“By demonstrating the impact that investing for growth and good can have on societies and economies, SA could help catalyse further uptake globally. But first, we must get measurement right.”
Speaking at the recent African Investing for Impact Barometer webinar, Makhabane pointed out that responsible investing has become an important principle in identifying material risks and growth opportunities for investors. “Investment funds that are focused on non-financial factors have gained significant traction in recent years.”
The sixth edition of the Barometer surveyed 2,640 funds from 382 fund managers in sub-Saharan Africa and scored them based on their implementation of responsible investment strategies, namely, ESG integration, investor engagement, screening, sustainability-themed investment, and impact investing. The barometer found that the most assets invested via a responsible investment strategy were in South Africa (at a weighty USD 600 billion) followed by Nigeria and Kenya.
Responsible investing can make a massive impact on society and on creating sustainable economic growth. “It can help address inequality as well as the fulfilment of basic needs.”
“Developing economies are melting pots of growth and social issues, and the outcomes of environmental and socially responsible initiatives are much more evident here than in developed economies, where change tends to take place at a slower pace. As such, I believe that Africa can be a good proving ground for responsible investment strategies, as we are already seeing in the ESG space. And as the continent’s leader in financial services with the most assets managed responsibly, SA is perfectly poised to lead in this regard.
“Out of all the economies on the continent, South Africa also has the best combination of real-world case studies and expertise to implement impact and sustainability-themed investment.”
She explained that there are subtle but specific differences between the two main types of responsible investing. “ESG investing is more focused on compliance and avoiding harm in investment strategies. Whereas impact investing targets investments that create certain outcomes, for instance, employment or improved infrastructure.”
In order for responsible investing to reach its full potential, one key issue – measurement – has to be addressed.