CAPE TOWN - South Africans appear to be keen to invest in sustainable companies and have a heightened awareness of sustainability issues, but say they need more information from advisers and fund managers about investments that fit the criteria for sustainability.
These are a few of the findings of the Schroders Global Investor Study, a survey by global asset-management company Schroders of more than 22000 investors across 30 countries, the results of which were released this week. The South Africans polled in the survey (335 people with investable assets of more than e10000 or about R170000) had a relatively accurate idea of what sustainable investing is, with 62% saying it is “investing in companies that are likely to be more profitable because they are proactive in preparing for environmental and social changes”.
Over half of them (55%) said they often invest in funds that consider sustainability factors rather than those that don’t, with sustainable investments representing 45% of South Africans’ investment portfolios. Jessica Ground, global head of stewardship at Schroders, says the survey underlines the surge of interest in sustainable investing globally, but especially in South Africa. “The study confirmed that 88% of South African investors indicated that sustainable investing is more important to them now than it was five years ago, compared with 76% of investors globally.
“This increased importance was evident in terms of asset allocation, with 76% of South African investors having increased their allocation to sustainable investments over the past five years, compared with a global average of 64%.”
Ground says younger people, particularly the “millennial” generation, are more likely to have increased their exposures to sustainable investments over the past five years, with 71% of 18 to 24-year-olds and 75% of 25 to 34-year-olds having increased them globally. However, insufficient information is a major obstacle for South Africans wanting to put their money into sustainable investments - 70% said there was a lack of information on sustainable investments, both on how fund managers engage with the companies they invest in and from financial advisers on which funds to choose.
Ground says South Africans appear to be driven towards sustainable choices by a tendency to support local businesses, while avoiding controversy. “While the majority (65%) often or always prefer to support locally produced products and services (compared with a global average of 53%), 71% said they often/always avoid businesses with a track record of controversy, compared with a global average of 56%.”
Issues on which South Africans feel the most strongly are: ending bribery and corruption (8.9 on a scale of 1 to 10), reducing pollution and using renewable energy sources (8.1); and climate change (8.0).
One way you can find out which fund managers support sustainable investing is to compare the companies they invest in with the companies that make up the FTSE/JSE Responsible Investment Top 30 Index.