The role of ESG in corporate decision-making: a South African analysis

Abstract

This dissertation examines the fusion of Environmental, Social, and Governance (ESG) considerations into corporate decision-making within the framework of South African company law. It explores the shift from a shareholder-centric model, to a model that embraces stakeholder considerations and corporate social responsibility. The study critically analyses the Companies Act 71 of 2008, with a special focus on section 76(3)(b), other national pieces of legislation such as the National Environmental Management Act 107 of 1998, relevant principles from the Constitution of South Africa, inter alia along with secondary sources, highlighting the ambiguity surrounding directors’ duties and the limited enforceability of ESG obligations. The research evaluates the contribution of the work of the Social and Ethics Committee while drawing guidance from global frameworks such as the UN Global Compact, OECD Principles, and statutory developments in jurisdictions including the UK, India, and New Zealand. The findings reveal that while ESG principles are increasingly recognised in South African governance discourse, their legal status remains fragmented and interpretive. The study concludes with recommendations for legislative reform, including clarifying directors’ obligations, strengthening the mandate of the Social and Ethics Committee, and aligning corporate governance practices with constitutional values and universal ESG standards.