The growing environmental impact of the retail industry has again made headlines in recent weeks, with France's senate approving a bill that directly addresses the environmental impact of the fast fashion industry. The bill proposes to regulate overproduction and overconsumption and is now under consideration by a joint committee of deputies and senators.

This latest legislative development builds on the 2024 adoption of proposals by the European Parliament to broaden the scope of recycling obligations for fashion brands and to introduce new food waste reduction targets for EU member states.

While the EU has applied direct pressure to retailers through targeted legislation, a broader set of regulatory and reputational considerations applies in South Africa, spurring a trend among South African retailers towards alignment with global sustainability standards.

In this article, we unpack key legal and reputational considerations for the South African retail industry as businesses progress on their net zero journey.

Decarbonisation and supply chains

Prioritising a reduction of greenhouse gas (GHG) emissions across operations and supply chains is foundational to the sustainability strategy of any business and requires net reductions across scope 1, 2 and 3 emissions. This is a particular challenge for retailers, whose scope 3 emissions, derived from indirect emissions in the value chain, often constitute the majority of the retailer's carbon footprint.

Given the high impact of scope 3 emissions, retailers will struggle to set and achieve meaningful net zero targets without understanding and prioritising their supply chains.  Mapping supply chains, assessing environmental and social impacts throughout, and promoting sustainable practices among suppliers are therefore crucial steps.

While supply chain due diligence is not yet a legislative requirement across most jurisdictions, retailers who engage thoroughly with their supply chains will be better positioned to build meaningful net zero targets, report on those targets, and ultimately meet legislative obligations, which are anticipated to come into force in the coming years.

Reporting and disclosures

The Corporate Sustainability Reporting Directive (CSRD) is an EU initiative aimed at enhancing transparency and standardising sustainability reporting across companies. As of June 2025, the CSRD is undergoing revisions to simplify reporting requirements, with implementation delays and scope adjustments proposed to reduce burdens on businesses while maintaining core sustainability objectives. Implementation of CSRD has, however, commenced. As more businesses are brought within its scope, sustainability reporting requirements will intensify for EU companies and their supply chains.

Retailers in South Africa may take the view that the incentive for ESG reporting is currently low, given the slow implementation of the CSRD in the EU and the absence of mandatory reporting requirements locally.

However, demonstrating progress towards net zero is underpinned by accurate reporting. With consumers increasingly seeking more sustainable retail options, retailers must ensure that their sustainability claims are credible and backed by data, or risk facing greenwashing claims. South Africa's Advertising Regulatory Board recently published a draft Sustainability Code to address greenwashing. The draft code establishes definitions and guidelines for various environmental claims, including composability, recyclability, and carbon neutrality of products.

Given the legal and reputational risks associated with unsubstantiated sustainability statements, thorough and transparent reporting is the only viable solution. A proactive and data-based approach to sustainability reporting will enable retailers to prepare for mandatory reporting obligations, while maintaining credibility with consumers and stakeholders.

South African legislation

South Africa has a robust environmental regulatory framework, and any company's net zero journey should begin with legislative compliance.

From an operational perspective, certain provisions of the Climate Change Act, 2024 recently came into force in South Africa. These provisions pave the way for the government to determine sectoral emission targets (SETs) for GHG-emitting sectors and sub-sectors, as well as to establish a GHG emission threshold to decide which entities will be allocated a carbon budget once the remaining provisions of the Act come into force. Draft SETs were published in April 2024, including those for the trade and industry sector, which covers all manufacturing and production in the country.

An important regulatory intervention which retailers should be considering is the principle of Extended Producer Responsibility (EPR), which seeks to extend a defined producer’s financial or physical responsibility for its products across the products' life cycle, to the post-consumer stage (ie post-consumption waste recovery, recycling and disposal, and the end-of-life management of the products and their resultant wastes). EPR Regulations, published under the National Environmental Management: Waste Act, 2008, regulate problematic waste streams resulting from public consumption of certain products, as set out in various sector notices. EPR sector notices have been published for the electrical and electronic equipment; lighting; paper, packaging and some single use products; portable batteries; pesticides and lubricant oil sectors.

Regulators are increasingly doubling down on EPR “free riders”. Businesses that manufacture, convert, import, refurbish or distribute any regulated identified products, or make or sell them under a brand label, are reminded to ensure compliance with these laws, as well as ensuring that their efforts towards net zero or circular economy initiatives are aligned with the regulations and related policy guidelines.

Reputation management

Although South African companies are not yet compelled by legislation to report on sustainability, many choose to make public statements and disclosures about their targets and performance.  These public statements must, however, be carefully considered and substantiated.

In August 2024, South Africa saw its first successful greenwashing case, in which TotalEnergies was found guilty of greenwashing by the Advertising Regulatory Board. While public scrutiny of the environmental and social impact of large companies is increasing, cases like this serve as a warning to businesses against making overly broad or misleading sustainability-related claims, which may result in reputational harm, litigation or other consequences.

Setting net zero targets is a priority for many retailers in South Africa, even though the targeted legislative interventions on sustainability reporting and due diligence seen in the EU are not yet directly impacting South African businesses.  Aligning these targets with global reporting standards, conducting comprehensive supply chain due diligence, ensuring compliance with local environmental regulations and managing reputational risk will support businesses on their net zero journey, and ultimately pay off as more companies fall within the scope of ESG legislation.

Written by Emily Gammon, Knowledge Lawyer & Paula-Ann Novotny, Partner at Webber Wentzel