THE FUTURE MATTERS INVESTMENT GROUP - Old Mutual Investment Group
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THE FUTURE MATTERS INVESTMENT GROUP
THE RESPONSIBLE
INVESTMENT DICTIONARY
ACTIVE OWNERSHIP v When FIDUCIARY DUTY n The legal INTEGRATION n An approach RESPONSIBLE BUSINESS n STEWARDSHIP n The important
shareholders exercise their rights, duty of one party (the fiduciary) to to investing which considers The collective term Old Mutual responsibilities that come with the
actively engaging with the investee act in the best interests of another integrating ESG issues into the uses to describe the broad set ownership of shares, particularly
companies on business strategy, (the principal). In the investment research, valuation and portfolio of management processes and the right to vote and engage on key
including sustainability issues, chain there are a number of these construction processes to improve activities that we undertake in matters influencing how an investee
to reduce investment risk and/or relationships, including the duty the risk/return characteristics of a response to the material ESG issues company operates. .
enhance long-term shareowner value. that boards have to shareholders, portfolio. facing our business.
the duty between trustees and
SUSTAINABILITY n A focus on
beneficiaries and the duty between
CODE OF RESPONSIBLE PRINCIPLES OF RESPONSIBLE RESPONSIBLE INVESTMENT considering ESG factors to generate
asset managers and their clients.
INVESTING IN SOUTH AFRICA INVESTMENT (PRI) n Founded n An approach of allocating and long-term stability and financial
in 2006 in partnership with the stewarding our clients’ capital in a returns as well as a positive societal
(CRISA) n Principles that give GOVERNANCE FACTORS n impact.
guidance on how institutional United Nations (UN), this is an manner that factors in ESG issues
Issues related to a company’s investor initiative that supports a and drives low-carbon, socially
investors should promote sound internal structure and practices,
governance. The code came global network of signatories to inclusive and resource-efficient SUSTAINABLE DEVELOPMENT
its consideration for shareholder incorporate ESG factors into their growth. This is central to achieving
into effect in February 2012. rights, its accountability and wider GOALS n A UN-endorsed set of
See Principles Of Responsible investment decisions. Old Mutual appropriate risk-adjusted returns
transparency framework. Measures 17 goals adopted in September
Investment (PRI). has been a signatory to the PRI while building resilience in the
of governance can include board 2015, aimed at ending poverty,
since June 2012. economies in which we operate.
structure and independence, preserving the planet and ensuring
ENGAGEMENT v A purposeful executive remuneration or auditor prosperity for all.
dialogue between shareholders and independence. See ESG. PROXY VOTING v A form of RESPONSIBLE OWNERSHIP
boards with the aim of ensuring a voting whereby a shareholder with n Speaks to how ownership of
company’s long-term strategy and voting rights delegates his or her shares brings with it important
GREEN ECONOMY n A low- voting power to a representative
day-to-day management is effective carbon, resource-efficient and responsibilities, particularly the right
and aligned with shareholders’ (in this case, the asset manager) to vote and engage on key matters
socially inclusive economic growth to enable a vote in absence at a
interests. See Engagement & path for improved human well- influencing how an investee
Responsible Ownership. company’s annual general meeting company operates. See Stewardship
being and social equity while or special meeting.
reducing environmental risks. It is & Engagement.
ENVIRONMENTAL FACTORS an alternative concept to typical
industrial economic growth, which RENEWABLE ENERGY n SOCIAL FACTORS n Issues
n Issues related to resource use, Electricity harvested from resources
focuses on increasing GDP above all related to social themes, such as
pollution, climate change, energy that are naturally replenished,
other goals. demographic changes, social trust
use and other environmental such as sunlight, wind, water and
challenges and opportunities that and transformation. Investors may
geothermal heat. use the analysis of these factors to
do or could impact the shareholder IMPACT INVESTING v Investing
value. See ESG. with the primary goal of achieving gauge the contribution a company
specific, positive social benefits, makes to society or assess a
while also delivering an attractive company’s ability to adapt to the
ESG n Stands for environmental, social pressures.
investment return. Typically, these
social and governance factors,
are investments in projects with
the three categories of factors
clear social goals, for example,
investors consider with regard to an
education or housing.
investment’s sustainable practices.
See Environmental Factors, Social
Factors & Governance Factors.
FOREWORD FOREWORD
A MESSAGE FROM KHAYA
In South Africa, we are faced with a unique set of challenges, ranging
from extreme social inequality, poor economic growth and lagging
RESPONSIBLE INVESTING AFFORDS US THE
KHAYA GOBODO infrastructure to increasing environmental stress. These challenges OPPORTUNIT Y TO PURSUE SUPERIOR, RISK-
Managing Director have created an important opportunity for us as we believe we have ADJUSTED RETURNS FOR OUR CLIENTS; WHILE
a responsibility to constructively contribute to creating a sustainable
and an inclusive future for all, without sacrificing return outcomes AT THE SAME TIME POSITIVELY IMPACTING
for our clients. As custodians of our clients’ wealth and acting on THE COMMUNITIES AND ENVIRONMENT THAT
their behalf, we have a real commitment to this responsibility, which
is encapsulated in our overall approach to responsible investing
WE OPERATE IN.
across all our asset classes.
MAKING ESG OUR For example, the MSCI Emerging
Market ESG Leaders Index, which
drive positive change with regulators
and industry bodies. On this note,
BUSINESS focuses on companies with we’ve supplied a few case studies
higher sustainability performance to demonstrate our on-the-ground
Environmental, social and than their peers in their sector, approach to active ownership.
governance (ESG) factors have outperformed the MSCI’s standard
become increasingly important emerging markets index on a total We also highlight where the
considerations for both asset return basis by 103% during the R122 billion we committed, on
owners and investors. This isn’t past decade. behalf of our clients, has been put
surprising, because the nature of to work in Africa’s green economy.
the world as we know it is at stake. FOR A FUTURE THAT This is another illustration of how
We face a very real existential crisis
if our impact on society and the
MATTERS we’ve long moved from just thinking
or talking about sustainability to
environment continues unabated. tangible action.
There is a recognition that we all In this publication, our team
details our Responsible Ownership
have a responsibility in creating a
programme, our contribution to the
YOUR THOUGHTS?
sustainable future for all.
green economy and our integration
of ESG into our investment With all the progress we’ve achieved
What is becoming clearly
processes. so far, it’s important to note that
apparent is that integrating ESG
we are part of a greater ecosystem
considerations does not have to
We define responsible ownership, and so cannot redirect the ship
come at a cost to returns. To the
or stewardship, as the active and alone. With that said, we would
contrary, there is emerging evidence
responsible management of our love to hear your views on how we
these factors can make a positive
clients’ assets to ensure ESG risks can contribute more or differently
contribution to client returns.
are reduced and opportunities are towards a sustainable tomorrow
captured. We do this through our for us all. Please email us at
active approach to proxy voting at listening@oldmutualinvest.com.
company meetings, engaging with
companies and by ensuring that we I hope you enjoy the read!
