As the head of Decusatio Impact Investment Solutions, I am constantly on the lookout for trends and insights that shape the future of sustainable investing. Recently, a fascinating survey conducted by 27four Private Markets shed light on the state of ESG (Environmental, Social, and Governance) integration within South African private markets. The findings offer a mix of commendable progress and areas ripe for improvement, echoing the complex nature of the ESG journey. Here are some key takeaways that I found particularly intriguing:
- Private markets are inherently well-positioned to champion ESG initiatives. With their robust investment processes and significant ownership stakes, these firms wield considerable influence over ESG performance. This dynamic allows for better alignment with medium-to-long-term investment horizons, providing the necessary runway for impactful ESG integration. It’s a strategic advantage that should not be underestimated.
- Among the surveyed firms, three asset managers emerged as frontrunners based on their overall ESG scores: Futuregrowth Asset Management, Sanlam Investments Private Equity, and SUMMIT Africa. These firms demonstrated exceptional performance across all survey sections, setting a high bar for their peers. Kudos to these trailblazers for leading by example in the ESG arena.
- The survey brought to light a pressing issue: the potential for greenwashing. This highlights the critical need for asset owners to move beyond self-disclosure and adopt more rigorous assessment methods for responsible investment practices. It’s a reminder that transparency and accountability are the bedrocks of genuine ESG commitment.
- A notable number of firms are taking a stand against environmentally and socially harmful practices. Specifically, several firms exclude coal, oil, and gas from their portfolios and avoid companies that violate the United Nations Global Compact’s principles on human rights, labor, environment, and anti-corruption. These exclusionary practices underscore a growing recognition of the importance of ethical boundaries in investment decisions.
- While it’s encouraging to see that twelve out of the sixteen surveyed firms are members of the Southern African Venture Capital & Private Equity Association (SAVCA), it’s somewhat disheartening that none are signatories to major global initiatives like the Net Zero Asset Manager Initiative, the CARBON DISCLOSURE SA Project, the UN Global Compact Network UK, or the International Corporate Governance Network. This gap presents an opportunity for South African firms to bolster their ESG credentials by aligning with these global standards.
The findings of this survey are both a pat on the back and a call to action for South African private markets. There is evident progress, but also significant room for growth and improvement. At Decusatio, we are committed to pushing the envelope on ESG integration, striving for a future where responsible investing is the norm rather than the exception.
For those interested in a deeper dive into the survey results and a comprehensive understanding of the current ESG landscape, I highly recommend downloading the full report here. A big thank you to 27four Private Markets and all the participating firms for their valuable insights and contributions.
Let’s continue to engage, innovate, and lead the way in creating sustainable and impactful investment strategies.
Navigating the ESG Landscape in South African Private Markets: Insights and Reflections
As the head of Impact Investments at Decusatio, I am constantly on the lookout for trends and insights that shape the future of sustainable investing. Recently, a fascinating survey conducted by 27four Private Markets shed light on the state of ESG (Environmental, Social, and Governance) integration within South African private markets. The findings offer a mix of commendable progress and areas ripe for improvement, echoing the complex nature of the ESG journey. Here are some key takeaways that I found particularly intriguing.
The Suitability of Private Markets for ESG Strategies
Private markets are inherently well-positioned to champion ESG initiatives. With their robust investment processes and significant ownership stakes, these firms wield considerable influence over ESG performance. This dynamic allows for better alignment with medium- to long-term investment horizons, providing the necessary runway for impactful ESG integration. It’s a strategic advantage that should not be underestimated.
The Top Performers in ESG Integration
Among the surveyed firms, three asset managers emerged as frontrunners based on their overall ESG scores: Futuregrowth Asset Management, Sanlam Investments Private Equity, and SUMMIT Africa. These firms demonstrated exceptional performance across all survey sections, setting a high bar for their peers. Kudos to these trailblazers for leading by example in the ESG arena.
The Greenwashing Conundrum
The survey brought to light a pressing issue: the potential for greenwashing. This highlights the critical need for asset owners to move beyond self-disclosure and adopt more rigorous assessment methods for responsible investment practices. It’s a reminder that transparency and accountability are the bedrocks of genuine ESG commitment.
Exclusionary Practices and Ethical Boundaries
A notable number of firms are taking a stand against environmentally and socially harmful practices. Specifically, several firms exclude coal, oil, and gas from their portfolios and avoid companies that violate the UN Global Compact’s principles on human rights, labor, environment, and anti-corruption. These exclusionary practices underscore a growing recognition of the importance of ethical boundaries in investment decisions.
Memberships and Global Initiatives
While it’s encouraging to see that twelve out of the sixteen surveyed firms are members of the Southern African Venture Capital & Private Equity Association (SAVCA), it’s somewhat disheartening that none are signatories to major global initiatives like the Net Zero Asset Manager Initiative, the Carbon Disclosure Project, the UN Global Compact, or the International Corporate Governance Network. This gap presents an opportunity for South African firms to bolster their ESG credentials by aligning with these global standards.
A Call to Action
The findings of this survey are both a pat on the back and a call to action for South African private markets. There is evident progress, but also significant room for growth and improvement. At Decusatio, we are committed to pushing the envelope on ESG integration, striving for a future where responsible investing is the norm rather than the exception.
For those interested in a deeper dive into the survey results and a comprehensive understanding of the current ESG landscape, I highly recommend downloading the full report here. A big thank you to 27four Private Markets and all the participating firms for their valuable insights and contributions.
Let’s continue to engage, innovate, and lead the way in creating sustainable and impactful investment strategies.
Emma Montocchio is the head of Impact Investments at Decusatio, dedicated to advancing ESG practices within the investment community.
Feel free to Contact Us or connect and share your thoughts with Emma at emma@decusatio.co.za
Disclaimer: This article is based on a survey conducted by 27four Private Markets. For the original findings, please refer to their publication.