Pair profit with purpose, says Old Mutual Investment Group
As asset managers, it is the responsibility of the industry to act as responsible stewards of its clients’ money. This is according to Old Mutual Investment Group CEO, Diane Radley, who said that open and collaborative engagement is critical if the industry is going to surface the kinds of solutions and innovation required to achieve sustainable economic growth over the long term.
Speaking at Old Mutual Investment Group’s annual responsible investment conference, TOMORROW: As Invested As You Are, Radley said that the wealth and savings of South Africans can and should be deployed into investments that deliver a good investment return while building social, natural and human capital. And while Old Mutual Investment Group does not claim to have all the answers, they are of the opinion that open and collaborative engagement is critical if the industry is going to surface the kinds of solutions and innovation required.
“Our business firmly believes in being good stewards of our clients’ assets and investing through a sustainable investment lens,” said Radley. “As managers of large portfolios of assets, we use our influence, at both a market and a company level, to ensure and promote good corporate governance practices. At the end of the day, our aim is to generate sustainable risk-adjusted investment returns that incorporate an understanding of what will drive investment returns in the long term.”
Radley points out that responsible investment goes beyond traditional financial analysis, and includes considering material environmental, social and governance (ESG) issues when making investment decisions.
“Companies are responsible for the majority of the global environmental footprint and social impact, so their operational practices and future strategy decisions are collectively important for us all. At the same time companies are realising that their impact on the environment and society can affect brand value, the ability to attract talent and even the ability to raise capital – all of which impact long-term value,” explains Radley.
“As a business, we have committed to both monitoring the extent to which our asset managers invest responsibly, and directly investing in the building blocks of a sustainable economy, such as housing, education, agriculture and renewable energy.”
In the Technological Age, Radley says that these skills become more critical in addressing inequality, as technology will in itself reduce the opportunities available to under-educated workers, replacing labour in many instances. “In South Africa the imperative of transformation and economic inclusion of all people in the country remains a burning platform. There is still much work to be done across all key measures of inclusion, to make significant progress in ensuring equality,” she says.
She adds that investors are concerned about preservation of capital and generating inflation-beating returns over the long term. “Governance over investments remains high on the agenda and the recent developments in King IV and the fiduciary duties embedded in being a responsible business go a long way in providing comfort. Leaders of businesses looking to attract capital and ensure growth need to show responsible leadership in how they manage their businesses sustainably, so that they can tap into rising customer consciousness,” she says.
“Long-term investment success is increasingly acknowledged to require a responsible investment lens. “A good understanding of the impact of ESG factors and how they impact value is required in order to drive outperformance,” explains Radley.
“There is a long road to travel in ensuring global stability, but the opportunity to use capital to address the single most significant impact – social inequality – is available to us while conserving the resources of the planet. The decisions we make today to invest responsibly, while generating decent returns for our client, will influence how future generations refer to this era in time.”
