ASISA members adopt Code for Responsible Investing on Feb 1: Sanlam comment

All members of the Association for Savings and Investments South Africa (ASISA) will adopt the Code for Responsible Investing in South Africa (CRISA). South Africa is only the second country, after the United Kingdom, to formally encourage institutional i

Dr Johan van Zyl, chief executive of Sanlam and chairman of ASISA, believes ‘this is a big and bright feather in South Africa’s cap which speaks to the integrity and professionalism of the investment industry in South Africa’. He says it will undoubtedly promote genuine, effective and broad-based sustainability in the financial services industry.

Sanlam is a deep believer in the growing role responsible investing must play at an environmental, social and governance level. “Asset owners and fund managers should, wherever possible, subscribe to responsible investment when they have control over clients’ money,” Van Zyl. The group is well underway implementing CRISA processes and is also committed to the United Nation-Principles for Responsible Investing (PRI) as asset manager, and is in the process of applying to become only the second asset owner in SA to be a signatory.

According to Richard Anderson, who heads up corporate governance at Sanlam’s asset manager, Sanlam Investment Management (SIM), responsible investing essentially means adopting a longer time horizon when investing, considering the sustainability of companies and assets that are invested in, and taking the interests of all stakeholders into account, not just those of shareholders.

“Responsible investing is a process and a way of thinking with shareholders being just one part of the process. During the course of 2012, fund managers and asset owners will have to demonstrate that they are investing in a different way,” said Anderson, adding that transparency and communication will be the key.

Importantly, CRISA aims to provide the investment community with the guidance needed to give effect to the King III Report and Code on Corporate Governance (King III) as well as the UN-backed Principles for Responsible Investing (PRI). Both of these require institutional investors to take environmental, social and governance issues more seriously than is currently the case.

While King III and the Institute of Directors have disseminated a code on how company boards should act, there is also a requirement for shareholders to get more involved. For example, this will see fund managers reporting back to their clients on proxies that were voted on their behalf.

Significantly, changes taking place this year in the responsible investing arena are also informed by Regulation 28 of the Pension Funds Act which sets out prudential investment guidelines to broaden the scope of what considerations need to be taken into account when investment decisions are made.

Meanwhile, Anderson said that SIM is now in the process of including its fixed interest team in the responsible investing process, having already done so with its equity investment team. “This means that we will be considering more carefully who we are lending money to and what the borrower will be using the money for,” he added.

“It’s part of broadening the reach of responsible investing and its effects into the thinking of all investment professionals.”