The purpose of this letter is to establish an open dialogue with you, and CEOs of other listed JSE firms, regarding issues that we see as critical for long-term shared value creation across the South African economy.

The past few years have shown us that environmental, social and governance (ESG) issues are very real and directly impact the ability of firms to generate value for all stakeholders. Governance failures, both in the private and public sectors, along with the mounting costs of environmental and social issues together convey a clear message - ignore ESG risk at your peril.

The positive news is that tackling ESG doesn’t have to come at a cost to a company, rather, if addressed correctly it can be a source of competitive advantage, profit and growth. It’s no surprise then that as an investment firm, we focus intensely on the way in which a company addresses these issues.

Growing returns sustainably

As one of the largest custodians of South Africans’ savings, we have a deep responsibility to our clients to manage and grow their assets in a sustainable manner. An important component of the returns we generate comes from the investments we make in listed firms such as yours. As such we rely on your leadership in managing ESG risks and capitalising on ESG opportunities.

Over time we have consistent long-term exposure to the listed markets, and thus have material interests in how long-term sustainability issues are addressed by market participants. From our perspective tackling these issues is not only good for the issuers, it makes sense from an investment perspective and it’s good for our clients and for society at large.

Partnering with our investee companies

We continuously engage with company executives on a range of ESG issues and are encouraged by the largely positive response. Our belief is that together we can accomplish a great deal. But it will demand robust, frank engagements, sometimes requiring us all to reassess how we measure performance, and working towards a joint vision of how to create shared value.

As such we have identified three key areas that we believe are critical for CEOs to provide leadership on:

  1. Transformation: Transformation is an imperative for South Africa and we fully expect the corporate sector to make its contribution. The economic rationale for market participants is clear – lack of socially inclusive growth and transformation will result in instability and muted growth. We will continue to actively engage with the laggards amongst our holdings and work with them to make progress on BBBEE. In addition to tackling ownership we see real opportunities for companies to address transformation by being more effective in the areas of skills development, enterprise development and by offering socially inclusive products and services.
  2. Long-term sustainable strategy: It is critical that corporates have in place a clear, straightforward, well-articulated strategy based on long-term competitive advantage, a strong sense of purpose and a sound, sustainable business model. Integral to such a sustainable strategy must be a deep consideration of the impact of ESG factors; not just in a separate Annual Report but central to the business strategy itself. We will increasingly look to this area as the focus of our assessments and engagements.
  3. Ethical Leadership: If South Africa is to seize the current opportunity and secure the long-term sustainable growth so desperately needed, then ethical private and public leadership needs to be central to our collective endeavours. We expect transparent and ethical dealings by directors and importantly seek clarity on the manner in which the company strategy aligns with rewards, and long-term incentives. We have a special interest in respect to the way human capital is managed, in particular skills development, succession planning and health and safety. Given that the tone is set at the top we expect the leadership team to take responsibility for the ethical issues associated with the company’s operations as well as its goods and services. We will be stepping up our focus on the manner in which businesses provide disclosure on ethics management and the outcomes thereof.

As a long-term investor, we believe that it is in the interest of all participants in the financial ecosystem (asset owners, asset managers and issuers) to play a proactive and coherent role in creating long-term sustainable outcomes for all stakeholders. We believe that fundamental alignment on these issues creates a virtuous circle that connects the aspirations of South African savers with the long-term sustainable strategies of corporate SA.


We thank you for your positive engagements thus far and look forward to further meetings to strengthen our communication so we can better tackle our common challenges and reap rewards for all of our stakeholders.


Khaya Gobodo   Hywel George
Managing Director   Director of Investments
Old Mutual Investment Group   Old Mutual Investment Group