South Africa’s high-emission industries are under mounting pressure to reduce carbon output. Juanita Pienaar spoke with Amith Singh, Head of Manufacturing at Nedbank Commercial Banking, about the country’s carbon transition journey, the growing impact of the EU’s Carbon Border Adjustment Mechanism (CBAM), and how businesses in sectors like construction, mining and logistics can prepare now to thrive later.
Carbon readiness: a business imperative
The global push towards net zero is no longer theoretical. For carbon-intensive sectors such as construction, mining, and logistics, adaptation is becoming a business-critical priority. Singh defines carbon readiness broadly, describing it as “adopting and adapting business practices and technologies that reduce carbon emissions, improve energy efficiency, and promote sustainability and financial resilience.”
This transition isn’t just about meeting environmental goals; it’s about business survival. “Globally, climate goals are in place, and failing to meet them would stifle South Africa’s economic growth,” Singh notes. “Being carbon-ready adds longevity to our planet and business at large.”
He explains that practical readiness in these sectors includes integrating eco-friendly materials, reducing energy use, investing in sustainable power sources like solar and wind, and enhancing production efficiencies. In mining specifically, Singh sees an opportunity for innovation, not job losses. “There’s a symbiotic relationship between man and machine in reducing carbon footprints,” he says.
CBAM and the export economy
For businesses that export to the European Union and the United Kingdom, particularly in manufacturing and mining, CBAM represents a significant shift in trade dynamics. Under this mechanism, carbon-intensive imports will be taxed based on their embedded emissions, forcing South African companies to meet stringent environmental disclosure and reduction standards.
Singh points to Nedbank’s recent carbon readiness survey conducted in partnership with NAACAM, which revealed that “60,7% of companies have a sustainability strategy, but only 42,3% have set a net-zero timeframe.” While encouraging, these findings show that more needs to be done. “Scope three emissions tracking remains limited,” Singh warns, “highlighting the need for standardised methodologies across the supply chain.”
Encouragingly, many businesses are already taking steps to respond to CBAM. “We were pleasantly surprised that companies are acting on CBAM requirements, albeit the clarity of requirements relative to scope two and scope three is not clearly understood, and as such, not fully planned for.”
The roadblocks: cost, complexity, and infrastructure
Despite growing awareness, practical implementation remains difficult. “The biggest challenges for construction and mining companies in adapting to carbon-related regulations are the costs and downtime when implementing changes, as well as the additional reporting requirements that must be strictly adhered to,” says Singh.
In the logistics sector, the hurdles are even more pronounced. “The challenge in South Africa is that there are few alternatives to road transport, and the charging infrastructure is still developing,” he explains. While electric vehicle (EV) adoption is growing from a percentage perspective, “it is nowhere near closing the gap,” due to both high costs and infrastructure gaps.
Cross-border logistics also face mounting pressures. “Sea transportation is under pressure to reduce its carbon footprint, which ultimately comes at a cost in an already compressed economy. Notwithstanding the fact that South Africa is geographically far away from EU countries, this further compounds the challenges.”
The opportunity cost of inaction
While the carbon transition is undoubtedly complex, Singh stresses that delay is not a viable option, particularly for export-heavy sectors like mining. “Companies that are heavy exporters have no option but to comply, and this does come at an initial cost,” he says. “However, early adopters could have the opportunity to secure and diversify their customer base. Yes, this will affect margins initially, but we believe the benefit outweighs the initial investment.”
Some South African companies see decarbonisation as a competitive edge. According to Nedbank’s study, “thirty six percent of companies view decarbonisation as an opportunity, while 32% view it as a threat.” Non-exporters and multinational suppliers tend to view the transition more positively, possibly due to less immediate pressure and better access to resources.
Practical steps to take now
Singh outlines several actionable measures for companies looking to enhance their carbon readiness:
- Adopt green building standards that utilise natural light and ventilation.
- Introduce sustainable materials and reduce waste through re-use and recycling.
- Implement energy-efficient machinery and smart production technologies.
- Start the transition to alternative energy vehicles and use data to optimise logistics routes.
“These are not just environmental initiatives,” Singh says. “They are smart business practices that can reduce costs and increase operational efficiency in the long run.”
Financing the green transition
Cost is a persistent barrier to progress, but financial institutions have a role to play. Singh notes, “As a bank, almost 20% of our total loans and advances - or over R183-billion - is aligned to businesses that have a positive social or environmental impact.”
He adds that blended finance models, involving public and private sector collaboration, will be crucial. “There are still opportunities to look at blended finance modelling through the government and partnerships with other private sector players.”
Singh also highlights the potential of carbon credits, “which can be sold to offset emissions,” and form part of broader carbon reduction and revenue-generation strategies.
Nedbank’s commitment to a greener economy
Positioning itself as South Africa’s ‘green bank’, Nedbank has embedded sustainability into its financial model. “Across our divisions, we have dedicated teams that offer tailored solutions to support clients on their decarbonisation journey,” Singh explains. These include support for everything from solar panel installations to large-scale wind farms.
The bank also provides specialist training opportunities. “We’ve partnered with institutions like the Sustainability Institute, where our clients may benefit from preferential rates on courses such as carbon footprinting and carbon tax training.”
A collaborative path forward
The way forward, Singh insists, must be collective. “The public and private sectors need to work together,” he says. “Firstly, we need to bring this matter to light and educate the market on what CBAM is. We then need to navigate this journey with the market by means of funding and advocating for change.”
In a country still largely powered by coal, the transition will not be easy. But Singh believes South Africa’s climate and resource potential give it an edge. “Should we introduce more renewable energy sources and comply with regulation early, we would have a considerable advantage over other developing countries.”
With the effects of climate change already visible and carbon regulation tightening globally, Singh’s message is clear: the time to act is now.