The world is entering a period of heightened geopolitical tension, marked by shifting alliances, economic rivalries and intensifying conflicts. Energy security, trade disruptions and technological dominance have become new battlegrounds shaping international relations.

These tensions are playing out across the investment scenario, shifting both attention and funding from long-term sustainability goals towards immediate national interests or concerns.

‘The politicisation of ESG [environmental, social and governance] in some markets is creating uncertainty for investors and companies, resulting in some instances in reversals on sustainability commitments,’ says Loshni Naidoo, the JSE’s Chief Sustainability Officer. ‘This scaling back on certain ESG requirements could potentially undermine sustainability progress and action.’

Yet in SA she says this influence has been limited, as the country continues to deal with energy transition and climate vulnerabilities. ‘There is still interest in green assets, as demonstrated by the growth in the JSE’s Sustainability Segment – it’s generally oversubscribed when bonds are issued.’

Naidoo highlights that while there were only nine green bonds in 2020, the segment now includes 104 listed instruments, which have collectively raised more than R70 billion in capital. This comprises R40.26 billion across 41 green bonds; R13.36 billion through 26 social bonds; R8.92 billion via 24 sustainability bonds and R8.22 billion from 13 sustainability-linked bonds (SLBs).

‘SLBs are the fastest-growing category on the segment as we see more issuers linking environmental and social outcomes. Transition bonds are the next frontier that we need to unlock to support the growth of climate finance,’ she says.

Naidoo believes that the exchange has a significant role to play in encouraging listed companies to remain committed to sustainability, despite geopolitical pressures over the short term.

‘We must continue to champion the sustainability imperative and reinforce the importance of staying focused on the long-term goals of sustainable development.

‘Expanding our ESG and sustainability-related product offerings could help support companies on their sustainability journeys. We’re committed to innovating and improving our current product suite to increase capital uptake through the Sustainability Segment. Our advocacy and engagement efforts remain strong – the JSE continues to use its brand to convene stakeholders for meaningful dialogue that will result in positive change for this country’s people.’

She stresses the importance of mobilising capital markets more effectively to ensure green financing continues, even during periods of geopolitical instability. ‘Education and awareness must bring in new participants, building broader understanding of the requirements and benefits of sustainable financing. Markets could explore different funding models, and leverage fintech/digital platforms to enhance transparency and simplify (where possible) the process to match investors and projects. De-risking mechanisms and innovative products can also help increase investor appetite for green finance-related initiatives.’

Greater collaboration between regulators, investors and companies is vital to ensure sustainability remains at the centre of SA’s agenda, says Naidoo. ‘Robust stakeholder engagement and strategic alignment are essential to keeping sustainability a core priority across all sectors. This includes ensuring coherence and consistency in both regulatory and development priorities.’

Naidoo is confident that sustainability will remain a defining feature of capital markets, regardless of geopolitical headwinds.

‘The next generation of consumers and investors are requiring accountability and purpose. As the JSE, a key player in the economy, we must continue to promote these values despite any global uncertainty.

‘Regulatory momentum is building, from disclosures to product responsibility. We’re seeing growing innovation in finance solutions aimed at supporting biodiversity and ecosystem restoration, alongside continued advancements in renewables and climate-friendly technologies. These trends will shape capital allocation. There is enormous acknowledgement among companies, regulators and consumers that sustainability is no longer a nice to have, it is a business imperative.’

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