IRF Conference identifies Responsible Investing as key issue for retirement funds

Responsible Investing (RI) has been identified by government as key focus on the horizon for the retirement fund industry and may even become regulated in the near future.

This is according to Vuyolwethu Nogantshi, Head of Institutional and Consulting at Nedgroup Investments, who says that new legislation introduced in recent years such as amendments made to Regulation 28 of the Pension Funds Act and the new Code for Responsible Investing in South Africa (CRISA) is serving to direct the attentions of the retirement industry on the importance of RI. Nogantshi, who is attending the IRF conference this week, says the theme of the conference – sustainability – is an opportunity for industry players to get fully acquainted with the implications of RI as well as the challenges of implementation.

“It’s clear from the theme of the IRF this year that the whole industry is thinking about RI and how to implement it effectively. Investment houses are trying to be fully transparent in terms of disclosing their efforts in this space,” he says.

Nogantshi says it’s crucial that retirement fund managers, trustees and consultants need to be actively engaging in terms of their investment strategy and how it ties in with RI. “Communication in this regard needs to include how the investment strategy is formulated, how it is implemented, how fund managers and consultants plan to monitor the success of the strategy and whether or not the RI benefits are being achieved – not only for the fund but in the broader social context as well,” he adds.

However, Nogantshi says while it is important to become more conscious of where one is positioned in terms of RI, this does not mean that investors need to change their long-term investments strategy.

He says it’s more important to integrate RI as a fundamental way of thinking within the long-term strategy.

According to Nogantshi, the IRF conference will also examine the role of prescribed assets and the impact that this could have on sustainability. “The driving philosophy behind RI is that we need to be aware of the impact our actions today, will have on long-term sustainability. If prescribed assets are focussed on infrastructure and development, the challenge to retirement funds and our economy is to measure and manage the long-term impact that this approach will have. It’s not yet clear how a prescribed assets arrangement will tie in with RI, but the various options to achieve the same objectives must be fully explored,” concludes Nogantshi.