How to ensure credibility in your ESG performance?
According to Grand View Research, the country's ESG investing market is expected to grow at a compound annual growth rate of 10.7% between 2025 and 2030.
However, a growing body of research suggests many companies are falling short. A 2024 PwC UK study reveals that 62% of global investors now require third-party assurance of ESG data, and 57% have walked away from deals due to concerns about ESG transparency or credibility.
'Many companies genuinely want to improve their ESG performance, but lack the systems and frameworks to produce consistent, verifiable data,' says Herman Stoop, governance, risk and compliance specialist at WWISE.
'Without strong internal structures, even the best intentions can result in shallow reporting or misleading claims.'
A legal and financial liability
Greenwashing is no longer just a PR issue; it is increasingly becoming a legal and financial liability.
The UN Global Compact reported that more than 40% of ESG-related lawsuits filed in South Africa in 2023 were linked to environmental non-compliance or poor stakeholder engagement.
In one high-profile case, a South African energy firm was found to have misrepresented its environmental impact, resulting in legal consequences and a loss of investor confidence.
The case is widely regarded as a turning point, as regulators and courts are beginning to take a firmer stance on ESG integrity.
'South Africa is at an inflexion point,' Stoop says. 'Regulators are preparing for mandatory disclosure frameworks, and companies that fail to prepare could face serious consequences.'
Five recurring challenges
Drawing from WWISE's work with over 750 organisations in 16 countries, Stoop identifies five recurring challenges that weaken ESG reporting across the board:
- Inconsistent data collection – ESG metrics are often tracked manually or across siloed systems, lacking alignment with global frameworks such as GRI, SASB, or IFRS S1/S2.
- Limited skills and capacity – Many companies lack ESG-literate personnel to design, integrate and manage reporting processes.
- Regulatory uncertainty – With frameworks like the JSE's Sustainability Disclosure Guidance still voluntary, businesses remain unsure how quickly to invest in ESG readiness.
- Superficial integration – ESG is sometimes isolated from broader strategy, reducing its impact on governance, operations, and risk management.
- Lack of independent assurance – Many companies have yet to prepare for third-party validation, leaving reports vulnerable to doubt.
'These challenges aren't unique to South Africa,' Stoop notes. 'But the risks of inaction are growing. What's needed now is a shift from ad-hoc ESG efforts to structured, strategic implementation.'
A path forward
For businesses seeking to integrate ESG into their core operations and demonstrate tangible progress, international ISO standards provide a clear path forward.
Frameworks like ISO 14001 (Environmental Management), ISO 45001 (Occupational Health and Safety), and ISO 50001 (Energy Management) are globally recognised and designed to support auditable, continuous improvement.
'These standards don't just help organisations comply, they help them perform,' says Stoop. 'They establish internal systems for data accuracy, align with other global frameworks, and support third-party assurance. In short, they're the infrastructure of trustworthy ESG reporting.'
Be transparent
Transparency in ESG reporting goes far beyond regulatory compliance. It builds long-term investor confidence, enhances stakeholder trust, and positions companies for future growth.
According to the EY 2024 ESG Barometer:
- 74% of institutional investors have divested from companies over ESG-related concerns.
- 87% now assess ESG disclosures alongside financial results.
- Companies with high ESG transparency typically enjoy more substantial long-term returns, stakeholder loyalty, and innovation in sustainable practices.
'Transparent ESG reporting signals responsible leadership,' Stoop explains. 'It shows that a company is planning for resilience, not just profitability.'
How to be credible
Credible ESG reports share several standard features that distinguish them from compliance checklists or corporate storytelling.
These include:
- Alignment with recognised frameworks: The report clearly states which standards are used (e.g., GRI, IFRS S1/S2, TCFD) and how they apply.
- Quantitative and qualitative data: Reports include measurable KPIs (e.g., carbon emissions, water use, employee turnover) alongside explanatory context.
- Third-party assurance: ESG performance is independently verified, with transparency around methodology and scope.
- Consistency over time: Year-on-year data is presented to show trends, progress, and areas of regression or improvement.
- Materiality assessments: The report reflects the issues most relevant to the business and its stakeholders.
- Governance and Accountability: This section details ESG oversight structures, including board-level responsibilities.
- Stakeholder engagement: The report addresses how stakeholder concerns are identified and addressed.