RESPONSIBLE INVESTMENT
JON DUNCAN
Head of Responsible
HARNESSING ESG long-term business strategies. Our
position was communicated in an
systems to track and report on the
contribution our clients’ capital
Investment
DATA IN LISTED open letter to the CEOs of the largest makes towards the United Nations
EQUITY listed companies in South Africa and Sustainable Development Goals
supported by direct engagements (SDGs).
Leveraging both quantitative and thereafter.
qualitative insights means that DRIVING
we can stay on top of ESG issues DRIVING GREEN INNOVATION
as they arise in the listed markets.
GROWTH THROUGH
OUR APPROACH During 2018 we developed an
algorithm that processes ESG data
ALTERNATIVES A standout innovation that we
brought to the market in 2018 was
TO RESPONSIBLE
into a proprietary ESG score. We
Across Old Mutual Alternative our ESG Index Fund range for retail
can then use this ESG score in our
Investments (OMAI), Old investors. This range was a first
quantitative equity strategies and
INVESTMENT
Mutual Specialised Finance and for South Africa and was built on
separately to focus qualitative ESG
Futuregrowth – all part of Old Mutual our experience of offering similar
research across our fundamental
Investment Group – we manage products to the institutional market
equity strategies.
approximately R122 billion of our – where we currently have in excess
of R10 billion of our clients’ capital in
Our approach to Responsible From a responsible investment
LISTED EQUITY clients’ capital in green economy
investments, both debt and equity. ESG index products. These passive,
Investment is motivated by perspective, 2018 was a milestone STEWARDSHIP These businesses are a constructive low-cost products are designed to
year for the South African market. voice across a range of national offer investors the opportunity to
a clear understanding that
The investment community Another important component interest issues such as renewable achieve benchmark-like returns by
environmental, social and became acutely aware of the need of our responsible investment holding a basket of companies that
energy, land reform and governance
governance (ESG) issues can to work collectively to address ESG commitment is our Listed Equity at State-owned entities. is measurably better for the planet.
and do impact returns. We are issues, the JSE developed new Stewardship programme, which Across OMAI we further enhanced In 2019 we’ll continue to place
bound by a fiduciary duty to market regulation to strengthen cuts across some R300 billion of our ESG integration practices by responsible investment at the heart
our clients to address these governance, and the Financial client holdings. In July 2018, we set investing in additional specialist of our business, with an unrelenting
Sector Conduct Authority out a clear position concerning our skills and through investments in focus on adding value to our clients’
issues and, importantly, by a
(FSCA) launched pension fund expectations of listed companies the systems to track and report portfolios while at the same time
belief that it’s both the right sustainability reporting guidelines in relation to ethical leadership, contributing towards a future that
on impact data. We now have the
and smart thing to do. for comment. tackling transformation and matters.
integrating ESG issues into their
Old Mutual Investment For Old Mutual Investment Group,
Group is guided by a publicly our resolve and commitment to
available Responsible responsible investment is as strong
as ever. The journey we began in
Investment policy that
2010 is gaining momentum, yet
commits us to integrate
remains focused on two priority areas: SPECIALIST SKILLS
ESG issues across all of
our investment and 1. Deepening our ESG research and We have a team of 11 full-time
ownership capabilities. integration practices. professionals working on a range of
ESG issues across our investment
See our policies at www. 2. Focusing our capabilities on capabilities. These specialists
investment solutions that address all bring deep insight into their
oldmutualinvest.com
long-term sustainability issues respective areas of practice, which
(for example, renewable energy, cuts across our private equity,
education, ESG indices). infrastructure, development impact,
agriculture, fixed income and listed
equities capabilities. The team
works across a range of sectors and
geographies and brings a unique
insight into investment risk and
opportunity.
WHO WE ARE FUNDAMENTAL INVESTMENTS
ABOUT US SIBONISO NXUMALO, FOR BETTER RISK-
ADJUSTED RETURNS
Boutique Head,
Old Mutual Equities
OUR VISION OUR MISSION
TO GENERATE SUSTAINABLE LONG-TERM To relentlessly pursue The integration of environmental, leverage both quantitative and – this may translate to an adjustment
investment excellence, within social and governance (ESG) issues qualitative ESG research inputs into of our base case and/or bull-bear
RETURNS THAT MAKE A DIFFERENCE IN and across our boutiques, to in fundamental analysis, valuation our processes. We do not apply hard case analysis. In each instance
OUR CLIENTS’ LIVES. help our clients achieve their and portfolio construction has exclusions unless mandated by our the analysts on the company are
investment goals. become increasingly important clients. required to prepare a detailed note
in recent years given the growing on how the material ESG issues
number of corporate events Our approach to ESG integration have been considered in the overall
which have adversely impacted is a structured and repeatable company valuation and buy/hold/sell
companies’ ability to sustainably process that is led by our portfolio recommendation.
generate quality earnings and managers and investment analysts
WE RELENTLESSY PURSUE positive returns for shareholders. in conjunction with our dedicated When it comes to ownership, we
INVESTMENT EXCELLENCE
The recent large-scale governance specialist ESG research unit. The are active stewards of our clients’
failures in the state and listed first step in the process involves assets and exercise voting rights and
corporates has highlighted that screening our investment universe regularly engage with management
investors need to consider more with a proprietary ESG quantitative teams and boards. A more detailed
than the “quantitative” assessment tool developed by our specialist summary of our proxy voting and
of “fundamental value” in investing ESG team. This tool highlights a company engagement is provided in
INVESTING clients’ funds. company’s exposure to accounting our Responsible Ownership Report.
