Sanisha Packirisamy, Chief Economist at Momentum Investments
The 2008 global financial crisis weakened Western economic dominance, paving the way for rising powers like China and India, and setting the world stage for multipolarity. The emergence of a multipolar world order, characterised by geopolitical risks, redrawn geostrategic alliances, and redefined economic and political priorities, challenges the traditional dominance of Western powers. Concurrently, nationalism and policies of influential figures like United States (US) President Donald Trump, amplified by a global cost-of-living crisis, have fuelled populist support, shifting voter preferences from centrist parties.
This surge in support for nationalism disrupts global commitments, including reshaping environmental, social, and governance (ESG) priorities, presenting South Africa with a challenging backdrop but also creating a new set of opportunities to advance its sustainable goals.
National interests over collective action
Geopolitical tensions, notably US-China trade rivalries and Russia’s 2022 invasion of Ukraine, have strained international cooperation and deepened trade fragmentation, with global trade policy uncertainty indices posting record highs. The World Trade Organisation projects a 0.2% contraction in global merchandise trade this year, which could further disrupt global supply chains for trade in ESG-aligned technologies like solar panels and batteries. Rising nationalism and protectionism, such as US tariffs doubling to 50% on Chinese solar cells in 2024 and India’s 40% duties on electronics like lithium-ion batteries and inverters, threaten multilateral frameworks, including the United Nations Sustainable Development Goals. These policies undermine global climate cooperation, essential for ESG objectives, as countries prioritise national interests over collective action.
China, the world’s largest CO₂ emitter, accounts for over 30% of global emissions but leads in renewable energy with over 40% of global solar and wind capacity in 2024. India, the third-largest emitter, accounts for about 7% of global emissions, pursues ambitious renewable targets of 500 GW of non-fossil capacity by 2030, driven by solar and green hydrogen initiatives, after having trebled its capacity in the past decade. Brazil, contributing 2% of global emissions, leverages hydropower and biofuels to position itself as a green leader in the Global South. These dynamics reshape global ESG priorities, creating opportunities and challenges for South Africa to align strategically, particularly given that the country positions itself as a key player in the Global South and the BRICS alliance, while remaining a member of the G20. SA must navigate this complex landscape to advance its ESG objectives while preserving its international interests.
A complex landscape for global sustainability efforts
Despite emitting 12.6 gigatonnes of CO₂ equivalent in 2024, China reduced emissions last year through energy diversification, hosting over half the world’s solar power, according to the International Renewable Energy Agency. However, its coal reliance, accounting for 95% of global new coal construction in 2023 (Carbon Brief), complicates its ESG alignment. India, emitting three gigatonnes in 2024, added 25.4 GW of solar and advanced green hydrogen but also struggles with coal phase-out. These trends underscore the complex ESG landscape South Africa must navigate.
The Transatlantic Alliance, a cornerstone of post-World War II global governance, faces strain as Trump’s second presidency prioritises bilateral deals and fossil fuel policies. Trump’s cancellation of US$4 billion in United Nations Green Climate Fund pledges marks a swift reversal of US climate and clean energy policies, following his January 2025 orders to withdraw from the Paris Climate Agreement, halt federal renewable energy funding, and, according to Secretary of State Marco Rubio, end US climate diplomacy. These decisions jeopardise global climate cooperation, critical for South Africa’s ESG objectives, particularly its US$13.8 billion Just Energy Transition Investment Plan (JET-IP). Similarly, India’s “Make in India” initiative, under Prime Minister Narendra Modi, prioritises domestic industries, raising costs for ESG-critical technologies. Similarly, Argentina’s Javier Milei’s nationalist economic policies de-emphasise ESG frameworks, while Italy’s Giorgia Meloni’s government has scaled back European Union sustainability mandates, further complicating global sustainability efforts.
Opportunities for South Africa
This creates a vacuum that China and other powers may fill. China’s Belt and Road Initiative, aiming to invest US$1 trillion across 150 countries, offers South Africa access to renewable energy technologies, funding for energy and transport infrastructure upgrades, higher export revenues to new green technology markets and strengthened trade and investment opportunities. Moreover, the African Continental Free Trade Area Agreement offers a platform to enhance intra-African trade in green technologies, reducing South Africa’s dependence on geopolitically distant partners. South Africa can position itself as a regional hub for renewable energy innovation, leveraging its mining sector’s critical minerals like platinum and cobalt, essential for green technologies.
South Africa’s non-aligned stance allows flexibility in navigating multipolar dynamics, but it must strategically align to advance its ESG goals amid funding shortfalls and geopolitical realignment across the globe. To secure funding and green technology partnerships, South Africa should maintain strong ties with the European Union, which prioritises climate action and open markets. Concurrently, it must diversify its Western partnerships, including with Canada and the UK (which are exploring clean energy collaborations), to counter US policy shifts under Trump.
To safeguard its interests, South Africa should adopt a multi-alignment strategy, engaging both Western and non-Western powers without committing exclusively to any bloc. This approach maximises access to ESG financial resources while mitigating risks from geopolitical fragmentation. South Africa should advocate for reformed multilateral frameworks, strengthening institutions to foster international cooperation, global stability and collective action, including inclusive trade policies that advance ESG goals. Such advocacy will build resilience and ensure sustainable progress in a fragmented world increasingly vulnerable to shocks.
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