- Transparency and honesty: Setbacks, challenges, and areas for growth are disclosed alongside achievements.
'These components are increasingly expected, not optional,' Stoop adds. 'And the companies that get it right are seeing real returns on that investment.'
As South Africa moves toward a more formalised ESG regulatory environment, forward-thinking businesses have a clear opportunity: prepare now, build internal resilience, and signal to the market that your sustainability journey is more than marketing, it's measurable.
'Greenwashing is usually a symptom of weak systems, not bad intent,' Stoop concludes.
'But it's a risk no business can afford. With the right structures in place, companies can turn ESG from a challenge into a powerful competitive advantage.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
an hour ago
- Zawya
South Africa: Monitoring and learning for impact, Vodacom calls for bold shift in CSI
As South Africa grapples with record unemployment, deepening inequality and a critical skills shortage, Vodacom is challenging the private sector to rethink its approach to social investment – by embedding monitoring, evaluation and learning (MEL) in core business functions, not just in social investment. Speaking at the 2025 Trialogue Business in Society Conference, Vodacom SA director of external affairs Takalani Netshitenzhe said impact was central to overcoming inequality. 'Only impact measurement can assist us to make sure we deal with inequality in our country,' said Netshitenzhe. The conference was held on 13 and 14 May at The Galleria in Sandton, Johannesburg under the theme 'Driving impact, inspiring change'. The Vodacom Foundation was one of six corporate sponsors who partnered with Trialogue to discuss pressing matters impacting the corporate social investment and development in South Africa. The foundation and Trialogue presented a panel discussion entitled 'Embedding a culture of monitoring, evaluation and learning to scale impact'. During the discussion, Netshitenzhe was critical of the traditional approach to corporate social investment, which entails 'paying lip service, writing a cheque, and walking away'. 'That's not partnership – it's outsourcing responsibility,' she stressed. She admitted that Vodacom itself was previously more focused on outputs – such as how many schools it had connected to the internet – rather than outcomes. As a result, its good intentions often went awry. 'When we donated routers and SIMS to schools and walked away, those routers often ended up in cupboards, or simply disappeared,' she said. 'If we're serious about addressing inequality and building a sustainable society, MEL must be embedded from the outset – not retrofitted once programmes are running.' The Vodacom SA executive was joined on the panel by Gcobani Zonke, the deputy president of nonprofit organisation (NPO) Ubuntu Pathways, and Dr Karen Kotschy, a research associate and freelance MEL consultant. Today, the telecommunications corporation places unemployed graduates from the Vodacom Youth Academy in some of the schools and NPOs it works with. Placing information technology technicians within schools has translated into a higher and more effective usage of the technological devices it places in the schools. Additionally, the company no longer counts how many social workers it deploys to schools, but how the psychosocial support impacts the well-being of children, teachers, parents and the broader community. To support this shift, Vodacom has established a dedicated MEL department – an unusual move in the corporate sector. 'Our MEL journey is still evolving, but we're gaining the trust of our partners and stakeholders. We're seeing the power of MEL to shape stronger, more accountable programmes,' Netshitenzhe said. Learning – a critical feature of MEL Dr Kotschy called for MEL practitioners to be positioned at the heart of strategic business and programme decision-making. 'MEL teams need to se themselves as more than just technical people doing their thing on the side – they must adopt an advocacy role,' she asserted. 'Relational and transformational skills are needed for this new approach to M&E.' She acknowledged that smaller NPOs may lack resources but urged them to start with simple reflection practices and build from there, adding: 'they should focus on the learning part of MEL first'. Zonke, who is based in Gqeberha, explained that communities were an integral part of their monitoring and learning practices. 'We build our indicators alongside the community, based on what teachers, nurses, and caregivers tell us really matters. We make sure voice of community is heard – we conduct caregiver satisfaction surveys and then integrate that data into our programmes.' He said the early childhood development teachers Ubuntu worked with didn't 'just collect developmental data – they co-design social and emotional indicators to assess the safety, attachment and wellbeing of the children'. Ubuntu's cradle-to-career model for vulnerable youth uses MEL not only for donor accountability but to adapt programmes in real time. 'We move and then we stop and evaluate. That way, you can see where you may have gone wrong. However, that's not failure – it's simply how we learn,' he pointed out. Netshitenzhe agreed that 'MEL allows us to accept that things don't always go according to plan', but any weaknesses provide an opportunity to 'do the right thing'. From data collection to strategic learning Netshitenzhe warned against last-minute data collation for ESG reports. 'When you rush to compile stats and nobody checks the numbers, you lose credibility. We've learned the hard way – you can't sign off what you can't verify,' she said. 'Now, we hold every unit accountable for the data they provide, and our auditors validate it before publication.' As South Africa moves toward large-scale social investments, such as the R100bn transformation fund, Vodacom argues that MEL needs to be embedded in such investments to ensure accountability. 'You can't wait for programmes to launch and then ask what the impact is,' said Netshitenzhe. 'You start with the problem, define the outcomes, and build MEL into the DNA of delivery.'