WE ARE OLD MUTUAL WE OPERATE AS
FOR A FUTURE and governance related risks,
INVESTMENT GROUP INDEPENDENT BOUTIQUES Old Mutual Equities’ (OME’s) external and internal exposures
THAT MAT TERS approach to ESG integration to environmental and social risks
is in principal guided by our (taking into account the firm’s
investment philosophy and capability in managing these risks),
approach. We believe in an as well as a company’s history of
enhanced value approach which controversial events. We use these
entails complementing rigorous insights to focus our qualitative/
bottom-up fundamental valuation fundamental ESG research,
WE INVEST ALONGSIDE
OUR CLIENTS work in the research portion of which aims to give dimension
our process with three confirming to the identified risks in terms of
quantitative factors: quality, growth materiality and financial impact
and sentiment in our portfolio over a short, medium and long-
construction process. The portfolio term time horizons. Depending
construction process is where we on the availability of data, we may
combine our bottom-up research also engage directly with company
with risk considerations alongside management to better understand
our quantitative factors to construct the issues in more detail.
portfolios that expose clients to our
best ideas while protecting them For example, our ESG risk screening
from unintended risks. With this may identify climate change risk as
perspective, we understand the a concern to a particular company.
macro-thematic business case for In this case, we will undertake deep-
sustainability and the underlying dive research on how the issue may
company value drivers associated impact the company’s core financial
with ESG issues. As such, we metrics and competitive positioning
FUNDAMENTAL INVESTMENTS FUNDAMENTAL SOLUTIONS
WHAT IT TAKES TO
BE RESPONSIBLE
PETER BROOKE
Boutique Head,
CUSTODIANS OF
MacroSolutions
OUR CLIENTS’
CAPITAL
WHEN MATERIAL Responsible investment is
important. It is relevant. And we
investment now or in the future.
Most often, these issues screen as
ISSUES ARISE engage with it on a daily basis. We negative themes and form part of
THAT WE THINK are committed to incorporate ESG our decision not to own a company.
factors into our investment and
COULD DAMAGE ownership decisions. We deliver to For instance, as part of our
OR ENHANCE our commitment by considering investment process we had decided
SHAREHOLDER two sides of responsible ownership:
firstly, whether to own an asset (pre-
to place a negative Theme score on
Steinhoff’s corporate governance
VALUE, WE trade) and, secondly, influencing the as far back as 2015. While this
OWNERS: POST- When material issues arise that we
ACTIVELY LOBBY outcomes on assets that we already meant that since then we became
TRADE think could damage (or enhance)
own (post-trade). active sellers of the shares, it also
FOR CHANGE. stopped us from buying shares
shareholder value, we actively lobby
Given the small universe of shares for change. For instance, following
RESPONSIBLE when they got cheaper. This is a
in South Africa, it is in our interests the listeriosis outbreak at Tiger
INVESTORS: PRE- good example of our philosophy in
to actively engage with companies Brands’ meat processing factories,
TRADE practice, given what ensued from a
corporate governance perspective
in order to get the best long-term we felt the company’s focus was
outcomes for our clients. We invest only on the short-term cost of
The first stage of incorporating for the company. As another
in a company with an expected potential payouts and loss of sales.
ESG factors into our decision- pre-trade example, we don’t own
time horizon of around five to We pushed the board of directors to
making happens when we review commodity producer Sibanye,
10 years. As long-term investors, we address the damage to brand value,
an investment for inclusion in based on a negative Theme score
need those companies to do the as it could impact the long-term
our portfolios. Our philosophy arising from social impact concerns.
right thing – whether that be how profitability of the business. You can
incorporates a uniquely two- Deep-level mining is very risky
they allocate capital, remunerate read more about our approach in
dimensional investment approach from a fatality point of view and
themselves or invest to grow. our Responsible Ownership Report.
of “Theme” and “Price”, on an Sibanye has been among the worst
Decisions made by companies
equally weighted basis. Under in this regard. Coupled with the
today impact their longer-term By integrating ESG considerations
Theme, in addition to considering company’s antagonist relationship
sustainability and hence into our investment framework we
the macroeconomic environment with labour, we are presented with
the investment outcomes for have managed to avoid owning
that drives the performance of a sizeable hurdle to ownership. Of
our clients. a number of “landmines”. For
the investment, we also consider course, the factors raised in these
those companies that we do own,
industry dynamics and company examples are dynamic and they
While we are able to draw on we actively engage with their
specifics. In doing so, we look for can be resolved. We therefore
the expertise of our Responsible leadership, through voting and
any environmental, governance or do not regard such hurdles to
Investment team as specialists lobbying for change, to drive the
social issues that may impact the be permanent and monitor for
on ESG-related engagement, best possible outcome for long-
any thematic improvement with
the responsibility to ensure that term value. As custodians of our
the same diligence as we would
companies do the right thing sits clients’ wealth, we are focused on
monitor Price action.
with the portfolio manager. As delivering returns sustainably and
our philosophy of “theme” and
RESPONSIBLE active custodians, we regularly vote
on company resolutions (see our “price” has worked well in growing
Responsible Ownership Report), and protecting our clients’ capital.
but our level of engagement is
much more than just proxy voting.
SYSTEMATIC INVESTMENTS SYSTEMATIC INVESTMENTS
GRANT WATSON FOR THE TRUE OUTPERFORMANCE WITH ESG INDICES
.
LONG-TERM
Boutique Head, Markets have been experiencing an increase in low-cost indices that offer
Old Mutual Customised ESG-led mandates and champion responsible investment. ESG-led index-
INVESTOR
Solutions tracking products can offer investors the opportunity to send signals to
capital markets that sustainability considerations are of prime importance,
without adversely affecting the risk-return characteristics of an investor’s
financial returns while also benefiting from substantially lower fees.
Old Mutual Customised Solutions, with its scale and depth of experience,
As a boutique that offers bespoke investment solutions,
FRANK SIBIYA launched the very first responsible investment equity index fund in South
our commitment to responsible investment involves
Portfolio Manager Africa in 2016. The Old Mutual Responsible Investment Equity Index Fund
examining appropriate mechanisms to integrate invests in companies that have measurably better ESG performance than
relevant and material ESG factors into our investment their sector peers. This is particularly attractive to long-term investors that
decision-making processes. value sustainable economic themes, given their extended investment time
horizon. Looking through the lens of sustainability gives better insight into
the risks and opportunities a company faces.
