What ESG means for SA’s agricultural sector

In recent years, ESG has become a buzzword in boardrooms, banks, and now, on the farm. But what exactly is ESG, and what does it mean for South Africa’s grain and livestock producers? This article unpacks the basics of ESG, explores how it is affecting the agricultural sector – especially primary production – and examines what is happening locally in the financial and regulatory environment.

What is ESG?
ESG stands for environmental, social and governance – three key areas used to measure the sustainability and ethical impact of a business. It’s a framework that investors, banks, companies, and governments use to assess risk and long-term value. Here’s what each part means:

• Environmental (E): How a business interacts with the natural world. For agriculture, this includes soil health, water use, emissions, chemical inputs, land use, and biodiversity.
• Social (S): How a business impacts people. This includes labour conditions, community engagement, food safety, and animal welfare.
• Governance (G): How a business is run. This includes compliance with laws, financial transparency, ethical leadership, and long-term planning.

ESG and primary production:
What does it mean on the farm?
1. Environmental pressures
Grain producers face scrutiny over soil degradation, pesticide use, water efficiency, and emissions (especially from mechanised farming and fertiliser use). Livestock producer concerns include methane emissions from ruminants, land clearing for grazing, water pollution, and animal welfare practices. Many producers are already implementing sustainable production practices, minimum-till systems, pasture rotation, and precision farming, which align strongly with ESG goals.

2. Social expectations
Fair wages, health and safety, and rural development are growing concerns. The treatment of farmworkers and farm dwellers, gender equity, and the role of emerging producers are now under the ESG lens. Animal welfare – particularly in livestock production – is an increasingly important factor in how local and international markets assess South African products.

3. Governance matters
Record-keeping, compliance, and traceability are no longer ‘nice to haves’. Export markets, financial institutions, and value-chain partners increasingly require ESG-linked reporting. Food traceability and bio­security have become part of responsible governance – especially post-COVID and amid growing global disease concerns.

What is happening in South Africa right now?
Growing pressure from the financial sector
Banks and financial institutions in South Africa are integrating ESG metrics into loan criteria, insurance risk profiles, and investment decisions. The Financial Sector Conduct Authority (FSCA) and South African Reserve Bank (SARB) have issued guidance for incorporating climate-related and sustainability risks into financial practices.

Emerging farmer support with an ESG lens
There is a growing trend for development finance institutions and agricultural support programmes to link funding with ESG-related goals – such as water conservation, land reform outcomes, and climate-smart agriculture. Government initiatives like the Climate Change Bill, Carbon Tax Act, and the Agriculture and Agro-processing Master Plan (AAMP) are starting to reference ESG frameworks, especially around sustainability and transformation.

International market access
Large buyers – especially from the European Union and the United Kingdom – are under ESG compliance pressure from their own governments and consumers. This affects South African export producers, who are increasingly asked for ESG-related certifications, animal welfare records, and climate impact disclosures.

Where are we headed?
While many grain and livestock producers are already engaging in sustainable
and ethical practices, the formalisation of these efforts under ESG frameworks is gathering pace.

What to expect

• AgriSA and the Banking Association of South Africa (BASA) are working on a national sustainability framework. The project is aiming to establish greater alignment by aligning the existing standards in agriculture with the sustainability reporting and practices of financiers.
• Standardised ESG metrics for farms may soon become part of compliance audits or financial applications.
• Technology and data collection – such as digital farming tools and carbon footprint calculators – will play a bigger role in tracking ESG performance.
• Consumer and retailer demand for transparency will continue to rise, especially regarding environmental impact and animal welfare.

What to do in the meantime?

• Stay updated on valuable information. It is advisable to follow Grain SA for the latest updates and participate in ESG workshops.
• Start taking proactive measures by collecting data related to your farm’s environmental and social practices.
• Engage in discussions with your bank to understand how ESG factors may have an impact on your financing options.
• Collaborate with industry bodies and cooperatives to ensure that your practices align with the evolving standards in the field.

ESG is no longer just a corporate checklist. For South Africa’s grain and livestock industries, the shift offers both a challenge and an opportunity: a challenge to adapt and demonstrate impact, and an opportunity to access better finance, global markets, and long-term sustainability. Producers who understand ESG and take small, measurable steps today will be best positioned for tomorrow’s market, policy, and climate realities.