DARK HORIZON SA investors go down new path
TRENDING: SUSTAINABLE INVESTING NOW IN DEMAND
After state capture and Steinhoff share price collapse, impact of poor corporate governance is real here.
decisions.
“South Africans have quite a sophisticated investment understanding and a thoughtful approach when it comes to sustainable investing,” says Jessica Ground of Schroders. “It is much more evolved than we see in some other countries.”
Appreciating the importance
A large part of this appears to be that these issues are very real for the average local investor. Whether due to state capture or the collapse of the Steinhoff share price, we’ve seen the impact of poor corporate governance. The Cape drought has also made environmental issues extremely tangible, while #FeesMustFall and the land debate have highlighted the imperative of social change.
Ground says there are often clear correlations when one compares broad national attitudes towards sustainable investing with where those same countries sit on indexes that measure issues like corruption or inequality.
“Those countries that tend to have day-to-day exposure to challenges as measured by those indexes see more value in sustainable investing.”
Unsurprisingly therefore, Ground says: “If we look in SA, 88% of people say sustainable investing has become important to them in the last five years. That is among the highest in the world.”
For a majority of SA investors, sustainable investing is not about excluding firms that are controversial, like tobacco or mining companies, but rather maximising returns by identifying companies with more sustainable operations. “We are really encouraged that 62% of South African investors felt it’s about companies that are likely to become more profitable because they are more proactive,” Ground says.
Limited supply
For many local investors, however, their appetite to invest sustainably isn’t matched by what they are being offered. Schroders found that 70% of investors feel they aren’t being given enough information. A second significant problem is a lack of advice. Advisors are less positive in general than end investors, and thus less informed. There’s a business opportunity here for advisors, says Ground.
Schroders found another interesting correlation: the more people feel they know about investing, the more likely they’re to see sustainability as important.