Green investing so much more than a score: it’s an impact
At the inaugural Sanlam ESG Barometer Conference, there was strong acceptance that for corporate SA Inc to attract international ESG investment, the approach to ESG strategies must be different.
The Barometer findings paint a picture of progress, while investigating the primary motivators behind ESG investment. Generally, the consensus was that SA Inc needs to direct its ESG efforts towards projects that see sustainable positive impact with a long-term view.
The time for meeting ratings agencies’ requirements as a compliance tool was found to be at the cost of creating greater impact for society.
ESG was also explored in terms of additionality, and measuring by impact, not score. The concept of additionality was explored as a key theme of the day and participants aligned on the need to have more evidence of ESG additionality as part of investment decision.
For me, and for all of us at Sanlam, ESG is about real outcomes. Seeking partnership and ESG additionality in your investment strategy has the power to create sustainable positive impacts for beneficiaries and society –a specific investment causing a positive outcome that otherwise would not have occurred.
We need to recognise how important it is that, as South Africans, we continue these conversations because our children will benefit from the engagements we’re having now.
The whole issue of sustainability is not a race to the
top. We always want to improve in terms of our scoring, but let’s focus less on external rating frameworks and more on real impact. That’s why we, as Sanlam, started this initiative with our partners, Business Day and Intellidex. Let’s start asking the question - “did that score allow you to show visible impact?” If you can’t answer yes to that question, then the score does not mean anything.
This encapsulates the Sanlam ethos. For example, the group has invested R7bn in our Sanlam Infrastructure Plan since December. We urge a collaborative, future-looking approach. Imagine if we come together to create positive social impact, how much additionality we could achieve. Over these last few weeks, we’ve seen students marching. Students are our future employees. Are we concerned about the issues they’ve raised? What is corporate SA doing to help? If these students don’t complete their studies, we confront a compounding issue of youth unemployment in the country.
ESG on the ground is about changing people’s personal stories. The Sanlam Foundation is focusing on early childhood development because we must lay good foundations. This country can’t afford to lower the matric pass rate to below 30% because we failed to create a good, solid educational foundation.
For Sanlam, investing in early childhood education is a practical and impactful strategy because these learners will have a good foundation to tackle the educational demands of the future.
We’re also capacitating municipalities from an infrastructure perspective, not because we’re a risk-averse organisation, but because we don’t want the poor gogo who sits in her one-bedroom house to lose her home because there’s no fire response available. Our Partnership for Risk and Resilience has helped many households survive natural disasters because municipalities are capacitated to respond effectively to such incidents. This is what we call ESG additionality because without our investments we will be counting the magnitude of damages and loss of livelihoods.
The Sanlam ESG Barometer is a continuation of Sanlam’s long-standing commitment to people and planet. It will introduce a more formal measure of how listed companies are performing with their ESG agendas, to drive a greater focus and commitment. We’re hoping it’ll help SA Inc to accelerate its ESG performance, share its wins and attract critical investment.