Investing today, for tomorrow
Often, when the subjects of the green economy or sustainable business come up, these common refrains arise: sustainability is not really a top priority for investors; and financial markets only care about short-term earnings performance. Well, we beg to differ.
The investment industry is changing, evolving. There is a growing demand from both retail and institutional investors to align their capital with better environmental, social and governance (ESG) outcomes. Investors are increasingly realising that engagement and management of ESG issues does not detract from generating profits. On the contrary, it aids in gaining returns.
SO WHAT’S NEXT?
Responsible investing is noticeably exploding as a practice and, although it is always risky to say anything definitive about the future, I believe at some point all investment practices will have to incorporate ESG considerations.
With that said, here are further key observations we’ve noted for the rest of 2018 and beyond:
Business leaders who don’t yet understand ESG factors as a systemic risk and opportunity will have to get on board. On that note, we have penned a letter to SA’s CEOs to ensure we are transparent and honest about what we expect of Corporate SA’s leadership. Read the letter on page 7.
Expect a continued focus on “long-term value creation” – you can read about the benefits of longhorizon investing on page 10.
Shared value will become a central ethos to address the root causes of socio-economic challenges such as poverty, inequality and unemployment. For us, education is a key remedy in this context. Go to page 14 to find out how one of our impact funds is helping to address an Apartheid hangover by bringing schools closer to those who need them. And find out how we can drive real broad-based transformation on page 16.
Artificial Intelligence (AI) and big data are increasingly changing how we understand companies, products, and services. Go to page 24 for a quick rundown of how the fourth industrial revolution is impacting the investment industry, and responsible investment in particular.
A SUSTAINABLE GOAL
Responsible Investment makes sense: investee companies' efforts to do good can be rewarded through improved operations and performance; and for investors there is substantial value from analysing non-financial data and incorporating it into the decisionmaking process.
As we all strive towards a sustainable place of being, I trust you will find value in some of the subjects we tackle in our fourth edition of Tomorrow, As Invested As You Are.
Khaya Gobodo, Managing Director - Old Mutual Investment Group