Our goal as a manager is to provide CREATING THE RESPONSIBLE INVESTMENT
our clients with superior investment EQUITY INDEX
returns over the long run, regardless
of the mandate. In this pursuit of To produce the responsible investment equity index, we took Morgan
long-term returns, we pay careful Stanley Capital International’s (MSCI’s) ESG-related data – collected through
attention to the analysis and its in-house research capability – and through a proprietary weighting
management of risk across all our methodology, built an index that has exposure to the most sustainable
portfolios, including ESG risks. Our companies in South Africa. Chart 1 shows the annualised return of the index
business works closely with the relative to the JSE Shareholder Weighted Index (SWIX).
dedicated Old Mutual Investment
Group Responsible Investment
Table 1 illustrates how the excess return depicted in Chart 1 was also achieved
team who support us with ESG data
at a similar volatility to the SWIX.
inputs. We leverage this ESG data into
our adaptive strategies, which vary
exposure to sources of excess return CHART 1 ANNUALISED RETURN SINCE INCEPTION
on a dynamic basis. Additionally, we
have leveraged ESG data insights 6,00%
5.37%
as the basis of launching a series of 4,00% 2.94% 2.43%
ESG index based funds. Across all 2,00%
our products we undertake an active 0,00%
ownership approach, which includes
proxy voting and engagement so that
THIS FUND ALLOWS Old Mutual Responsible
Investment Index
JSE Shareholder
Weighted Index
Excess Return
we proactively drive positive change INVESTORS THE
and long-term sustainable outcomes
OPPORTUNIT Y TO Source: Old Mutual Investment Group. Figures as at January 2019.
Old Mutual Responsible Investment Index’s inception date is 1 April 2016.
VOTE WITH THEIR
FEET BY REWARDING TABLE 1: OLD MUTUAL RESPONSIBLE INDEX VS THE SWIX
COMPANIES THAT
VALUE ESG ISSUES INDICES VOLATILITY SINCE INCEPTION*
AHEAD OF THEIR Old Mutual Responsible Investment Index 10.35%
PEERS WITHOUT
JSE Shareholder Weighted Index 10.68%
COMPROMISING
BROAD MARKET
Increasing awareness of the importance of ESG factors in an investment
EXPOSURE. approach is translating into strong demand for sustainability-themed
investment products. And ESG-led indices in particular offer the savvy
investor meaningful exposure to these solutions.
FIXED INCOME FIXED INCOME
AN UNWAVERING ENGAGEMENT IS KEY compliance, among others. On
these occasions, we engage with
that our focused and dynamic
approach has set us apart in this
COMMITMENT TO
ANGELIQUE KALAM
the borrowers to ensure that the field. We add value to our clients’
Manager: Sustainable We have a large, skilled credit
risk is minimised as far as possible, portfolios by integrating ESG into
Investment Practices, team and we’re able to negotiate
ESG INTEGRATION
and, importantly, that long-term, our investment processes and
Futuregrowth Asset specific terms in loan agreements
proactive strategies are devised engaging borrowers on material
Management on behalf of our clients – and have
and implemented to manage issues that affect the sustainability
the added benefit of being able
the risk and the impact on future of their business. We also strive
to structure many of these loans
revenues. Learnings from these to add value to our industry by
internally. As lenders, we seek strong
events are shared internally and engaging the market around
KEY TAKEOUTS covenants in order to protect our
clients during the term of a loan,
applied across all our investments, improving capital market standards
where applicable, to the benefit of while being mindful of the issues
for example, we require borrowers
all our clients in the end. summarised in this article’s key
• ESG risks can impair an issuer’s credit quality to report timeously on any material
takouts aforementioned.
• There is no standard set of ESG risk parameters for fixed income, it differs across
events that could affect the credit
quality of the loan. Examples of
A COMPETITIVE
issuers and sectors such events could be reputational ADVANTAGE
damage to the company due to
a failure to respond timeously to In our rapidly changing
• ESG is full of judgement and biases; as managers we should exercise judgement
poor product quality that resulted environment where responsible
in harm to consumers, extreme investment practices are gaining
• Build investment processes that earn sustainable returns momentum and evolving,
weather incidents that caused
unforeseen production losses, the financial services industry
• ESG should never compromise risk/return principles continues to grapple with risks
or unanticipated expenditure
relating to health and safety non- of an ESG nature. We believe
Futuregrowth manages
approximately R185 billion of assets
APPLYING ESG
in the fixed income space, ranging
ANALYSIS TO FIXED EX AMPLES OF
from money market, vanilla and INCOME SCREENING
inflation-linked bonds to high-
yielding credit bonds, and a suite Our primary objective is to earn
CRITERIA COULD
of developmental (impact) funds appropriate risk-adjusted returns at INCLUDE:
across a variety of asset classes. all times for our clients. As such, it is
necessary that ESG screening and ENVIRONMENTAL
As defined by our Responsible analysis forms part of an integrated Does the company assess the
Investment philosophy, we seek to investment process across our environmental risks arising from its
promote sustainable environmental, wide range of mandates. In this operations, and what processes are
social and governance (ESG) best way, non-financial ESG indicators in place to do this and how do they
practice in our investee companies. are assessed along with financial mitigate these risks?
We believe that ESG issues are and credit indicators in order to
key components in managing produce a holistic risk profile of SOCIAL
investment risk. A lack of attention any new or existing loan, at a given What impact do the company’s
or management of ESG issues can point in time. We use a variety of activities have on local communities
have a negative impact on risks tools and inputs for this purpose, and other stakeholders?
and rewards – as evidenced in and these are constantly fine-tuned
many recent headlines relating to as new learnings arise. The fixed GOVERNANCE
governance failures in the South income asset class is complex due Does the company routinely disclose
African market. to the wide variety of issuers, and material transactions that involve
therefore there is no “one-size-fits- conflicts of interest of any directors,
all” solution to analysing companies and any fines or regulatory non-
on sustainability issues. Therefore, compliance – and is there a record
there will be variances in our of how these situations have been
approach to, for example, issuers addressed?
in the listed space versus those in
private debt.
ALTERNATIVE INVESTMENTS ALTERNATIVE INVESTMENTS
DEAN ALBOROUGH ESG INTEGRATION
Head of ESG,
Old Mutual INTRINSIC TO The ESMS is tailored for each OMAI business capability and comprises a
set of policies, procedures, tools and reporting guidance that have been
ALTERNATIVE
Alternative
customised for the various funds. This enables each fund to identify, assess,
Investments
manage and report on ESG risks associated with their assets and portfolio
INVESTMENTS
companies, and to identify opportunities for positive impact. The ESMS fully
integrates ESG into the OMAI investment lifecycle.
Old Mutual Alternative AN OVERVIEW OF OUR ESMS
Investments (OMAI) is one of the
largest alternative investment
Raise Funds / LP Engagement ES Policy
managers in Africa, with over
R58 billion under management
Screening Investments ES Screening
in infrastructure, private equity
and impact investing. As well
Aggregated
as delivering sustainable, Due Diligence ESDD
OMAI Annual
superior returns to investors, we Outputs
Reporting &
KPIs
also seek to create a positive, Decision-making Agreements ES Term Sheet Clauses Monitoring
long-term impact in the
communities we live, operate
Management and Monitoring ES Monitoring Tools
and invest in.
