SIMON BROWN: I’m chatting now with Siyabulela Nomoyi, a quantitative portfolio manager at Satrix. Siya, I appreciate the early morning time. You’re coming out with a new exchange-traded fund (ETF) next month. We’ll get to that. The methodology is going to be fundamentally different. You are focusing on inclusion and diversity. The phrase which came out in the release was sort of putting that ‘S’ into ESG (environmental, social, and governance) [investing]. We talk a lot about environment, we talk a lot about governance. The social part sitting in the middle perhaps doesn’t get its deserved airtime and focus quite often?
SIYABULELA NOMOYI: Thanks, Simon for having me on the show. Yes, there is a lot of talk about inclusion and diversity in the local and global space. So Satrix has had a view that this type of thing would be a great ESG-linked product, with a huge focus on the ‘S’, as most of the time the ‘E’ and the ‘G’ of the ESG are easier to measure. So we wanted a product which focuses more on the social side.
SIMON BROWN: I want to get to that measurement, what it includes. It’s inclusion and diversity, so of course it’s going to be gender, it’s going to have race – but it’s broader than that. It’s disability, it’s policies, for example, on mental health and HIV, flexible working, daycare. It’s about making a well-diversified (environment), but also a workplace that just sounds like a place you want to work…. The logic is simple. That’s going to make for a better work environment and therefore better outcomes, and the numbers back that up.
SIYABULELA NOMOYI: Yes. Quite a lot of the products which are in a similar space tend to focus more on the diversity side, so they just look at the gender split. With this product we’ve also looked at things like flexible hours, where we’re speaking a lot more on inclusion so that workspaces move from only just [focused on being] diverse, to a space where the workforce is also included and also has equal access to opportunities and resources in the company.
So we look at whether companies have policies on, as you mentioned, HIV/Aids, also the alignment in terms of the shareholders of the portfolio. So BEE is also included as one of the metrics, and also whether the company trains its own people. So we’re looking at average training hours, internal promotions and employee satisfaction, as well as any news and controversies out there. So it’s quite unique in that way.
SIMON BROWN: The Deloitte survey was looking at the Fortune 500, so offshore, but the logic remains the same – if you’ve got that diversity. I’ve often been critical with respect to [when there’s] a board of 12 pale males, there’s no diversity. How are they going to be innovative? They’re all going to have the same sort of group think, and it is about breaking down that group think. The data does say these companies are likely to be more innovative, more able to anticipate change, which in the current 2021 pandemic, global warming and so forth, is exactly what you need at the head of a company and filtering through the organisation.
SIYABULELA NOMOYI: Yes. And looking at the South African side, there’s certainly room for great inclusivity and diversity in the South African corporate sector.
Our product is designed to actually track and highlight the progress being made and to hopefully increase dialogue as well, and around the success of individual big businesses.
Change does take time and we look forward to playing a role in highlighting the gains made in South Africa in this space.
SIMON BROWN: I like that point; change does take time. But if we shine a bit of a light, we get there.
You are bringing an ETF out next month; you’re going to be using the Refinitiv [Diversity and Inclusion Index]. Talk a bit about that. It’s going to be local equity, is it not?
SIYABULELA NOMOYI: Yes. We identified Refinitiv as having very strong capabilities in this space. They already have a global product in this space working with BlackRock. So we wanted to have this product in the South African market only focusing on JSE-listed companies.
So it’s going to be a South African market for the South African people, and it’s going to be focusing on diversity, inclusion, people’s development, and also the use of controversies.
And it’s going to be constructed based on a lot of metrics pulled from data points collected by Refinitiv.
SIMON BROWN: We’ll leave that there. We’ll chat again when it gets closer. As I said, that new ETF will be coming out in August. Obviously it will be on the Sens and you’ll be able to get it wherever your stockbrokers are. Siyabulela Nomoyi, quantitative portfolio manager at Satrix, I appreciate the early morning.
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