ON THE MONEY
STUART THEOBALD: The problem with sustaining sustainability
Considering the social impact of investments with risk and return might not always be the best idea
We are increasingly in love with the idea that investments can do good and not just deliver a financial return. Pressure has been growing worldwide for investment managers to consider the social impact of investments alongside risk and return. In SA, regulation 28 of the Pension Funds Act requires pension fund managers to think about the trifecta of environmental, social and governance (ESG) issues when making investment decisions. A guidance note in 2019 from the Financial Sector Conduct Authority said funds should put ESG criteria into their investment policy statements and make these available to members.
Recent research by my firm Intellidex found that almost all pension fund principal officers are expecting sustainable investing to become more important over the next five years, and some even think it is more important than generating returns.