6 Hidden Costs of Sustainability Reporting SA Property Investors Need to Know
Lost investment capital, lower portfolio valuations and falling behind global competitors - these are the real risks and costs of sustainability reporting property investors shouldn't ignore
How does your portfolio score on ESG?
Sustainability reporting is practically still in its infancy in South Africa, but the two years since the launch of voluntary submissions in 2023 have already shown up some cracks. Apart from a handful of JSE-listed REITs that have committed to annual ESG (in fact, GRESB) reporting, not many SA companies are reporting or scoring very well.
Surveys show that less than 9% measure carbon emissions comprehensively, and 66% do not take external (value chain) emissions into account. A shocking 55% still use a patchwork of spreadsheets and some software, 88% of which have serious errors in them, which is why preparing ESG disclosures can consume 5-7 months of work, more than 250 staff hours and cost into the millions on large portfolios.
What on Earth is going to happen when sustainability reporting becomes mandatory?
Rising Costs: We Ain't Seen Nothing Yet
South Africa's Companies Amendment (2023) now explicitly adds ESG factors into corporate governance duties, meaning failures in disclosure can expose directors to legal risk. And let's not forget that the country's reporting preparedness roadmap is to begin aligning global standards like the ISSB's new IFRS S1 and S2 for sustainability and climate with SA's Green Finance Taxonomy, effectively making ESG filings mandatory for public companies, early as 2025/2026.
In fact, global climate litigators like the Sabin Centre and Dentons have already noted a rising trend in ESG-related lawsuits in South Africa. Something that local legal agencies, including Webber Wentzel and Hogan Lovells, have already started tracking.
And the penalties are severe.
The US SEC's Climate and ESG Task Force has already brought severe sanctions against companies, while in the EU, deficient reports cost companies up to 5% of their annual turnover in fines.
We don't know what the local penalties will be as yet. But the real question is, do you even want to find out?
International companies say that unpreparedness for sustainability reporting can deplete some 20-30% of their financial reporting budget and put tremendous strain on teams.
Which is why we're diving into the real costs and hidden costs of sustainability reporting, to help SA property investors prepare for when (not if) it becomes mandatory.
Can anyone afford these?
6 Real Costs of Sustainability Reporting SA Property Investors Can't Ignore
1. Lost Investment-Capital Opportunities
When ESG submissions are late or inaccurate, institutional investors can (and increasingly do) walk away. A single downgraded GRESB or CDP score makes it harder to tap green-bond markets or sustainability-linked loans, effectively shutting the door on fresh capital. Globally, 70% of investors now screen property assets on ESG transparency before deploying funds, so every reporting misstep represents real, quantifiable opportunity cost.
Not to mention, late or inaccurate reports lower GRESB/CDP scores, which directly affect access to green bonds, sustainability-linked loans, and investor interest.
2. Lower Portfolio Valuation
Poor sustainability reporting is “priced in” by the market: real-estate funds with weak, error-ridden disclosures are routinely valued at a discount because analysts expect higher operating risk and future cap-ex to catch up. GRESB itself notes that even one late or inaccurate filing can drag down portfolio value and access to finance, a drag that compounds every year the data gaps persist.
3. Falling Behind Global Competitors
While South African portfolios wrestle with spreadsheets, international peers are automating ESG data flows and pulling ahead. Global average GRESB scores have risen steadily for three years as overseas funds invest in smarter tech. International investors and asset managers have had time to adapt and are now already automating up to 50% of manual reporting tasks.
The gap is no longer theoretical: global buyers and tenants benchmark SA assets against those higher-scoring portfolios, making local laggards less attractive.
4. Reputational and Regulatory Risk
Failing to meet evolving disclosure rules isn't just a paperwork issue; it's headline risk. ESG-related legal actions have surged in South Africa, with >40 % now tied to environmental non-compliance. Each case erodes brand equity and triggers intensified scrutiny from boards, lenders and tenants. Add in potential fines for incorrect emissions data, and the reputational hit quickly snowballs into bottom-line pain.
5. Carbon Tax Penalties
The Carbon Tax Act already levies R236 per t CO₂e, and portfolios with poor emissions tracking are doubly exposed — paying more than they should and risking additional penalties for mis-reporting. The regulation is explicit: incorrect or incomplete data can lead directly to over-payments or fines, turning sloppy ESG processes into an avoidable, perennial tax drain.
Plus: The Everyday Drain That Adds Up Fast
Beyond the big-ticket risks, portfolios lose millions through day-to-day inefficiencies: ESG reports consume up to 250 staff hours annually, consultants charge hundreds of thousands to validate fragmented data, and teams juggle overlapping software tools across departments.
Manual reporting across 30+ spreadsheets introduces critical errors and constant rework, while ESG leads are pulled from strategic work to chase down data. Add in tenant dissatisfaction from poor transparency and missed cost-saving opportunities (like undetected fuel overspend or water leaks), and the hidden daily costs of sustainability reporting quickly become a major drain on performance.
The Solution? Automated Sustainability Reporting
The SA property industry is at a turning point. It's time to evolve reporting from a reactive, annual tick-box exercise into a proactive, real-time performance driver.
South African portfolios, especially those under pressure from Carbon Tax, need to start adopting predictive ESG analytics to use live data to detect issues before they become costly.
One commercial property group, for example, recently reduced their reporting time by 40% while increasing GRESB scores by leveraging automated data pipelines that replaced 30+ manual spreadsheets.
