By Quintin Rossi
Investment decisions based on company ESG policy; the trend is growing.
ESG (Environmental, Social and Corporate Governance) should be a high priority of not only measuring a company’s performance, but more importantly providing a comprehensive tool for making investment decisions. Along with financial reports, ESG metrics form part of a company’s annual reporting. Research is showing that new waves of responsible investors are applying these non-financial factors as part of their due-diligence analysis.
In a recent tweet shared by one of our shareholders, UK-based research and investor data company, Morningstar reports that investment into ESG funds is on a healthy rise globally, with Europe and the US leading the charge. The graph sadly clusters the balance of countries as ‘the rest of the world,’ which thankfully follows the upswing trend. The (long overdue) reality is that investors are considering; a). the social contract between business and the underprivileged, b). a business’s responsibility of taking care of the environment and c). the ethical governance of a business. Frankly, a board that is socially and environmentally aware is a well-governed board.
However, from a local outlook, a report on ten South African JSE listed property stocks published by ATISA and Integram Research, found that we have a way to go with Corporate Governance; the Environmental and Social impact aspect faring poorly in the report findings.
Perhaps by highlighting the importance of investment decisions, motivated by more than the financial statement, will encourage change. One cannot ignore that investors are allocating capital to companies which have a clear ESG strategy. A board that understands its social and environmental contract obligation and conducts itself with good governance, is one that underpins long-term value. Our sustainability objectives and initiatives are consistently monitored and improved upon as our portfolio grows. For example, we set out to convert 50% of our property portfolio covered in solar, currently achieving 28%, with a pipeline of projects committed to increase that to 63%. Our average solar penetration rate (power we generate on site) is at an average of 29%, saving 2.9million kilograms of Co2 emissions (21 707 trees for those of the literal mind).
The World Bank affiliate, the International Finance Company (IFC) has recently awarded Cape Town a 6 million rand donation to facilitate the city’s energy transition. The funds are earmarked for sustainable energy projects, with one of the objectives being to be less reliant on Eskom, while transforming to a more responsible, greener energy future. One could suggest that Eskom deserves some sort of twisted thanks; the struggling national power utility could very well be the reason that climate change finally tops many a boardroom agenda.
We’ve knitted our ESG policy to work in unison; our social responsibility projects, work hand-in-hand with our environmental projects. One of our company values speaks to generosity and giving back and as a company generating revenue and profit within the Western Cape, it is imperative that we make an impact on this community by supporting socially valuable initiatives. Identifying and giving our support to education, nutrition and assisting vulnerable families through the five well-run and trustworthy initiatives with which we work. Our alignment with people, our planet and profit drives our position as one of the sector leaders in the Western Cape authentically adopting ESG initiatives that are measurable and impactful.
Let’s hope it’s contagious.