Are SA asset managers taking risk out of your pension?

South African asset managers collectively invest R7.8-trillion in savings, about 40% of which is held by pension funds. The Mail & Guardian invited fund managers to explain their investment philosophy regarding fossil fuel industries.

Futuregrowth

Futuregrowth’s position on climate risk incorporates our belief that global warming is a real factor affecting investments (risks and returns) and sustainability for all citizens.

We have a strong bias against new-build coal fired plants that don’t address the full range of concerns (for example, carbon emissions, particulate emissions and water use).

We have a bias towards renewable energy and remain an active and substantial funder of the renewable energy independent power producers programme (for example, wind and solar).

Futuregrowth has integrated environmental impact into our investment process for a while now. For example, during September 2016 we announced that we would not invest clients’ funds into the mooted coal-fired independent power plants (Thabametsi and Khanyisa).

Allan Gray

As a responsible investment manager focused on protecting and growing wealth for our clients, we support the global transition to a more environmentally sustainable society.

We integrate environmental, social and governance (ESG) factors into our investment decision-making process and use active ownership, such as frequent engagements with senior management and the board of investee companies, as well as proxy voting, to hold companies to account.

We invest time and resources into understanding the environmental and social considerations of the energy transition, and how this affects financial risk and return.

We think carefully about how climate change considerations affect a company’s long-term sustainability. Carbon intensive companies will face greater regulation, costs and social pressure, and many more face potential physical climate change risks.

Old Mutual

Old Mutual is a signatory of the United Nations-backed Principles for Responsible Investing.

As a long-term investor, we understand the sustainability imperative and its role in changing the competitive landscape of every industry. We believe that companies that are able to respond to this trend and innovate early will reap the benefits of stronger growth prospects, enhanced operating efficiencies, stronger social license to operate, enhanced staff retention, lower cost of capital and, ultimately, stronger and longer competitive advantage.

We believe that incorporating ESG factors into our investment and ownership decisions supports the pursuit of superior riskadjusted returns for our clients.

Coronation

We expect all companies that we invest in to be good corporate citizens. This requires that they take their ESG obligations as seriously as they do their financial objectives.

We expect all companies to disclose their carbon footprint as well as other emissions. We expect them to disclose plans to reduce their emission intensity in a sustainable and just manner.

We believe these commitments should be included in key performance indicators used to remunerate and assess the performance of executive management. We track progress in meeting these plans and hold them to account where they are not delivering.