At the heart of OMAI’s investment Exit ES Vendor DD Tools
objectives and processes is a
commitment to responsible
investment. We take into
consideration the environmental, The ESMS enables us to:
social and governance (ESG) factors
that accompany our investment and
ABOUT OMAI
• Integrate ESG issues directly into investment decision-making processes;
ownership decisions.
We operate under four capabilities:
• Set clear requirements for portfolio companies to develop and
To this end, we’ve developed implement ESG systems to ensure they meet OMAI’s ESG standards;
and implemented an integrated • African Infrastructure
Environmental and Social Investment Managers (AIIM)
• Provide a framework for reporting and disclosure on ESG aspects to
Management System (ESMS) – a invests in infrastructure assets
OMAI by portfolio companies; and
robust and an embedded system across Africa.
that addresses environmental and • Work in partnership with portfolio companies to help them identify and
• Private Equity (OMPE) invests
social management requirements implement ESG opportunities and create sustainable value-add that
in unlisted businesses across a
across all our fund portfolios. It is enhances their overall financial performance.
number of sectors.
also a mechanism for efficient
and transparent ESG reporting to We receive specific ESG quantitative and qualitative information from
• Fund of Funds (OMFoF) invests
our stakeholders. portfolio companies as part of the asset management/monitoring phase of
in African and international
the investment cycle. This allows us to measure and track ESG performance
private equity funds.
against key performance indicators (KPIs) for the portfolio company while
driving positive outcomes benchmarked against United Nations Sustainable
• Impact investing in affordable
Development Goals.
housing, schools and retirement
accommodation.
OMAI investment professionals use this information to produce better
outcomes in their portfolio companies.
ALTERNATIVE INVESTMENTS ALTERNATIVE INVESTMENTS
CASE STUDY |
BBOXX CAPITAL –
A SOL AR POWER
HOME SYSTEMS
COMPANY
In December 2018 the African
Infrastructure Investment Fund 3
(AIIF3) acquired a minority stake
in BBOXX’s operations in East
Africa, as part of a US$31 million
investment plan.
BBOXX Capital is a pay-as-you-go
solar electricity service company
that designs, manufactures and
distributes plug-and-play solar
home systems for off-grid rural
and peri-urban communities. AIIF3
has a minority interest in BBOXX’s
subsidiaries operating in Kenya,
Rwanda and the Democratic
Republic of Congo, referred to as
Next Generation Utilities (NGUs). At the start of the deal ESG documents and contracts to ensure
screening was undertaken to that the portfolio company meets
BBOXX’s vision is to provide 20 identify key risks and opportunities. OMAI’s ESG requirements.
million people with electricity by We also ensured the deal was
2020. BBOXX focuses on satisfying aligned with the AIIF3 mandate, From a company structure
the fundamental need for electricity identifying the standards and perspective, AIIF3 and BBOXX have
as well as providing superior guidelines to be applied. We then invested into a holding company
customer service. defined the scope of the due called Beyond, which holds equity
diligence phase and the skills and in each of the NGUs. BBOXX also
To date: experience required by advisers maintains a direct equity holding
undertaking it. We appointed Ibis in each of the NGUs. Three AIIM
OVER 250 000 PEOPLE ESG Consulting to conduct the investment professionals sit on
have been positively impacted by environmental and social due the Board of Beyond, and at NGU
BBOXX solar products diligence (ESDD) for the transaction. level in each country two AIIM
representatives sit on boards,
4 GWH OF ENERGY Ibis ESG Consulting undertook a full including an AIIM-appointed
have been generated using BBOXX ESDD, including paying site visits independent director on two of the
solar home systems and conducting detailed interviews NGU boards. Within NGUs there are
with BBOXX management. Findings also audit and risk, remuneration
from the ESDD then informed an and ESG subcommittees. It
63 000 SCHOOL-AGED
CHILDREN environmental and social action is through these governance
can now study comfortably plan (ESAP), which would be structures that AIIM drives ESG
implemented in the business once performance.
US$2.4 MILLION the transaction had been finalised.
has been saved in energy expenses ESG implementation clauses
were also incorporated into legal
40 000 TONNES OF CO2
has been offsetRESPONSIBLE INVESTMENT RESPONSIBLE INVESTMENT
HYWEL GEORGE GLOBAL SHIFTS will further put pressure on asset
manager margins as well as
management will be more clearly
defined. While passive investments
impact investing, infrastructure
investments, private equity, and
IN THE ASSET
the need for them to invest in may form the foundation of credit (yield-enhancing) strategies.
Director of
technology. multi-asset solutions, active and
Investments
alternative investments that deliver These global shifts highlight
MANAGEMENT
3 Client-driven bespoke solutions / high and non-correlated alpha will two key pressures facing asset
Partnerships be important components that managers: lower fees and the need
INDUSTRY – AND
Investors increasingly want boost performance. for sustainable profitability. Let’s
specific outcomes rather than now explore ways in which ESG
plain vanilla funds, e.g. bespoke 4 Search for sustainable alpha could address these global shifts
WHY RI MATTERS
multi-asset investment solutions for The increased demand for and their consequent pressures.
institutional investors, often with alternative, non-traditional
an ESG ethos. In the coming years, investment products continues to
the value of active and passive grow, particularly the demand for
More than 40% of US asset From a real asset perspective, the
owners have incorporated Netherlands’ largest pension fund
investor, APG, has set internal ESG
ESG factors into their
targets. The €482 billion pension
investment decisions, up investment manager now invests
from just 22% in 2013, states €21.7 billion of its nearly €42 billion
the annual Callan ESG Survey property portfolio in sustainable
Report (August 2018). The assets – an increase of €1.3 billion
top two reasons cited for from 2017. The trend is similar in
infrastructure, where €2.3 billion of
this ESG incorporation were
the €11 billion portfolio is deployed
expectations to achieve an in sustainable investments.
improved risk profile and
fiduciary responsibility. Responsible investment is evidently
becoming an important part of
Many investment management institutional clients’ investment
advisers have also identified the decision-making. So what are
need to launch “ESG funds”, for the key drivers causing the need
example, UBS Global Wealth for these responsible investment
Management is now offering strategies? Well, we have identified
its clients sustainable funds in some dominant global shifts that
cooperation with the Swiss giant’s call for greater, more intentional
asset management arm. From ESG integration.
January to August 2018, UBS’s
sustainable mandates, which the These shifts will define the future
new strategies are built on, have of the asset management industry,
doubled in size from CHF1.2 billion both globally and here in South
(€1.05 billion) to CHF2.45 billion Africa:
(€2.15 billion).
