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Pandemic heightens SA investors’ awareness of sustainability issues

The majority of those whose interest in ESG had increased were 51-70 years old: Schroders Global Investor Study 2021.
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The impact of the global pandemic has sharpened South African investors’ focus on environmental and social issues, amidst calls for greater sustainability-focused performance data. This is according to the Schroders Global Investor Study (GIS) 2021, an annual survey which highlights savings and investment trends based on the answers and opinions of more than 23,000 respondents globally.

The study reveals that the majority of South African investors are now placing more importance on environmental (58%) and social issues (55%) than before the Covid-19 pandemic.

While Covid-19 has widened the gap between rich and poor the world over, South Africa was already burdened by a vast economic disparity prior to the pandemic, which has since become further entrenched. This might account for the increased focus on sustainability issues, particularly those that are social.

The data also reveals that among those who said their interest in environmental and social issues had increased, the majority were found to be in the 51-70 years age bracket. Yet, seemingly in contradiction, it appears that South African investors aged between 18-27 were more at ease with the prospect of embracing sustainability.

Sixty-three percent of younger respondents stated they would feel positive about moving to an entirely sustainable portfolio provided the same level of risk and diversification was maintained – compared to 58% within the 51-70 category.

However, almost six in 10 local investors (56%) believe that data which suggests sustainable investing delivers better returns would further encourage them to increase allocations.

A further 50% said that more information on funds aligned to their preferences would motivate them to increase their sustainable investments, while 46% said that regular reporting highlighting the impact of their investments would motivate them to increase allocations.

When it comes to personal motivation for moving to a more sustainable portfolio, 67% said that the environmental impact of investing sustainably was the most appealing factor, while 55% believe that sustainable investing offers scope for greater returns.

The study also revealed what controversies are likely to drive South Africans to withdraw from investments. Financial scandals were cited as the most likely, with 76% of local investors stating they would sell out if their investments were impacted by financial or accounting scandals, which is in line with the global consensus.

However, an interesting departure from other markets is that 67% of South African respondents cited a human rights scandal as a reason to withdraw their money from an investment fund if the companies associated were involved in a controversy of this nature. This is in contrast to the global data, which records a cyber attack as the next scenario that would most likely lead to people withdrawing from their investments.

This is not particularly surprising when you consider the human rights breaches of South Africa’s past, which have left citizens with a deeply ingrained sense of justice.

As sustainability moves to the fore, the 2021 GIS has highlighted that South African investors are prepared to defend these hard-won rights with their investment spend.

Kondi Nkosi is country head at Schroders South Africa

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Investing is like breeding. The more traits the sheep farmer selects for, the slower the genetics of progeny will advance in any of them. The genetic material will stay the same over a decade. The profitability of stock farming depends on the efficiency of genetic material. To ensure success, the selection criteria must be focused on one or two of the most important performance variables.

The investor who tries to reach various goals at the same time will go nowhere. An investor, per definition, needs a return on capital. Anything else will diminish investment performance. When authorities require investment objectives that do not increase the return on investment, it becomes a social project. At that stage, it is simply another tax on the capitalist class, tantamount to the expropriation of property. They hide this process of expropriation in shiny wrappers, brand it as a social responsibility, while they force the investor to take over the responsibilities of the government.

The most important responsibility we owe to society is to be responsible for ourselves.

Modern-day politics is a mirage that allows irresponsible people to motivate irresponsible politicians to make irresponsible laws in the false belief that they are enforcing social responsibility. This can only end badly for the irresponsible masses.

Stating that you’re interested in social issues and actually putting your money where your mouth is, are 2 entirely different actions.

The article clearly states that it is “based on the answers and opinions of more than 23,000 respondents globally” and no mention is made of whether any comparison of the composition of portfolios prior to and subsequent to the Covid-19 pandemic were actually made to substantiate whether “feelings or intentions” actually became actions where it relates to sustainability investing.

Yeah…I know lots of SJWs who work themselves into a righteous froth about the homeless too, but I don’t know of a single SJW who actually has a formerly homeless individual living with them.

End of comments.

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