Asset managers told
Investors, in particular asset managers, have been encouraged to integrate ethical and moral factors into their investment decisions.
This was said by Nicole Martens – Head of Africa and Middle East at Principles for Responsible Investment (PRI) – during a Press Club forum organised by Kgori Capital.
She encouraged asset managers to exercise responsible investment, which can be defined as a form of investment that aims to incorporate environment, social and governance (ESG) factors into investment decisions to better manage risk and generate sustainable, long-term returns.
More often asset managers are said to invest just anywhere as long as returns are guaranteed, without taking into consideration the types of investments they are making.
Asset managers invest on behalf of other people, especially pensioners, and often go about without taking into consideration the type of investment which may be not in be alignment with the beliefs and principles of those whom investments are made on behalf of.
Investors should practice responsible investment because – as Mertens said – besides managing risks; it fulfills investor duty and enhances potential returns.
It fulfills investor duty in that it satisfies beneficiary demand, meet government policy guidance and regulation and improve investor practice and market effectiveness. Responsible investment manages risks by going beyond simply excluding unethical investments.
Mertens said responsible investors empower asset owners, support investors incorporating ESG issues and create an industry of active owners. She said it also serves to showcase leadership and increase accountability.
Responsible investment does not require ruling out investment in any sector or company – it simply involves including ESG information in investment decision-making to ensure that all relevant factors are accounted for when assessing risk and return.
This form of investment does not require the use of specialised products but is primarily about bringing additional data and analysis into existing approaches. It is noted that responsible investment should be pursued even by the investor whose sole purpose is financial return, because ignoring ESG factors will be tantamount to ignoring risk and return.