MoneyMarketing December 2019

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31 December 2019 | www.moneymarketing.co.za

@MMMagza

First for the professional personal financial adviser

WHAT’S INSIDE

YOUR DECEMBER ISSUE

DIVIDEND INVESTING: THE LOW-DOWN

STRUCTURED PRODUCTS IN AN UNPREDICTABLE WORLD

Companies that pay dividends provide investors with an effective inflation hedge

Structured products provide access to alternative assets and markets

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RISK MANAGEMENT IS SHARIAH’S GREATEST HURDLE Shariah investing is considered high risk in South Africa

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Is SA’s investment community investing responsibly?

M

any people still think the idea that companies have some kind of social responsibility is nonsense, yet the social purpose of the corporation is enshrined in South Africa’s company law, Tracey Davies, director of the non-profit shareholder activism organisation, Just Share, told the Impact Investing Forum in Johannesburg last month. South Africa is one of the most unequal societies in the world, and the blame for this is usually laid squarely at the door of the government.

However, Davies said, the post-apartheid era has also seen a disastrous failure of leadership from most of the custodians of South Africa’s private capital: listed companies, banks, asset managers and pension fund trustees. “This failure has contributed to and exacerbated inequality, both within the corporate sector and in our broader society.” Davies believes that regulators – including the JSE – have failed to hold companies accountable for diversity and transformation targets, as well as for their impacts on people and the environment. “Investors claim to be ‘responsible’, but their words are rarely matched by the kinds of action that could create meaningful social benefits.” She said that the country’s investment community prides itself on being a global leader in ‘responsible’ investing. “This mainly involves the integration of environmental, social and governance (ESG) factors into investment decision-making. In 2011, the Code for Responsible Investing in South Africa was launched with much fanfare. A large proportion of our financial sector has adopted this code, and many are also signatories to the global Principles for Responsible Investment, launched in 2006.”

Tracey Davies, Director, Just Share

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Davies questioned the impact that these initiatives have had. “Do we now have a more responsible, accountable corporate sector? Do the boards and CEOs of South Africa’s listed companies operate as if they know that their shareholders will ensure there are consequences for them if their companies cause social and environmental harm?” She believes that ESG integration has not created meaningful social benefits. “For decades, civil society organisations in SA have been studying and IT IS ASSET documenting OWNERS WHO the human and environmental HAVE THE PRIMARY devastation RESPONSIBILITY caused by our mining FOR RESPONSIBLE industry in INVESTMENT, AND surrounding ‘host’ IN PARTICULAR, communities and the environment. PENSION FUNDS This information is widely and freely available, but investors simply don’t pay any attention to it.” She added that seven years after Marikana, Lonmin employees’ living conditions have barely improved, and the company is still failing to comply with its social and labour plan – which is a condition of its mining right.

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FSP: NR 641


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