Edition: September / November 2017
Called to account
Purporting to be a retail client, youthful ESG enthusiast Lise Pretorius* did some dipstick research. Her conclusions invite consideration.
Only a handful of the South African asset managers, invited to articulate how their claims of responsible investment were being implemented, have attempted to engage with the substance of my argument. Originally published by Moneyweb in May, the managers were identified and their approaches summarised.
It could be that many asset managers aren’t as attentive to retail investors as they are to institutional. If so, it’s a bad sign. Amongst other environmental, social, and governance (ESG) factors, a responsible investor seeks to invest in companies that engage with their stakeholders. A responsible investor should be held to the same standard.
I’d emailed 27 SA signatories to the UN-backed Principles for Responsible Investment. In the email I presented myself as a retail investor looking to move my assets to a fund that either takes ESG issues into account or that’s specifically focussed on sustainability.
It clearly asked for an explanation of respective managers’ ESG integration processes and for details of any funds that match my preferences. As PRI signatories, these were the SA asset managers who’d voluntarily and publically committed to being ESG integrators. So I’d expected some sort of response from them all.
This hadn’t happened. In summary:
An important caveat is that an asset manager’s response, or lack of it, doesn’t necessarily reflect its commitment to RI. A non-useful response, as Investec suggested, may have been from a client-services department not fully up to speed.
Also, of course, some asset managers who offered thorough explanations of their RI practices might have included elements of spin. Nonetheless, even accepting that my research was unscientific, it is illustrative of asset managers’ different treatment of retail clients wanting to call them out on RI.
If my individualistic efforts help to stimulate the thinking of asset managers, on ways to reach best-practice standards for communication of RI amongst the public, they will have been worthwhile. There are good examples for the industry to emulate. Take a bow Investec, Futuregrowth and Old Mutual for their engagement with my exercise.
* Lise Pretorius holds an MSc in environmental economics from the London School of Economics. Currently at Cape Town consultancy firm GCX, where she develops long-term sustainability roadmaps for JSE-listed clients, she’s soon to join the WWF in Singapore. There she’ll be working with investors, regulators, stock exchanges and banks across the South-East Asia region on integration of ESG into their investment practices.