1 The growth of indexation (passive
management)
As indexation/passive funds
continue to grow, pressure on active
asset manager fees to be reduced
will continue.
2 Technological transformation /
Evolution
Technology and digitisation
are expected to be increasingly
disruptive to the industry – thisRESPONSIBLE INVESTMENT
THREE
PASSIVE AGGRESSION?
With the growth of indexation, ESG can be used as a differentiator in terms of ESG
passive offerings. In this respect Old Mutual Investment Group already offers a
variety of both local and global ESG funds. Our Customised Solutions investment RESPONSIBLE
INVESTMENT
boutique manages the very first responsible investment equity index fund in
South Africa. For active managers, we have incorporated ESG into the investment
processes of our actively managed funds.
The search for sustainable alpha through alternative, non-traditional investment
products is a strategy well known to Old Mutual Investment Group. Across our THEMES TO THINK
ABOUT IN 2019
alternative strategies – including impact investing, infrastructure investments,
private equity, and credit (yield-enhancing) investments – we apply an ESG filter/
consideration to each investment offering. This incorporation of ESG is also often
an essential component of a bespoke client solution.
Even with this increasing adoption of responsible investment practices, many In 2019, we expect that the “G” factor in ESG, which is
critics still argue that ESG does not necessarily represent an alpha opportunity governance, will remain front and centre for South African
but that it is more effective as a risk management tool. In our view this is not
investors. We anticipate a greater amount of shareholder
necessarily true, as indicated by Chart 2 below, which compares the MSCI
Emerging Markets ESG Leaders Index to the MSCI Emerging Markets Index (USD).
proposed resolutions at company annual general meetings,
coupled with more vocal pushback from civil society
organisations to corporate responses on ESG issues.
CHART 2: MSCI EMERGING MARKETS ESG LEADERS INDEX VS MSCI EMERGING
MARKETS INDEX (USD)
120%
100%
Since Inception Returns (Annualised) TRANSFORMATION SUSTAINABILITY AS DEATH OR TAXES?
80% MSCI EM ESG 4.07% AN IMPERATIVE
MSCI EM 0.40% The social challenges of The South African Carbon Tax Bill
60% Tracking Error 3.57% 56.7% unemployment, skills development was passed in Parliament on 19
A driving force here will be the
40% and inequality still facing South Financial Sector Conduct Authority February 2019. The Bill includes
Africa mean that transformation Directive on Sustainability a R120 per tonne carbon tax for
20% remains a priority issue for investors Reporting for pension funds. Our primary greenhouse gas emitters, a
in 2019. Aside from Broad-Based expectation is that this will drive a carbon tax on liquid fuels, economic
0% 4.6%
Black Economic Empowerment greater awareness amongst pension incentives for energy efficiency and
score compliance, we see fund members of the sustainability the use of carbon offsets as a means
-20%
addressing this issue as central to practices in their funds. On the back of reducing the tax burden. What
building a stable and prosperous of this, the retail market in South is envisaged is a phased approach,
-40%
South African economy, and so we’ll Africa is also waking up to the fact with the first phase extending
-60% continue to champion progress that they can and should have a from June 2019 to December 2021,
through our engagement activities choice when it comes to how their escalated at 2% above CPI annually.
-80% as we simultaneously drive inclusion capital is managed. In this context, With the planned implementation
and diversity within our own of the national carbon tax this year,
Dec-09
Mar-09
our expectation is that there will be
Sep-07
Jun-08
mar-18
Sep-10
Dec-18
Dec-15
Sep-16
Dec-12
Mar-15
Sep-13
Mar-12
Jun-14
Jun-17
Jun-11
organisation. growth in demand for ESG-themed we expect that the climate change
products and, coupled with this, debate in South Africa will gain
(Net Total Returns as of 30 June 2018) | Performance price to 6 June 2013 has been back-tested.
innovations in this area. further traction and expect greater
investor focus on costs, disruption
and transition risks.
So, as these global shifts continue to gain momentum, the need to look to ESG
as a cornerstone to manage the impending changes to their landscape has never
been more important to investors, which include millennials, many pension and
provident funds, and asset managers.AN ACTIVE
OWNER
INVESTMENT GROUP
DO GREAT THINGS EVERY DAYRESPONSIBLE OWNERSHIP RESPONSIBLE OWNERSHIP
2018 – A DEFINING
YEAR FOR OUR
ROBERT LEWENSON
Head of ESG
Engagement
LISTED EQUITY
STEWARDSHIP
Old Mutual Investment On reflection, 2018 was a watershed
Group’s Responsible year for listed equity stewardship
(here we mean primarily proxy
Investment team worked
voting at company meetings and
in tandem with our listed engagement on ESG issues with
equity analysts and portfolio company management). This was
managers throughout the not only as a result of the various
year to highlight the key corporate controversies which
ESG risks and opportunities plagued the South African market,
but also an evolving sense of
with companies and across
urgency to rectify gaps in corporate
sectors. The focal point of governance reporting, with
our work in this regard was changes being proposed to both
the themes identified in our the Companies Act (for the first
letter to the CEOs of the JSE’s time since enactment) and the JSE
Listing Requirements.
THE STRENGTH OF made regarding remuneration
Top 100 companies – namely practices but also highlight where
OUR RESPONSIBLE more work is still required. Lastly,
transformation, long-term
We also saw a significant increase in OWNERSHIP our retail sector analyst will describe
sustainability strategy and the number of institutional investors APPROACH how research into the retail sector’s
ethical leadership. taking their stewardship obligations previous poor performance on
more seriously, with collaborative For our clients it’s essential that transformation led to engagements
engagements among institutional we build trust as the stewards of with key companies in the sector.
investors to address ESG concerns their long-term capital by showing
becoming ever more prevalent. On the strength and conviction of our With the strengthening of our
a market level we saw a revitalised approach to the ESG issues which responsible investment research
Code of Responsible Investing in affect the long-term value of the and valuable lessons learnt about
South Africa (CRISA) committee assets we manage on their behalf. the necessity of robust stewardship
undertake significant action to push practices with our investee
the investment value chain to adopt In this year’s report we show how companies over the years, we’ve
standardised reporting practices on we expect our investee companies entered 2019 excited about the
responsible investment, including to engage appropriately with the opportunity to continue working for
stewardship. abovementioned ESG themes by our clients by engaging the market
sharing some of the experiences in a meaningful manner. Expanding
our listed equity investment teams our role in providing listed equity
had during the year. We ask our stewardship services to a broader
MacroSolutions portfolio managers client base will be an important
how they responded to the tragic part of this journey.
