Is ESG-integration aligned with Fiduciary Duty?

Yes.

Regulation 28 makes it clear that ESG integration as part of a Responsible Investment strategy is not only consistent with fiduciary duty, but is in fact a core element of good governance for retirement funds in South Africa:

“A fund has a fiduciary duty to act in the best interest of its members whose benefits depend on the responsible management of fund assets.

This duty supports the adoption of a responsible investment approach to deploying capital into markets that will earn adequate risk-adjusted returns suitable for the fund’s specific member profile, liquidity needs and liabilities.

Prudent investing should give appropriate consideration to any factor which may materially affect the sustainable long-term performance of a fund’s assets, including factors of an environmental, social and governance character.

This concept applies across all assets and categories of assets and should promote the interests of a fund in a stable and transparent environment.”

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