Code for responsible investing in south africa
This Sustainable Returns project is made possible through funding from the government of Norway. Their size means they have unprecedented power to secure sustainable longer-term returns by insisting on high standards of environmental care, social concern, and better governance in the assets in which they invest.
IFC aims to lead by example, with investments in emerging markets governed by a Sustainability Framework and corporate governance standards that help us invest in the responsible companies with high potential for good outcomes. They will receive technical support and the opportunity to work with peers in this space.
Yet, for many pension funds, responsible investing is still new territory. About the Sustainable Returns Project Sustainable Returns for Pensions and Society is a southern African, industry-led initiative to integrate environmental, social, and corporate governance ESG considerations into the mainstream of retirement industry investment practices. The inclusion of implementation and reporting recommendations gives more detailed and clear guidance to those that apply the code. Broadening the scope will ensure that investors have a ripple effect and influence adjacent and related market participants.
CRISA refers to the increasing need for good governance, particularly in South Africa given some notable governance failures. The emerging need is for investors to scrutinise investments more closely in South Africa and globally, to manage this significant risk. Given that in some cases, the regulatory oversight of investors is less rigorous, the role of self-regulation and stewardship is doubly important. Putting the comments on the specifics of revisions to the CRISA code aside, there is a bigger question around whether the code itself is adding value to the responsible investor in South Africa.
There are two global trends that should be noted with respect to ESG integration and reporting. Firstly, there is a move towards harmonising ESG reporting requirements at a global level to align the various approaches and reduce the reporting burden on business of the plethora of ESG reporting standards, and their differing requirements. In , the Carbon Disclosure Project, Climate Disclosure Standards Board, Global Reporting Initiative, International Integrated Reporting Council and Sustainability Accounting Standards Board began to collaborate on developing a joint or at least interoperable corporate reporting system in an attempt to begin this journey.
They are also driving simplification and alignment and believe that these metrics will apply regardless of sector, geographic location and economic status. These are two recent initiatives, but there are many others all calling for a rationalisation of ESG measures whether they be voluntary or legislated.
There are obvious areas of differentiation, but the question is whether sector voluntary reporting or sovereign regulation can accept a global norm and manage only the expected differences at a local or sectoral level. The benefit is significant to not only companies that have to report or work across a number of different requirements, but also for investors who can then make easy and normalised comparisons between projects and companies.
Secondly, several countries are considering regulating the requirement to integrate and report on ESG issues, a significant shift away from the guidelines and other voluntary approaches that have historically been the norm. The impact on country competitiveness of integrating and not integrating ESG issues and reporting on them as a regulatory requirement is key.
The European Union EU is at the forefront of this drive which is understandable, as they led the charge on reducing carbon emissions. A broad range of measures are being considered as outlined in their Action Plan on Financing Sustainable Growth which was released in and which pivots around the achievements of the SDGs and the Paris Agreement on climate change.
The proposals also cover all forms of asset managers and financial services players. This trend in the EU is being echoed around the world and in developing and developed countries. There are many international collaborations and at national level individual countries are moving ahead. The complexity of managing not only these voluntary frameworks, but now also equally diverse national regulation, is daunting.
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The Code requires institutional investors to develop policies on how they incorporate sustainability considerations, including ESG, into investment analysis and activities. Institutional investors should ensure that this policy is implemented and establish processes to monitor compliance with the policy.
Principle 2 — An institutional investor should demonstrate its acceptance of ownership responsibilities in its investment arrangements and investment activities. The second principle requires institutional investors to demonstrate a responsible approach to shareholding by, among others, implementing a policy detailing mechanisms of intervention and engagement with companies when concerns have been identified, as well as the means of escalation if concerns raised cannot be resolved.
The Code requires such a policy to also detail the approach to voting at shareholder meetings, including the criteria to be used in reaching voting decisions and public disclosure of full voting records. Controls should also be introduced by the institutional investor to prevent insider trading as defined by the Security Services Act.
Principle 3 — Where appropriate, institutional investors should consider a collaborative approach to promote acceptance and implementation of the principles of CRISA and other codes and standards applicable to institutional investors.
Institutional investors are encouraged to work with other shareholders, service providers, regulators, investee companies and ultimate beneficiaries to promote CRISA and sound governance. Principle 4 — An institutional investor should recognise the circumstances and relationships that hold a potential for conflicts of interest and should pro-actively manage these when they occur.
The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The performance of the portfolio depends on the underlying assets and variable market factors. Lumpsum investment performances are quoted. The portfolio may invest in other unit trust portfolios which levy their own fees, and may result in a higher fee structure for our portfolio.
The fund may from time to time invest in foreign countries and therefore it may have risks regarding liquidity, the repatriation of funds, political and macroeconomic situations, foreign exchange, tax, settlement, and the availability of information. The Manager has the right to close any portfolios to new investors to manage them more efficiently in accordance with their mandates. The portfolio management of all the portfolios is outsourced to financial services providers authorised in terms of the Financial Advisory and Intermediary Services Act, Sanlam Life Insurance is a licensed financial service provider.
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FINANCING INVESTING AND OPERATING ACTIVITIES CASH
All rights reserved. Collective investment schemes are generally medium- to long-term investments. Additional information of the proposed investment, including brochures, application forms and annual or quarterly reports, can be obtained from the Manager, free of charge.
Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in the portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of the portfolio and the investor will differ depending on the initial fees applicable, the actual investment date, and the date of reinvestment of income as well as dividend withholding tax.
Past performance is not indicative of future performance. Forward pricing is used. The CRISA Principles Principle 1 — An institutional investor should incorporate sustainability considerations, including ESG, into its investment analysis and investment activities as part of the delivery of superior risk-adjusted returns to the ultimate beneficiaries. The Code requires institutional investors to develop policies on how they incorporate sustainability considerations, including ESG, into investment analysis and activities.
Institutional investors should ensure that this policy is implemented and establish processes to monitor compliance with the policy. Principle 2 — An institutional investor should demonstrate its acceptance of ownership responsibilities in its investment arrangements and investment activities.
The second principle requires institutional investors to demonstrate a responsible approach to shareholding by, among others, implementing a policy detailing mechanisms of intervention and engagement with companies when concerns have been identified, as well as the means of escalation if concerns raised cannot be resolved. The Code requires such a policy to also detail the approach to voting at shareholder meetings, including the criteria to be used in reaching voting decisions and public disclosure of full voting records.
Controls should also be introduced by the institutional investor to prevent insider trading as defined by the Security Services Act. Principle 3 — Where appropriate, institutional investors should consider a collaborative approach to promote acceptance and implementation of the principles of CRISA and other codes and standards applicable to institutional investors.
Institutional investors are encouraged to work with other shareholders, service providers, regulators, investee companies and ultimate beneficiaries to promote CRISA and sound governance.
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