SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison, Madison Liebmann and Sinovuyo Damane, ENS
that sustains and optimises strategy and objectives, including assessing risks arising from the economic, social and environmental context. Board Level Oversight FICA gives effect to United Nations Security Council (UNSC) targeted financial sanctions through Sections 26A and 26B. Section 26A provides that a UNSC reso - lution adopted under Chapter VII providing for finan - cial sanctions has immediate effect upon adoption, without requiring Gazette publication. Section 26B prohibits any person from directly or indirectly acquir - ing, collecting, using, possessing or owning property, or providing property, financial services or economic support for the benefit of, or under the control of, a person or entity designated pursuant to a UNSC res - olution. FICA implicates the Boards of accountable institutions, mandating compliance. King V does not explicitly address international sanctions but its princi - ples of ethical and effective leadership require Boards to assess all risks relating to their entities. Important ESG issues in South Africa include sus - tainable development, a just energy transition, black economic empowerment, climate change resilience, employment equity, improved governance and anti- corruption practices. Obligations of JSE-Listed Companies The Listings Requirements mandate that Main Board issuers adopt and apply the King Code through its application and disclosure regime. King V requires annual integrated reporting and emphasises sustain - ability reporting. In July 2021, a King IV Guidance document on “Responsibilities of Governing Bodies in Responding to Climate Change” was published, which continues to contain relevant principles under King V. Furthermore, the JSE launched its JSE Sustainability Disclosure Guidance and JSE Climate Change Disclo - sure Guidance in 2022. The JSE’s disclosure guidance 7. Environmental, Social and Governance 7.1 ESG Requirements ESG Considerations
documents are based on international best practice and are an important distillation of the recommenda - tions of multiple global initiatives on sustainability and climate risk disclosure, including GRI Sustainability Reporting Standards, the Taskforce on Climate-relat - ed Financial Disclosures recommendations, the IFRS Foundation’s ISSB prototypes and the Value Report - ing Foundation’s Integrated Reporting Framework and Sustainability Accounting Standards Boards. They are also not mandatory, but bring much-needed guidance for consistent, comparable, transparent and reliable disclosures. Regulation 28 of the Pensions Funds Act requires funds to consider all factors (including ESG) relevant to long-term success. South Africa’s first national Green Finance Taxonomy was published in April 2022. Although not yet mandatory, it provides a use - ful benchmark for tracking green activities. Environmental Legislation ESG reporting requirements are contained in specific legislation, including reporting obligations under the National Environmental Management Act No 107 of 1998 and the National Environmental Management: Air Quality Act No 39 of 2004. Certain emitters must report under the National Greenhouse Gas Emission Reporting Regulations, covering sectors including energy, transport, industry, agriculture and forestry. The Climate Change Act No 22 of 2024, assented to on 23 July 2024 and largely operative from 28 Feb - ruary 2025, enables the development of an effective climate change response and a just transition to a The Employment Equity Act No 55 of 1998, as amended (EEA), imposes obligations on “designated employers” (those employing 50 or more employees) to prohibit unfair discrimination and take progressive measures to improve representation of suitably quali - fied employees from designated groups (black South Africans, women and people with disabilities). Desig - nated employers must develop Employment Equity Plans and submit annual reports to the Department of Employment and Labour. Recent amendments to the EEA require designated employers to meet sec - tor-specific employment equity targets over five-year low-carbon economy. Employment Equity
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