The Responsible Investment and Ownership Guide

A tool for integrating ESG into the investment process
This guide supports South African retirement funds with the integration of ESG considerations into their investment processes. It provides guidance on the development of the policies, procedures and protocols necessary to meet the requirements of best practice, including those set out in Regulation 28 of the Pension Fund Act 

What do we mean by ESG integrated investment?

There is no single agreed definition, but generally, Sustainable, Responsible and ESG-integrated investment (terms that generally can be used interchangeably) is commonly understood to mean:

The integration of environmental, social and corporate governance (ESG) considerations (and other relevant long-term economic risks and opportunities) into investment management processes and ownership practices, in the belief that these factors can impact financial performance.

The 'Why', the 'What' and the 'How' of
RI and ESG integration and the content of this guide.

WHY do we need to do this?
HOW can we implement this?
WHAT outcomes can we expect?

If you are new to this topic,  start here.

You will find answers to a series of commonly asked questions about ESG and Responsible Investment practices for pension funds.

This covers some of the most common questions and concerns raised by pension funds in South Africa as they start the journey of ESG integration.

The RIO tool takes you through the steps that will help you develop the policies, procedures and protocols necessary to meet the regulatory obligations in relation to ESG integration.

The seven steps provide an overview of what is required and recommended and include sample checklists and templates to help you get started.

This section contains a more detailed discussion on ESG topics globally and within South Africa. 

ESG investment strategies and their application are discussed in detail.

Responsible Investing is considered in terms of the real-world outcomes and impacts we are looking to achieve.

How using this tool will help you

  • It will enable you to use ESG insights to help manage investment risks and returns over the long-term.
  • It will help you to engage with investee companies on ESG issues of particular concern.
  • It will allow you to exercise your voting rights conferred by share ownership when ESG issues of concern arise.
  • It will formalise your fund’s approach to ESG risk management through appropriate policies and service provider agreements.
  • It will enable you to collaborate with others to develop, share and promote ESG best practice.
  • It will allow you to incorporate ESG thinking into your fund’s strategic portfolio allocation.
  • It will provide you with the knowledge to incorporate long-term ESG related incentives into investment management agreements.
  • It will help your fund comply with the requirements of Regulation 28 and the FSCA Guidance Notice.

On which guidelines is the tool based ?

This tool is anchored in both national and international regulation and best practice.

It covers the requirements in Regulation 28 and the FSCA Guidance Notice On Sustainability Of Investments And Assets In The Context Of A Retirement Fund’s Investment Policy Statement and it incorporates the guidance provided under the Code for Responsible Investment (CRISA) which is further reinforced and complimented by the King (IV) Report on Corporate Governance for SA, 2016 and the Sector Supplement for Retirement Funds.

The tool has also drawn significantly on international practice and experience available from the global investor network Principles for Responsible Investing (PRI).