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‘Most SA investors see environmental and social issues as important’

The global pandemic has sharpened South African investors’ focus on environmental and social issues, amid calls for greater sustainability-focused performance data, according to the Schroders Global Investor Study (GIS) 2021.

The annual GIS highlights savings and investment trends based on the answers and opinions of more than 23 000 respondents in 32 locations around the world, including 400 in this country. The investors surveyed were limited to those who planned to invest the equivalent of a minimum of €10 000 (about R170 000) in the next 12 months and have made changes to their investments within the past 10 years.

Kondi Nkosi, the country head at Schroders South Africa, says the GIS found that most South African investors are now placing more importance on environmental (58%) and social issues (55%) than before the Covid-19 pandemic.

He said the entrenchment of the vast economic disparities because to the pandemic might account for the increased focus on sustainability issues, particularly those that are social.

The data reveals that among those who said their interest in environmental and social issues had increased, most were in the 51-to-70 age bracket. Yet, seemingly in contradiction, it appears that South African investors aged between 18 and 27 were more at ease with the prospect of embracing sustainability.

“Sixty-three per cent of younger respondents stated they would feel positive about moving to an entirely sustainable portfolio, provided the same level of risk and diversification was maintained, compared to 58% within the 51-to-70 category.”

However, Nkosi said 56% of local investors believe that data which suggests sustainable investing delivers better returns would further encourage them to increase allocations.

A further 50% said that more information on funds aligned to their preferences would motivate them to increase their sustainable investments, while 46% said that regular reporting highlighting the impact of their investments would motivate them to increase allocations.

When it comes to personal motivation for moving to a more sustainable portfolio, 67% said the environmental impact of investing sustainably was the most appealing factor, while 55% believe that sustainable investing offers scope for greater returns.

Human rights matter

The study also revealed what controversies are likely to drive South Africans to withdraw from investments. Financial scandals were cited as the most likely, with 76% of local investors stating they would sell out if their investments were impacted by financial or accounting scandals, which is in line with the global consensus.

However, an interesting departure from other markets is that 67% of South African respondents cited a human rights scandal as a reason to withdraw their money from an investment fund if the companies associated with it were involved in a controversy of this nature. This is in contrast to the global data, which records a cyber attack as the next scenario that would most likely lead to people withdrawing from their investments.

According to Nkosi, this is not surprising considering the human rights breaches of South Africa’s past, which have left citizens with a deeply ingrained sense of justice.

“As sustainability moves to the fore, the 2021 GIS has highlighted that South African investors are prepared to defend these hard-won rights with their investment spend.”

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