listeriosis outbreak at the operations
of Tiger Brands Limited. Our Old
Mutual Equities portfolio managers
reflect on some of the progressRESPONSIBLE OWNERSHIP RESPONSIBLE OWNERSHIP
OUR LISTED EQUITY
STEWARDSHIP IN 2018
ESG ENGAGEMENTS PER CATEGORY
Regulatory Risk 2% Remuneration Report 2%
56%
ENGAGEMENTS WITH THE FINANCIAL
Food Safety 2% Water Usage 2% SECTOR MOSTLY FOCUSED ON
REMUNERATION ISSUES
Financial Mismanagement 2%
Ethical Leadership 2%
PROXY VOTING
Director Attendance 2%
Remuneration
Cybersecurity 2% Old Mutual Investment Group
Policy 27%
Auditor Remuneration 2% exercises each proxy on the merits
of the case, and from the viewpoint
Board Independence 4% of the client, without regard
to any interests of Old Mutual
Investment Group, its employees,
BBBEE Transaction 4%
officers, directors or its associated
companies.
Audit Committee 4% FIGURE 1:
PROXY VOTE RESULTS FOR 2018
Transformation 5%
9%
Board
Composition 11%
ESG Strategy 5%
150 764
Succession Planning 7% VOTES IN TOTAL
Auditor Appointment 9%
Climate Change 7% 91%
FOR - 141 900
AGAINST - 10 864RESPONSIBLE OWNERSHIP RESPONSIBLE OWNERSHIP
RESOLUTIONS WE VOTED AGAINST – SPLIT BY SECTOR
PROXY VOTING ON
THE ELECTION OF
Capital Management DIRECTORS
Shares Under the Control of Directors
• High priority issues:
Remuneration Report
Remuneration Policy • Independence
Remuneration other
Memorandum of Incorporation
• Attendance and participation at
meetings
General Resolutions
Financial Assistance • Experience
Election of Directors’
• Qualifications – including diversity.
Director Fees
Authority Granted to Director to Implement a Specific....
Appointment of Auditors
SECTORS WHERE WE WERE MOST
Appointment of Audit and Other Committee Groups
ACTIVE IN RESPECT OF
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% REMUNERATION IN 2018
Most represented sector Count
Consumer Discretionary Financials Consumer Staples Healthcare
Real Estate 18
Utilities Industrials Real Estate Materials
Materials 16
Information Technology Communication Services Energy Financials 15
Consumer Discretionary 9
Source: Old Mutual Investment Group Industrials 7
Consumer Staples 4
Communication Services 4
Information Technology 3
Healthcare 1
Energy 1
Total 78
PROXY VOTING FOR 2018 ON REMUNERATION
Relative to the market, Old Mutual Investment Group is stricter when it comes to voting against
the remuneration policies and reports of the companies in which we invest. KEY TAKEOUT FOR
PROXY VOTING ON
THE ELECTION OF
74% 68% 90% DIRECTORS
How much Old Mutual Investment How much Old Mutual Investment How much Old Mutual Investment High priority issues were
Group voted against the Group voted against the Group voted against when there independence, attendance
remuneration policy of our investee remuneration reports of our were material votes against and participation at meetings,
companies when the dissent level investee companies when the remuneration (greater than 25%). experience and qualifications –
was immaterial (less than 25%). dissent level was less than 25%. including diversity.COMPANY ENGAGEMENT COMPANY ENGAGEMENT
taken drastic but necessary steps
to ensure food safety is embedded
ALIDA JORDAAN in all operations, as stated in their
Portfolio Manager Sustainability Report – “from farm to
fork” - including internal and external
audits of their food safety practices
AFTER A TRAGEDY
and implemented recommendations
in accordance with international best
practice.
A Q&A WITH Q: In your view, is the company’s
response an essential part of the
MACROSOLUTIONS
WARREN VAN DER
WESTHUIZEN investment case?
Portfolio Manager
A: For the long-term investment case,
absolutely. Listeriosis was a tragic
event that is still being resolved
but, for the longer term, the issue
of food safety is an important one
The deadly listeriosis Q: The listeriosis tragedy was in the short and long term. For the
and will remain so going forward.
outbreak was first noted a setback for Tiger Brands in a short term, we called for improved
This will require our continuous
generally challenging 2018 – why communication, settling of the
in SA in October 2017 and monitoring of the implementation
did you choose to invest in the food class action lawsuit in a responsible
after some investigating, producer beyond this point? and empathetic manner, as well
of their commitment to food safety
processed meat products – practices.
as ensuring that no other business
such as polony and viennas A: We were looking for shares units were or would be affected
– from a production facility that would benefit from an by the outbreak. For the long term,
owned by Enterprise Foods improving South African operating we wanted special attention paid
environment and still offer a to food safety across their product
(a division of Tiger Brands)
valuation underpin. Tiger Brands has range – including attention to
was identified as the source a portfolio of excellent brands, in reporting practices.
of this bacterial infection. many cases being the number one
brand in a category, for example, Q: What has been the company’s
Tiger Brands had a lot to tomato sauce, rice, pasta, bread and response to the engagement?
account for. So why would baby food. Previously, Tiger Brands Have they addressed the ESG risks
our portfolio managers had always been deemed too appropriately?
expensive and this setback created
decide to invest in this food
an entry point. We believed the A: The company responded to
producer post listeriosis? market had priced in the event. The our concerns, highlighting the
We asked MacroSolutions listeriosis outbreak was, however, actions they had already taken to
portfolio managers, ALIDA very tragic and we engaged with address the crisis. This included
JORDAAN AND WARREN management around the issue. the nation-wide recall of products
VAN DER WESTHUIZEN. With that said, we believe this and suspension of operations to
company will continue to be part of undergo extensive, deep cleaning
SA’s recovery story. and structural upgrades. To
address food safety concerns, they
decided to increase the frequency
Q: What were the priority ESG
of monitoring and added further
risks you decided to engage Tiger
quality control measures at all their
Brands on first after the listeriosis
manufacturing sites. Food safety
tragedy?
and quality training was conducted
A: For us and our clients, the for all staff at the facilities. As
biggest, most urgent concern was we would have expected, the
of course the tragic loss of lives and company’s management took
illnesses which ensued. We wrote accountability and indicated the
a letter to the Tiger Brands board class action would be handled with
from our investment analyst and sensitivity, with a view to resolving it
Head of ESG Engagement calling in a fair and responsible manner.
