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Global Sustainable Investement Alliance

Africa There is approximately US$ 228.7 billion in sustainable investing assets in Africa, with the largest investment market (South Africa) representing the majority of assets and 95 percent of the sustainable investment market in Sub-Saharan Africa. ESG integration accounts for the single largest strategy of sustainable investment, applying to US$ 198.1 billion of the total. Negative/exclusionary screening is the second most common strategy in assets. As in other markets, sustainability-themed investing (for example low-cost housing, clean tech or alternative energy) and impact investing14 represent relatively small percentages of the market. Based on the 2012 AfricaSIF.org survey, most institutional investors had some form of sustainable investing policy as large retirement funds increasingly move toward adopting ESG considerations at the policy level. A significant driver in the region has been the US$ 121 billion South African Government Employees Pension Fund (GEPF), Africa’s largest institutional investor and the world’s sixth-largest pension fund. Africa’s 54 countries have very different investment markets. South Africa, Morocco and Egypt are emerging markets; Nigeria, Ghana, Kenya, Mauritius, Tunisia, Botswana and Zimbabwe are frontier markets. The lion’s share of sustainable investing activity and data is in South Africa, but Kenya, Ghana, Nigeria, Egypt, Namibia, Mauritius and Botswana are markets where ESG investment is growing, starting with a focus on corporate governance. Outside of the most advanced African markets, institutional investors have limited activity, mostly in government bonds, private equity or project/corporate financing. The largest institutional investment market on the continent is South Africa, which accounts for 95 percent of the sustainable investment market in Sub-Saharan Africa. The institutional investors based in South Africa are adopting various forms of sustainable investing policies15 and increasingly using shareholder engagement as a tool. Research in 201116 identified 1 percent of assets under management in South Africa invested in ESG-branded portfolios, with self-described ESG integration close to US$ 125 billion (about 20 percent of general asset management). As South African institutional investors have increased allocations to Africa and more companies grow market share in Africa, more ESG-integrated investment decisions will have an impact in Africa. Focus on South Africa South Africa has laws and regulation enabling sustainable investment. A global best practice has been the launch of new pension regulation explicitly referencing the opportunity for fiduciaries to include ESG factors in their decision-making (Pension Funds’ Act Regulation 28). The investment industry association ASISA (Association for Savings and Investment South Africa) has been actively promoting ESG via the Responsible Investment Standing Committee. A multi-stakeholder group promoted a locally developed voluntary investor initiative, the Code for Responsible Investment in South Africa (CRISA) with five principles creating a supply- side incentive for institutional investors to be proactive and report on ESG. Also, integrated reporting since 2011 has been mandatory as part of JSE-listing requirements17. 14 Impact investing, especially, is garnering increased interest on both the supply and demand sides. For example, the 16 GIIRS funds (giirs.org) investing in Africa have almost a US$1 billion in committed capital and are seeking to raise another US$ 500 million. 15 For example Old Mutual Investment Group South Africa, Investec Asset Management, StanLib, Sanlam Investment Management and Allan Gray together represent nearly US$ 214 billion and have pledged to apply CRISA. 16 Sustainable Investment in Sub-Saharan Africa, SinCo + RisCura commissioned by IFC, July 2011. Primary drivers are: Good investment returns; Explicit and tangible ESG benefits/impact; More information; Government/regulator incentives; Demands from clients/investor mandate/shareholder pressure. 17 In February 2010, the JSE Listings Requirements made it compulsory for all JSE-listed companies to comply with King III, including the recommendation for a company to produce an integrated report for its financial year starting on and after March 1, 2010, or to explain. Global Sustainable Investment Review 2012 32


Global Sustainable Investement Alliance
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