Old Mutual has finally signed the UN Principles for Responsible Investment (Unpri). This comes six years after the initiative came into effect and years after key players in the South African fund management industry, such as the Government Employees Pension Fund and the Eskom Pension Fund, became signatories.
The only other major local fund manager that has still to sign the Unpri is Allan Gray.
The principles were devised by the investment community under the guidance of the UN. According to the Unpri website, the principles reflect the view that environmental, social and corporate governance (ESG) concerns can affect the performance of investment portfolios and therefore must be given appropriate consideration by investors if they are to fulfil their fiduciary duty.
The move by Old Mutual, whose Old Mutual Investment Group South Africa unit is one of the largest fund managers in South Africa, coincides with the release of research by Deutsche Bank confirming that groups with high ratings for corporate social responsibility and ESG issues have a lower cost of debt and equity.
Although Old Mutual has signed the Unpri and is also a signatory to the UK’s Stewardship Code, it has not yet made public its proxy voting policy. This policy outlines the position that an investor or fund manager will take on key shareholder issues that are voted on each year at a firm’s annual general meeting. It is considered a crucial document in analysing a fund manager’s commitment to responsible investing. A spokesman for Old Mutual told Business Report that the company would make this policy public in the near future.
But while Old Mutual would provide its clients with the voting results, the group had “no plans to make the results public”, the spokesman said.
While the seven UN principles are guidelines, not directives, they do encourage signatories to disclose their voting policies and record. Principle 6 states: “Institutional investors should have a clear policy on voting and disclosure of voting activity.” And principle 7 says: “Institutional investors should report periodically on their stewardship and voting activities.”
Old Mutual, in contrast to a growing number of signatories, has interpreted the disclosure clauses as limited to its clients.
Commenting on the move, Old Mutual chief executive Julian Roberts said: “As a custodian of our collective long-term future, Old Mutual believes that making this commitment is the right thing to do.”
In a related development yesterday, Deutsche Bank released the results of research that showed that corporate social responsibility and ESG boost investment returns. “The evidence is compelling: sustainable investing can be a clear win for investors and for companies,” said a Deutsche Bank executive
On the JSE yesterday, Old Mutual shares rose 1.45 percent to end trade at R20.34.