By: Sachin Chanderdhev - Sector Specialist for Manufacturing, Absa Business Banking

The conditions under which the global manufacturing sector creates value are shifting. Carbon intensity and environmental compliance now shape industrial performance in ways that were previously treated as secondary, and these factors are beginning to influence core decisions around investment and supply chain design – especially in economies under pressure to simultaneously industrialise and decarbonise.

For African manufacturers, the implications extend beyond operational adjustments and require a re-examination of what industrial competitiveness will mean in the decade ahead.

One feature to bank on is the exponential pace of technological change. Automation, data-driven systems, and advanced production techniques are enabling manufacturers to reach new levels of productivity and efficiency – often while reducing material inputs and improving the consistency of output. But these gains remain bounded by resource constraints. Past models that assumed unlimited access to energy and materials are no longer viable, and the question is no longer whether manufacturing should adapt, but how rapidly it can align with a more constrained and climate-vulnerable world.

The effects of that climate vulnerability are already visible.

Heatwaves, flooding, and water scarcity are placing new stress on industrial infrastructure and supply chains, turning environmental volatility into a hard constraint on where and how production can be sustained. In South Africa, for example, where manufacturing accounts for more than half of industrial energy and resource demand – much of it dependent on coal-fired power – this vulnerability is especially acute. And the environmental impact is becoming a competitive determinant. Manufacturers that remain locked into high-emission models face rising exposure to regulatory, operational, and market risk.

Adoption of, and adherence to, ESG (Environmental, Social and Governance) frameworks is gaining momentum – not only because they signal responsible business conduct, but because they offer a structured approach to reducing emissions, improving operational efficiency, and advancing cleaner technologies. These frameworks also formalise the social obligations embedded in industrial activity – linking long-term sustainability to local economic development and skills transfer.

Increasingly, environmental regulations are extending beyond domestic jurisdictions, with direct implications for trade and market access. The European Union’s Carbon Border Adjustment Mechanism (CBAM) is one such measure, designed to impose carbon accountability at the point of import. In parallel, carbon taxes are being applied across various national systems. Demonstrable progress against ESG metrics is therefore no longer a reputational advantage; it is becoming a baseline requirement for industrial participation.

In response to these pressures, many manufacturers are beginning with their energy mix – investing in renewables to reduce reliance on high-carbon sources and limit exposure to escalating energy tariffs. Others are also exploring more eco-friendly material inputs, sourcing recycled metals, biodegradable plastics, and organic fibres in place of more environmentally intensive alternatives.

Circular economy principles are gaining ground, with more manufacturers redesigning products and processes to enable reuse, repair, and reintegration into productive systems. These approaches extend the lifespan of resources, reduce waste, and open new value chain opportunities. While such shifts clearly align with ESG commitments, their impact is not limited to compliance – they are proving to deliver measurable cost savings and long-term operational resilience.

To meet rising sustainability demands without sacrificing competitiveness, many manufacturers are turning to advanced technologies that reconfigure how resources, labour, and information are deployed at scale.

Artificial intelligence, automation, and robotics are already enabling real-time decision-making across production systems – improving quality control, reducing waste, and lowering operational costs. Smart manufacturing strategies, including just-in-time inventory management, are tightening supply chains and minimising excess capacity. In some contexts, fully automated “dark factories” are emerging as models of high-efficiency production. Other technologies, like 3D printing, IoT systems, and blockchain, are beginning to coalesce into integrated platforms that connect machines, data, and human oversight. For many, these are becoming the tools for navigating a more resource-constrained, regulation-intensive industrial future.

The challenge for manufacturers is to remain open, informed, and aware – to embrace a culture of continuous learning, understand the context in which they operate, and move forward with intent. Start small, but remain steady in the journey toward building resilience and sustainability into the core of the business.