ESG Matters – January 2018

By Alexander Forbes Investments on Feb 12, 2018 in ESG Matters

Alexander Forbes Investments adopts a Living*Investing framework, which is a risk-led, forward-thinking investment approach aimed at achieving client objectives with a greater degree of certainty. Taking a sustainable investment view, including the consideration of environmental, social and governance (ESG) factors, is one of the key investment beliefs underlying the Living*Investing framework.

Global

Davos 2018: Transforming the world by putting ESG in the spotlight 26 January 2018

  • More capital is being directed to ESG issues as the correlation between social contribution and business performance (the sustainability premium) is shown to be true.
  • Climate change has been one of the key catalysts in shifting corporate decisionmaking and capital towards other ESG issues as well.
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World enters critical period of intensified risks in 2018 – WEF Global Risks Report 17 January 2018

  • Among 30 global risks experts were asked to prioritise in terms of likelihood and impact, all five environmental risks were ranked highly on both dimensions.
  • These include extreme weather, biodiversity loss and ecosystem collapse, major natural disasters, man-made environmental disasters and failure of climate-change mitigation and adaptation.
  • Environmental risks are now seriously threatening the foundation of most of our commons.
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BlackRock’s message: Contribute to society, or risk losing our support 16 January 2018

  • Laurence D Fink, founder and chief executive of the investment firm BlackRock, informs business leaders that their companies need to do more than make profits — they need to contribute to society as well if they want to receive the support of BlackRock.
  • BlackRock manages more than $6tr in investments, making it the largest investor in the world with an outsize influence on whether directors are voted on and off boards.
  • Society is demanding that companies, both public and private, serve a social purpose.
  • To prosper over time, every company must not only deliver financial performance but also show how it makes a positive contribution to society.
  • If a company doesn’t engage with the community and have a sense of purpose, it will ultimately lose the licence to operate from key stakeholders.
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Chief executive pay falls almost £1m as ‘Fat Cat Thursday’ arrives 4 January 2018

  • Britain’s top bosses have seen their pay packets slashed in the face of mounting pressure from politicians and from investors.
  • The average FTSE 100 chief executive earned £4.5m in 2016, down from £5.4m in 2015.
  • A typical CEO earned £3.45m in 2016, which was 120 times the average income. This ratio is however down from 141:1 in 2015.
  • Business, shareholders and remuneration committees need to do their part and challenge excessive pay, understand pay and reward for top executives in the context of the whole organisation, and look at how pay is linked to driving sustainable performance.
  • CEO’s should be measured using a more balanced scorecard of success which goes beyond financial outcomes, looking more widely at the impacts of businesses on all stakeholders from employees to society more broadly.
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Local

JSE’s green bond segment could boost ESG investing in South Africa 10 January 2018

  • The JSE has been developing offerings across asset classes that promote responsible investing including the launch of its Green Bond Segment.
  • Green bonds provide a commercially practical way to finance renewable energy sources, such as wind and solar power, as well as natural gas.
  • The global market for green bonds is currently valued at $895bn, and the year-on-year issuance has doubled in size annually over the past two years.
  • The South African green bond market is still in its infancy, with only four green bonds listed locally.
  • The City of Cape Town raised R1bn for projects including electric buses, energy efficiency in buildings and water management initiatives in 2017. The issuance was five times oversubscribed, demonstrating that there is appetite for good-quality ESG focused assets.
  • As more investors see the benefits of green investing through the return profile of these investments, as well as the protection it can offer during volatile periods thanks to its enhanced governance, we believe there is healthy scope for responsible investing to grow in the South African market
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Silicosis appeal on hold as settlement with workers beckons 11 January 2018

  • A multibillion-rand settlement between gold mining companies and lawyers representing tens of thousands of former mine workers with the lung sickness silicosis is near.
  • The mining companies have formed the Occupational Lung Disease Working Group made up of African Rainbow Minerals, Anglo American SA, AngloGold Ashanti, Gold Fields, Harmony and Sibanye Stillwater.
  • Those six firms said last year they had made provision for a settlement payment and the total came to about R5bn.
  • The settlement is estimated at R5bn and will be paid into a trust for about 100 000 former mine workers with the crippling lung disease.
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South African Ministers in Davos welcome tough action on SOEs 24 January 2018

  • South African Ministers in Davos for the World Economic Forum have welcomed the tough line and decisive action taken on state-owned enterprises, with Eskom having a shake-up at board and executive level.
  • Deputy President Cyril Ramaphosa appointed a new Eskom board, led by Telkom chairperson Jabu Mabuza, and recommended that Phakamani Hadebe be appointed interim CEO of the power utility.
  • It was also ordered that all Eskom executives facing allegations of serious corruption and other acts of impropriety, including Matshela Koko and CFO Anoj Singh, would immediately be removed.
  • South Africa has committed to introducing stronger consequence management measures, with findings by the auditor general among the key steps.
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Alexander Forbes Investments

Alexander Forbes Investments

Alexander Forbes Investments was established in 1997. We are a forward-thinking and trusted global investment provider, with roots in Africa. In pursuit of certainty we set out to understand our retail and institutional clients’ circumstances and risk tolerance to set clear goals. Our adaptive investment approach, called Living*Investing allows us to maximise opportunity and minimise risk at every stage of the investment cycle.

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