Responsible investment is an approach to investment that explicitly acknowledges the relevance to the investor of environmental, social and governance (ESG) factors, and the long- term health and stability of the market as a whole.
Sasria is a supporter of the Code for Responsible Investing in South Africa (CRISA) and a signatory of the Principals for Responsible Investment (PRI).
The Board recognises that the generation of long-term sustainable returns is dependent on stable, well-functioning and well governed social, environmental and economic systems.
The Board considers ESG issues on Sasria’s investment portfolio as a whole. The Board takes a wider view, acknowledging the full spectrum of risks and opportunities facing them, in order to allocate its assets in a manner that is aligned with the short and long-term interests of Sasria.
The Board recognises that effective research, analysis, evaluation and incorporation of ESG is a fundamental part of assessing the value and performance of an investment over the medium and longer term, and that this analysis should inform asset allocation, stock selection, portfolio construction, shareholder engagement and voting. As and when Sasria makes investments, the investments themselves, and the underlying asset managers including their investment philosophy and processes will also be considered from an ESG perspective.
Proxy voting rights accruing to Sasria in its capacity as a shareholder will be delegated to the asset manager in terms of the portfolio management agreement, except when otherwise instructed by the Investment Committee. Sasria monitors the proxy voting activity on its underlying equity portfolios on a quarterly basis.
Sasria is committed to building a better society and seeks to continuously place efforts to do this. Investment efforts will align to Sasria’s efforts in the following ways:
- Encourage and support existing asset managers to strive to become members of PRI and to support principles aligned to CRISA.
- All investment team members at Sasria will hold responsible investing as a key priority in the decision-making process.
- Encourage asset managers to invest in underlying companies that place high priority on ESG factors and/or have high ESG Scores/Ratings.
- Asset managers mandated by Sasria are encouraged to have a responsible investing policy in place and implement a responsible investing methodology when making investment decisions.
- Asset managers mandated by Sasria are encouraged to have staff that apply due care and diligence in incorporating ESG into the investment process and decision-making across the business.
- Asset managers mandated by Sasria report annually on how ESG was incorporated into the investment and decision-making process.
- Sasria will have asset consultants that are strongly aligned to Sasria’s goals and ESG aspirations.
- Sasria’s investment team members are encouraged to undertake further studies relating to responsible investing.
- Sasria will continue to prioritize responsible investing in the selection, appointment, and monitoring of external asset managers.
- External asset managers will identify risks and opportunities when analysing ESG factors in the investment process.
- External asset managers will incorporate ESG analysis in the decision-making process of asset allocation, portfolio construction, and developing investment strategies.
- When selecting asset managers, Sasria’s asset consultant acting on Sasria’s behalf, will assess the following against responsible investing (for all and any asset class):
o Firm culture
o Investment approach and objectives
o Investment policy and guidelines
o Governance structure and management oversight, including diversity
o Investment strategy and fund structure
o Investment team competencies
- External asset managers will:
o Incorporate material ESG factors in all investment analyses and decisions.
o Incorporate their own responsible investing policy into their asset allocation decisions.
o Have adequate resources and processes to analyse ESG.
o Incorporate material ESG factors throughout the portfolio construction process
o Engage with underlying portfolio assets to address ESG risks and opportunities.
o Comply with their own exclusion policy
o Embed ESG considerations in contractual documentation
o Implement adequate disclosure and accountability mechanisms
o Are willing to work in partnership with Sasria to develop their responsible investing approach.
o Strive to track the positive and negative sustainability outcomes of their activities.
- Where possible, Sasria will assess asset managers’ stewardship and climate change activities.
- Investment decision taking into account ESG will keep to the mandate on capital preservation, liquidity, and risk-adjusted investment returns.