlash—the discipline behind it is here to stay.
When trade policy disrupts sustainability:
According to The Conference Board’s [1]survey of 125 large US and multinational companies, two-thirds believe new trade measures (“tariffs”) “will hinder progress on achieving sustainability goals”. Nearly half expect it to “delay sustainable investments in sustainable operations.” In addition, 52% of respondents report “reworking their sustainability messaging, including moving away from the term ESG”, while maintaining the substance behind it.
ESG continues to be highly politicised, framed in some regions as a cost burden or ideological agenda. For us, this distracts from its original and enduring purpose: identifying long-term risks and opportunities that don’t appear on traditional balance sheets.
But that raises a deeper, more important question: Is ESG actually to blame here? Or is it something else—like policy decisions—getting in the way of progress?
Let’s take a closer look. Trade policy, especially in the form of tariffs, is making it more expensive to pursue sustainable outcomes. For example, when clean energy components (e.g., solar panels or electric vehicle batteries) are subjected to tariffs, their costs rise. That, in turn, slows down corporate decarbonisation initiatives—not because companies no longer care about climate goals, but because the commercial reality has shifted. In emerging markets like South Africa, where we’re already balancing decarbonisation with urgent developmental priorities, these disruptions cut especially deep.
Many companies have spent years building supply chains that aren’t just cost-efficient, but also ethical, transparent, and carbon-conscious. Tariffs can throw those carefully built systems into disarray. Suddenly, organisations are forced to restructure global operations under time pressure and cost strain. In that scramble, sustainability can quickly fall down the list of priorities—not because ESG isn’t working, but because the broader operating environment is working against it.
ESG is not a trend or a label. It is, at its core, a risk management lens—one that helps identify material, long-term risks and opportunities that don’t appear in traditional financial models. Whether it’s climate exposure, labour conditions, or supply chain fragility, these factors can carry real financial consequences if ignored.
Yes, the ESG label has become politically charged in certain markets. And yes, businesses are feeling the heat. But effective ESG integration does not depend on what it is called—it depends on what it does. And what ESG continues to do, when applied correctly and rigorously, is drive more resilient decision-making. That means continuing to push the ESG agenda forward, even when it’s difficult—especially when it’s difficult.
What next then?
Even in today’s constrained global environment, paths forward still exist. Many South African businesses are pivoting towards regional integration under the African Continental Free Trade Area (AfCFTA), as noted by Minister Parks Tau in his National Assembly address, as a strategic response to global trade uncertainties. This shift strengthens resilience against tariff shocks and may reinforce ESG goals by shortening supply chains, reducing emissions, and supporting local economies.
Investors are increasingly moving beyond ESG checklists, guided by frameworks like double materiality, SASB standards, SFDR, and South Africa’s Regulation 28. These developments reflect a more nuanced approach—one that values ESG not only for its societal or environmental impact, but also for its relevance to financial performance and long-term risk management.
In private markets, especially infrastructure and clean energy, ESG-aligned investment opportunities are growing.
But these aren’t easy wins. They require long-term commitment, patience, and an appreciation for both risk and impact. Liquidity trade-offs must be managed carefully. Capital must be allocated with foresight. And above all, communication must be honest—about the complexities of doing ESG properly in a world that often demands speed over substance.
The intersection of trade policy and ESG is becoming increasingly complex—but that’s no reason to retreat. Done right, sustainability isn’t a burden—it’s a strategy for resilience. Even when the road gets rough, staying the course matters. Because ultimately, the greater risk lies not in doing too much, but in doing too little, too late.
[1] https://www.conference-board.org/press/sustainability-under-scrutiny-2025