for an urgent response to areas of
Since the tragedy, the company has
attention for Tiger Brands – bothCOMPANY ENGAGEMENT COMPANY ENGAGEMENT
PHILIP SHORT
Portfolio Manager
CASE
STUDY
NASPERS:
INCENTIVISE
UNLOCKING
THE RUMP CONCERN RAISED control (for instance, customer In our follow-up engagement,
We believe that shareholders can growth and increased IT Naspers confirmed that the
COMPANY DESCRIPTION AND benefit from a better understanding metrics). valuation process and performance
of what is required from Naspers metrics for each division would be
INVESTMENT CASE management to unlock the value of We were pleased to note that disclosed in their next Integrated
the unlisted rump assets (excluding more than 65% of the criteria listed Report. This would include more
While the bulk of Naspers’s value FIRST ENGAGEMENT (20 OCTOBER 2017) Tencent). As such, we requested excluded Tencent. detailed disclosure on e-commerce
resides in its investment in China- more detailed information on key share appreciation rights (SARs)
based internet giant Tencent, Old Mutual representatives: performance indicators and metrics With regard to long-term versus other business units’
its unlisted (or rump) assets are Robert Lewenson (Head of ESG used in determining executives’ incentives, the company was schemes and each executive’s
in global classifieds, online food Engagement), Philip Short (Portfolio remuneration – as we did not agree looking at the most appropriate overall performance criteria.
delivery and online payments. In Manager), with Naspers’s stance at its previous way to incentivise the closure of the The company further confirmed
sub-Saharan Africa the comopany annual general meeting (AGM) that valuation gap between the rump that clawback provisions were
provides video entertainment. Company representatives: disclosing this information could and Tencent and sees e-commerce introduced from 1 April 2018. These
Chief People Officer and Head undermine its competition position. share appreciation rights as the would be backward looking for
The majority of the unlisted of Investor Relations best answer. The remuneration a period of two years and relate
businesses are not yet profitable, OUTCOME committee did not want the primarily to financial misreporting
but we believe there is significant FOLLOW-UP ENGAGEMENT (2 MAY 2018) Following our discussions, Naspers executives to be incentivised for of information in terms of pay. It
value that can be added via this agreed to provide better disclosure performance in each business unit, was also agreed that minimum
diverse portfolio of assets. Given Old Mutual representatives: on short-term incentives, including: but rather the division as a whole. shareholding requirements would
that we are significant shareholders Robert Lewenson (Head of ESG For new acquisitions, performance be introduced for the CEO equal
on behalf of our clients, we need Engagement), Philip Short (Portfolio • Financial performance would would be looked at from three to 10 times basic salary and would
to know that Naspers has the Manager), Peter Linley (Head of consist of 50% economic years onwards. be achieved gradually from share
appropriate targets and employee Old Mutual Equities) criteria and 50% on the incentive schemes and awards and
incentives are in place to unlock business under control of each It was further agreed that Naspers not from the issuance of shares.
Company representatives: executive. would consider introducing
this value. This motivated us to
Chief People Officer and Head clawback provisions in the event
engage with the company on a
of Investor Relations • Non-financial performance that executives were paid, but
number of key issues regarding
the remuneration policy. criteria would include areas performance wasn’t achieved.
specific to the executive’sCOMPANY ENGAGEMENT COMPANY ENGAGEMENT
CONCERN RAISED CONCERN RAISED These were fruitful discussions
A TALE OF
In calculating the valuation of the Perceptions matter and ultimately and we found Naspers receptive
rump (used for calculating financial impact share prices. We believed to our suggestions, and they NEELASH HANSJEE
performance), Naspers uses a that the public perceived Naspers’s actively addressed our concerns. Portfolio Manager
TWO BANKS
Deloitte valuation. Our concern management to be disinterested We are further encouraged
was that the methodology and in engaging with shareholders by the appointment of a new
metrics of this calculation were not and the media. We requested remuneration committee chair,
disclosed. that management adopt a more Craig Enenstein, and the inclusion
proactive approach to address this of new members with technological
OUTCOME perception. backgrounds and more diverse skill
While Naspers conceded that the sets. We believe these initiatives
Deloitte valuation was not ideal, OUTCOME will support the unlocking of value COMPANY As a long-term investor, we
believe that incorporating
STANDARD BANK is the largest
South African banking group ranked
they said was the best option Naspers was aware of the negative within the rump assets and look DESCRIPTION AND relevant environmental, social by assets and earnings. It has a
available and that Deloitte would perceptions following its previous forward to further engagements
review the business plans and AGM and conceded that there was with the board on ESG issues.
INVESTMENT CASE and governance (ESG) factors into strong market position in corporate
our investment and ownership and investment banking, and in
discounted cash flow (DCF) analysis. room for change. We proposed
decisions ultimately leads to retail banking and operations in 20
Naspers’s auditors, PWC, would using existing online platforms
improved risk-adjusted returns for African countries. It has a controlling
cross-check the valuations and a to better communicate with
our clients. Identifying issues that stake in Liberty Holdings. Given
sub-committee of the remuneration stakeholders. In addition, the
currently or at some point in the the diverse nature of the business,
committee would then review company decided to do more
future may materially impact the we need to clearly understand
the report. This committee would regular investor roadshows and
long-term value of a company, gives remuneration, compliance and policy
have discretion to amend the follow-up engagements with
us insight into a business’s ability to decisions taken by its remuneration
valuation report if need be. We shareholders.
grow sustainably. As shareholders committee.
further requested Naspers to inform
on behalf of our clients, we regularly
shareholders of any trends towards
engage with companies’ executive
amending the valuation report. ABSA GROUP is one of Africa’s largest
teams as well as actively exercising
our voting rights. diversified financial services groups. It
has a presence in 12 African countries.
With me being a financial services The group offers a range of retail,
sector analyst, Robert Lewenson business, corporate and investment,
(Head of ESG Engagement) and wealth management solutions.
and I engage with companies Apart from the share’s current
across this sector, specifically on extremely low valuation and its solid
governance issues. Given that a dividend yield, the investment case
significant portion of financial also lies in the benefit of Barclays
services companies’ expenses is plc no longer being a controlling
remuneration, it is our responsibility shareholder. We believed this move
to ensure that the remuneration would give management greater
policies of companies in which we scope to drive growth without the
invest are aligned to shareholders constraint of the parent company.
by being appropriate, transparent
and set against clearly defined and
sufficiently challenging targets.
By way of example, two financial
services companies with which we
have had numerous engagements
are Standard Bank and ABSA.
While these discussions have
been constructive, we have not
always voted in favour of their
remuneration polices.You can also read
