In an era defined by geopolitical tension, the relevance of environmental, social and governance (ESG) principles has intensified. While uncertainty may tempt corporates to refocus solely on short-term resilience, ESG remains a critical lens for managing risk, safeguarding reputation and unlocking long-term value. From supply-chain fragility to energy security and social cohesion, today’s business challenges are still deeply interconnected with ESG priorities, but companies need to be aware of the new dynamics of greater volatility.

‘A couple of years ago, ESG investors may have viewed geopolitics as largely peripheral to discussions on economic inclusivity, social development and environmental responsibility. In 2026, geopolitics is constantly dominating the headlines,’ says Loshni Naidoo, the JSE’s Chief Sustainability Officer.

‘The new “G” in ESG is no longer shorthand only for governance. Governance remains essential, but geopolitical risk has become the defining variable shaping policy trajectories, supply chains and most importantly the cost and availability of capital.

‘The Network for Greening the Financial System (NGFS) has made geopolitics central to its macro-risk architecture. Its November 2025 scenarios report describes a fragmented world in which trade blocs, sanctions and supply-chain realignment could generate divergent carbon prices (a range of $60–$130 per ton by 2050), uneven transition policies and elevated physical and transition risks. In a race to a net-zero pathway by 2050, the global society needs to pre-empt deeper climate damage later while avoiding economic disruptions, higher carbon prices, tighter financial conditions and volatile equity markets. Boards do not have to like this trajectory; however, they do need to plan for it.

‘Geopolitical risk now influences how much your money costs. If your strategy does not demonstrate resilience across the NGFS-type scenarios, capital providers will conduct their own tests and adjust your valuation accordingly. Companies that show how their business model performs under three plausible futures tend to secure improved funding terms.’

Naidoo says that according to the WEF CEO Guide 2025, the global green economy surpassed $5 trillion in 2024 and is heading for $7 trillion by 2030. Firms with sizeable green-revenue shares have grown twice as fast as peers and accessed capital up to 104 bps cheaper. ‘However, the outperformers are not subsidy dependent – they actively shape ecosystems, scale technologies down the cost curve and build financing models that attract diversified investors,’ she says.

‘The best performers do three things consistently: shape their operating ecosystem with clear policies and standards; industrialise new tech so unit costs fall; and build bankable structures that draw diversified capital instead of relying on one funding source,’ says Naidoo. ‘In today’s world, that also means designing absorbers for geopolitical shocks such as supply disruption, sanctions, conflict-driven fuel and shipping volatility, and proving to investors that operations can keep running when politics turn turbulent.’

For SA listed companies, the core message is that geopolitical volatility can become a direct financial variable, says Naidoo. Energy instability, shifting trade routes, concentrated supply chains, sanctions regimes and the politicisation of technology markets can now affect funding costs, valuation multiples and competitive positioning.

‘In this environment, companies that can demonstrate operational continuity, diver-sified and transparent supply chains, credible risk data and strategies tested against realistic geopolitical and transition scenarios are increasingly perceived as lower risk by global investors. This matters profoundly for the JSE,’ she says.

‘The ability of South African issuers to compete for that capital will depend not only on their internal resilience but also on the quality of the market infrastructure that supports disclosure and assurance.

‘The JSE, therefore, has a strategic role in strengthening the credibility and transparency of the South African market, ensuring our issuers remain investable in a world where geopolitical risk is priced with increasing precision. The governance of geopolitical and transition risk has become a price signal. Companies that integrate geopolitical realism into their strategies do more than comply with reporting expectations, as they unlock lower capital costs in a world where political risk influences term sheets, insurance premiums, and valuations.’

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