⎪ Local manufacturing and food processing ⎪
Manufacturing at a turning point
Amith Singh, National Manager for Manufacturing at Nedbank Commercial Banking, argues that the competitiveness of the manufacturing sector in South Africa now depends on carbon intelligence.
S outh African manufacturers have earned their reputations through resilience, navigating energy disruptions, rising costs and unpredictable supply chains. But as 2025 draws to a close, it is clear that resilience alone is no longer enough. The next frontier of competitiveness is data – specifically, carbon intelligence. The Nedbank–NAACAM Carbon Readiness Study, released in June, provided a sobering assessment of the preparedness or lack thereof of our manufacturing base. Nearly 70% of the country's automotive component manufacturers export to the European Union and the United Kingdom, where emissions reporting is now manda- tory. Yet fewer than half have set a net- zero target, and only a small minority are tracking Scope 3 emissions across their supply chains. This gap is not just a technical oversight; it is a commercial risk, as global buyers increasingly screen suppliers based on carbon transparency. Competitiveness, once measured by cost, quality and delivery, now includes a fourth metric: carbon. In October 2025, carbon traded at roughly R1 600 to R1 620 per tonne , up from an average of R1 320 per tonne in 2024. These figures mean that embedded emissions in every product exported to Europe now carry a tangible financial cost. Yet despite the price signals, many firms still lack the systems to measure progress. Cost pressures and uncertainty about what to track continue to stall ac- tion, and hesitation in this environment is expensive. Some manufacturers are already break- ing that pattern. A leading Tier 1 automo- tive supplier has recently become the first in South Africa to trial low-carbon steel in production, thereby cutting embedded emissions and aligning with international buyer expectations. While the premium for low-carbon steel remains high, early adopters are gaining access to future sup- ply chains and strengthening their export market positions. Their example shows that carbon readiness is not a compliance burden but a competitive advantage. The study also revealed how uneven progress in sustainability is reshaping competitiveness across South Africa. Export-oriented firms face the greatest exposure as their customer base lies in
carbon-regulated markets where disclosure is now a condition of trade. Every tonne of material, every kilowatt of energy, and every logistics decision now determines whether a business retains access to global buyers or fades from their radar. This vulnerability is compounded by hesitation. Most companies understand the urgency of decarbonisation but struggle to move from intention to implementation. Cost constraints limit technical capacity, and the absence of clear reporting stan- dards leaves even willing participants un- sure of where to begin. Scope 3 emissions exacerbate this challenge: While many firms track direct energy use, few capture the indirect emissions that occur across their supply chains. Without this visibility, even long-standing firms risk exclusion from the value chains they helped build. Water adds another operational risk. Nearly half of the surveyed manufacturers rely on municipal supply, and many report interruptions that raise costs and halt pro- duction. Sustainability, the study suggests, is no longer just about environmental respon- sibility; it is now a measure of operational resilience and long-term viability. Financially, only a small fraction of companies allocate even 1% of their an - nual budgets to sustainability projects. This results in fragmented progress, where a few leaders surge ahead while others stall. The challenge is to convert awareness into coordinated action, linking finance, policy, and data so that readiness becomes the norm rather than the exception. Nedbank's response has been to move beyond traditional banking and into part- nerships. We help clients baseline their emissions, map financial exposure and de- sign credible carbon strategies. Our carbon readiness toolkit, developed in collabora- tion with NAACAM, offers a structured pathway with diagnostics, benchmarks and step-by-step guidance on prioritising mea- surements. For small and mid-sized firms without sustainability teams or external consultants, this support can be the differ- ence between staying competitive and being priced out of the market. Policy will determine how quickly readi- ness spreads. At our June roundtable, the Department of Trade, Industry and Competition emphasised the need for in- centives that help manufacturers transition
Amith Singh, National Manager for Manufacturing at Nedbank Commercial Banking.
while remaining competitive. Faster approv- als for renewable projects, clear guidance on Carbon Border Adjustment Mechanism (CBAM) compliance, and export support tied to verified progress will be essential. At the same time, we must avoid protecting outdated business models at the expense of innovation. Congested ports, costly safeguard duties and delayed infrastructure upgrades all erode competitiveness while the world moves ahead. Globally, manufacturing is being re- defined as governments invest heavily in low-carbon industries. The United States is reshoring clean technologies through the Inflation Reduction Act, while Europe is channelling billions into its Green Deal Industrial Plan. South Africa cannot af- ford to lag as demand shifts to regions that can demonstrate verifiable carbon performance. Even so, the ingenuity, skill, and deter- mination that define South African manu- facturers remain unmatched. To achieve sustainability and profitability, the sector now needs coordination between banks and factories, as well as between policy and practice. At Nedbank Commercial Banking, we are committed to driving that coordination be- cause the future will not reward those who are stagnant. It will reward those who adapt first, measure what matters and design with a carbon-conscious world in mind. https://business.nedbank.co.za
November-December 2025 • MechChem Africa ¦ 37
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