Responsible investing is crucial to Africa’s growth story and could yield high returns for investors; this is according to industry experts who attended a summit addressing the topic in Cape Town recently.
“It’s about investing in what society needs and society drives that need. We have found out that we generate good returns out of making sure we deploy our capital in those spaces such as renewable energy and infrastructure.
“Africa is in desperate need of infrastructure and we get very decent returns out of that. Our ideas fund has already demonstrated very sizable returns north of 18 per cent nominal over the last 15 years,” Diane Radley, chief executive of Old Mutual Investment Group told CNBC Africa.
Radley was speaking at the event in Cape Town
According to a statement on the company’s website, “We believe that companies that are able to respond to this trend and innovate early will reap the benefits of stronger growth prospects, enhanced operating efficiencies, stronger social licence to operate, enhanced staff retention, lower cost of capital and, ultimately, stronger and longer competitive advantage,” read Old Mutual statement on responsible investing.
“Consequently, we believe that incorporating environmental, social and governance (ESG) factors into our investment and ownership decisions will support the pursuit of superior risk-adjusted returns for our clients.”
Jon Duncan, head of sustainability research and engagement at Old Mutual Investment Group added that there were growth opportunities in the responsible investment space.
“In such a young environment that is where the bulk of the big sustainable growth opportunities sit, so we think about education, affordable housing, renewable energy and agriculture,” he said.
“These are the kinds of investments areas we should be making more investments in, if we are to deliver a sustainable future for South Africa.”
Another industry actor, Hywel George, director of investments, Old Mutual Investment Group urged investors to look at impact and not only short-term returns.
“If you are invested in a particular equity and you do not price the external impact in time you will realise that what was unreported will come home to roost.”