The European Union (EU) is South Africa’s largest trading partner and a critical market for local exporters, receiving roughly R430 billion (€23 billion) in goods each year. It also accounts for more than 20% of South Africa’s total trade in goods and remains an expanding market for service exports.
Under the Southern African Development Community (SADC)-EU Economic Partnership Agreement (EPA), roughly 98% of South African exports enter the European market duty-free.
But the rules of global trade are changing. Europe’s sustainability agenda is turning regulatory compliance into a strategic risk for South African companies that cannot prove the environmental and social footprint of what they sell.
This risk is reflected in the 2026 Forvis Mazars C-Suite Barometer, in which 27% of executives identified new or increased regulatory requirements as one of the external trends expected to have the greatest impact on operations over the next 12 months.
Strategic priorities are shifting as a result, with 22% of respondents reviewing supply chains, operations and procurement processes over the next three to five years.
At the centre of this shift is the EU’s sustainability strategy, anchored by the Corporate Sustainability Reporting Directive (CSRD). The CSRD sets out how companies within its scope must report their environmental, social and governance performance.
The scope of the directive was narrowed in 2026, with higher employee and turnover thresholds introduced. However, South African suppliers may still receive sustainability data requests from European customers that remain subject to its requirements.
For companies trading with Europe, the Carbon Border Adjustment Mechanism (CBAM), which entered its definitive regime in 2026, adds a further layer of complexity.
CBAM puts a carbon price on selected carbon-intensive goods imported into the EU, with the intention of equalising the cost of carbon between European producers and foreign suppliers.
For South African exporters, the potential impact is significant. Although CBAM does not remove the duty-free treatment provided by the SADC-EU EPA, its carbon-related costs could reduce the commercial benefit of that preferential access for covered goods.
CBAM data can also support the product-level carbon-footprint information required for value-chain reporting. Together, these rules have made supply-chain visibility a mission-critical commercial requirement, not simply a compliance exercise.
CBAM raises the cost of EU trade
The complexity of these overlapping regulations is reshaping global trade. As the 2026 C-Suite Barometer notes, supply chains have become “the strategic battleground for ultimate success”.
Adaptability matters most here, as sustainability requirements, tariff pressures and regionalisation make global networks harder to manage.
Yet business leaders are not standing still. The barometer shows that confidence in managing supply-chain challenges and regulatory compliance has risen by nine percentage points, while ESG preparedness is up eight points.
Executives appear confident: 92% say they are prepared to manage sustainability requirements and supply-chain resilience, while 90% feel ready for new regulatory demands.
However, that confidence now needs to translate into action, as CBAM will intensify competition and raise the regulatory cost of serving European customers.
As the barometer reflects the views of more than 3 000 executives across 40 countries, South African leaders should ask whether their organisations are ready for CBAM’s operational and financial impact.
To compete under the CBAM regime, South African companies can no longer assess sustainability in isolation. The focus must extend beyond direct operations to the full value chain.
No company operates in a vacuum. Every business has customers downstream and suppliers upstream. Leaders must understand the emissions, inputs and practices across their supply chains because transparency is fast becoming a condition of global market access.
For exporters, CBAM compliance requires granular value-chain data. European buyers increasingly need to know where materials originate, which inputs are used and what environmental and labour impacts are associated with the products they purchase.
Companies that cannot provide this information risk weakening customer relationships when those requests arrive.
Exporters need reliable supply-chain data
Large JSE-listed companies supplying Europe may already have much of this data integrated into their reporting frameworks. However, this is not always the case. Large private businesses and smaller listed companies may be more exposed.
South African producers of CBAM-covered goods, particularly iron, steel and aluminium, face increasing pressure to provide reliable emissions data to European customers.
South Africa’s carbon-heavy electricity mix compounds the risk because power is a major production input. In sectors such as iron and steel, CBAM-related costs could narrow or eliminate the price advantage on which exporters have historically relied.
As other countries and trade blocs adopt similar measures, the pressure to decarbonise will only intensify.
The demand for transparency is also moving upstream. Companies are increasingly expected to show how they assess, monitor and improve the sustainability of their own suppliers.
Industry initiatives are helping to define good practice. Outside the commodities covered by CBAM, the Better Cotton Initiative, for example, provides a framework for the water- and chemical-intensive textile sector to audit and monitor suppliers.
Precious-metal mining companies can draw on due-diligence guidelines such as the London Bullion Market Association’s responsible-sourcing accreditation for gold and the London Platinum and Palladium Market’s equivalent for platinum-group metals.
Human capital is part of the same equation. South African companies are increasingly being asked to confirm their alignment with labour legislation, including across outsourced services, as buyers scrutinise supply chains more closely.
This scrutiny is not limited to heavy industry. The broader a company’s African footprint, the greater the need for verifiable data showing how its supply chain is reducing emissions and managing social risk.
The services sector is also exposed. Banks and insurers may have lower direct emissions, but they face increasing scrutiny over financed emissions.
As greenwashing concerns grow, the balance between green and high-emission asset financing – not only the value of green financing in isolation – is coming under closer review.
Building full supply-chain visibility and quantifying carbon costs is complex. Companies must identify whether their products fall within CBAM, map their value chains, establish responsibility for gathering emissions data and assess the potential financial effect on exports.
By mapping their value chains and reducing environmental exposure, South African companies can assure customers and other stakeholders that they are monitoring suppliers, managing risk and protecting future demand.
As the 2026 C-Suite Barometer states, adaptability is central to business success. By embracing transparency and building more sustainable supply chains, South African companies can move beyond compliance and protect growth in one of their most important markets.
