The Public Investment Corporation (PIC), which manages the pensions of government employees, and Stanlib have been named among seven fund managers that ignored attempts by shareholder activist group Just Share to assess their climate-related risk management efforts.
The inaugural SA Asset Manager Climate Risk Survey was circulated to 33 local fund managers, including the top 20 by size, but only 23 participated, while two formally declined the invitation to do so, the activist group said.
Seven asset managers — including the PIC, which is the biggest asset manager on the continent and has stakes in virtually every listed company on the JSE — did not respond. Apart from Stanlib, the others are All Weather Capital, Argon Asset Management, Benguela Global Fund Managers, Meago Asset Managers and Sentio Capital Management.
Absa Asset Management was excluded due to its pending merger with Sanlam’s investment business.
“It’s really disappointing that even the PIC, which is the biggest asset manager in the country, did not respond to our survey even after we tried numerous times to get them to participate,” Robyn Hugo, director of climate change engagement at Just Share, told Business Day.
“While it is encouraging to see that some local asset managers are integrating climate change into their investment processes on certain fronts, when one looks at the local industry at an overall level it is clear that it falls well short of international best practice,” said Hugo.
Businesses and those who fund them are coming under increasing pressure worldwide to shift to a more socially conscious form of stakeholder capitalism that takes a proactive stance to address environmental, social and governance (ESG) issues. With climate change and the transition to a less carbon-intensive economic system becoming increasingly important sociopolitical topics, banks and asset managers are being pressured to reduce their funding for carbon-intensive projects.
Performed best
Just Share has been one of the most active protagonists in driving local companies to adopt tangible ESG reporting frameworks and has agitated at company results presentations and annual general meetings (AGMs) for corporate SA to do more to combat climate change. Its 2021 Climate Risk Survey includes responses to its survey questions and publicly available data to assess the asset management sector’s approach to climate risk across the core components of governance, stewardship and integration.
Based on the survey responses, the leading SA asset managers were found to be Aeon Investment, Ninety One, and Old Mutual Investment, who performed the best when measured against these components.
One area in which SA asset managers are clearly not up to scratch is employing people with the appropriate climate change-related qualifications to help steer their investment processes. It was found in the survey that only four of 23 respondents employed people with the appropriate qualifications, with Ninety One the only asset manager with more than one member of its investment team possessing the relevant technical skills.
Ninety One, the country’s biggest private sector asset manager, was also the only respondent to have published, in its own right, a report aligned with the Task Force on Climate-Related Financial Disclosures (TCFD), a leading reporting framework for the disclosure of climate-related financial risks.
A key motivation behind the survey is that despite many local asset managers making some climate-change related disclosures, there is no standardised framework to assess the information. There is also no professional body or other entity in SA to verify the climate-related commitments of asset managers in their public disclosures and marketing material.
Most problematic
“The result is that there is no way for the local investor to accurately assess which asset managers are taking climate change seriously and which aren’t,” said Hugo. “Investors are increasingly demanding that their capital plays a role in supporting the transition to a less carbon-intensive economy but local asset managers don’t seem to be responding fast enough.”
Perhaps most problematic for investors who wish to channel their capital allocation towards entities with credible ESG-related credentials is the lack of investment products available in SA to facilitate this growing requirement.
Just Share also highlighted the need for caution about “greenwashing”, in which bold claims are made by funds claiming to be “low carbon” or “green” yet little evidence is provided to back it up.
“SA asset managers tend to argue that our market isn’t suitable for low-carbon investment products, but that argument is outdated. Asset managers should be thinking more innovatively about how to respond to the growing demand for these products from retail investors and pension funds in particular,” said Hugo.
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