Zawya
an hour ago
- Zawya
South Africa: South Gauteng deeds office remains open for business
The Department of Land Reform and Rural Development has reassured that the South Gauteng Deeds Office remains open and fully operational, despite recent media reports claiming the facility's closure. In a statement issued on Tuesday, 1 July, the department acknowledged that while the facility is experiencing infrastructure challenges, services to the public and clients continue uninterrupted. 'The department has previously acknowledged the Occupational Health and Safety (OHS) issues in the building, which include, sometimes, dysfunctional lifts, intermittent poor lighting, and other challenges. 'Additionally, we have indicated that the Department of Public Works and Infrastructure is in the process of securing a suitable building. It has been incorrectly reported by the media that services have been compromised,' the department said. The department said the area, which is currently experiencing delays, is the data capturing after registration. Despite these challenges, the department has assured that performance targets continue to be met and exceeded. 'In terms of the target of 95% of deeds and documents made available within seven days from the date of lodgements for execution, the office performance is at 97%. The office exceeded the target. 'In terms of the target of 95% of deeds delivered within 10 days from the date of registration, the office delivered 99% in 32 days. The backlog is due to the Occupational Health and Safety challenges,' the department said. To address the situation, interim alternative working arrangements have been implemented to ensure business continuity, and additional measures are underway to address the data capturing backlog. 'Members of the public and clients requiring services at the South Gauteng Deeds Office are advised to note that the office is open and operational,' the department said. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
Zawya
an hour ago
- Zawya
Cloud-based tools reshape how South Africa's businesses communicate
The digital communications landscape in South Africa and globally continues to shift, with cloud-based telephony tools increasingly replacing legacy PBX systems. This is according to Braintree, a local Microsoft solutions partner, which says tools such as Microsoft Teams Calling and Operator Connect are becoming core to how businesses collaborate and manage voice services. Doug Morrison, VP of modern workplace at Braintree, says companies are moving away from hardware-dependent systems toward software-based platforms that integrate voice, chat and video services under a single interface. 'Digital-first has become the default,' he says. 'It's not just about replacing phones; it's about embedding communication into business workflows.' Braintree cites IDC figures showing that unified communications as a service (UCaaS) accounted for 89% of global market revenue, with Microsoft leading the market at 44.7% share. These platforms allow companies to manage voice calling without traditional infrastructure, routing calls directly into Microsoft Teams through certified telecom partners. Braintree refers to the Forrester Total Economic Impact report, which found that small and medium businesses using Microsoft Teams Calling saw up to 45% total cost of ownership savings over three years, with enterprise customers reporting 17% savings. Both categories reported positive returns on investment. Beyond cost, Braintree says organisations are adopting cloud communications for greater flexibility and scalability. Operator Connect, Microsoft's voice integration service, enables organisations to provision and manage phone systems directly in the Teams admin centre, removing the need for on-site PBX equipment. Security has also become a key consideration. Cloud-based systems allow for encrypted communication, remote patch management, and access controls. Braintree notes that this is especially relevant for businesses with hybrid or remote workforces. Mobility is another driver. Employees can make and receive calls from any internet-connected device, which Braintree says reduces the need for fixed desk phones and enables flexible work policies. It adds that AI features now available in cloud systems can support compliance, call transcription, and workflow automation. Looking ahead, Braintree expects greater convergence between telephony, collaboration tools, and emerging technologies like AI and omnichannel messaging platforms. 'As tools become smarter and more integrated, communication is shifting from something you do separately to something embedded in how work gets done,' Morrison says.
