ON THE GROUND IN AFRICA
As a long-term investor and responsible steward of
the assets it manages on behalf of its customers,
Old Mutual Africa is on course to becoming the
leading responsible investor on the continent,
where it has offices in Kenya, Malawi, Zimbabwe
and Namibia. Old Mutual Africa’s Responsible
Investment Committee spearheads this initiative,
ensuring that we continue to incorporate
environmental, social and governance (ESG)
considerations in the assets in which we invest.
Marjorie Mayida shares some of the learnings
along her ESG journey into the African investment
Jonathan: Describe your role and
what you’re most passionate about in your
Marjorie: I am the chair of the committee, which
is a platform where responsible investment representatives from
Namibia, Malawi, Kenya, Zimbabwe and South Africa can
share their experience and discuss their challenges. In this role
it is my responsibility to support my colleagues in embedding
responsible investment (RI) into the DNA of our investments
across selected Old Mutual Africa businesses.
In addition, I am the responsible investment ambassador for
the Zimbabwean business, and thus play an active role in
developing Old Mutual Zimbabwe's responsible investment
initiatives and building these out in the broader Zimbabwean
We do this by spearheading responsible investment thought
leadership in the country as part of our commitment to making
a positive contribution to the Zimbabwean economy.
This is important for us, as we believe that Old Mutual should be
the voice of change in influencing the way in which investments are made. Part of this is ensuring that people become aware
of the materiality of ESG factors in the investment process.
Jonathan: What do you think it means to be a
Marjorie: It means ensuring not only the creation of
sustainable businesses and economic systems through good
corporate citizenship, but the generation of long-term,
superior, risk-adjusted returns by seriously considering ESG
factors, when we invest and engage with the
management of investee companies.
Jonathan: Why is responsible investment so
important, and particularly for Africa?
Marjorie: The global investment themes have been evolving
and the 2007-2008 global financial meltdown brought
to the fore the increasing demands from both institutional
and individual investors to play a more active role in how
companies are managed. The importance of responsible
investment in Africa can never be overemphasised, as it
presents an overarching framework for the future of a healthy
investment environment in Africa. Africa is part of the set of
emerging frontier economies with huge growth potential and is
a major destination for capital flows from developed nations.
As a leading African business and asset manager, if we are to
harness and leverage the potential capital flows into the African continent, Old Mutual Africa needs to epitomise
responsible investment, thereby boosting our influence on
Africa’s corporate governance frameworks and our impact on
our society as a whole.
Jonathan: Is there a business case for responsible
Marjorie: Yes, definitely. Contemporary research on the
impact of responsible investment on performance indicates that
companies that incorporate ESG thinking into their operational
and strategic plans, are operationally efficient, and are
able to attract debt and equity funding more effectively than
companies that don’t. When it comes to adding alpha (excess
performance ahead of a benchmark or the market), companies
that are committed to embedding responsible investment in
their businesses tend to be winners, and thus attract more
foreign capital. So responsible investment is an important
strategy for African businesses. Our colleagues in South Africa
have developed an ESG indexation product that is based on
their responsible investment thesis. They use a best-in-class
approach and select the best 50% in each sector based on
their ESG screening. Their research illustrates and endorses the
outperformance of the ESG index relative to the market index.
Jonathan: What are some of the key regulatory
drivers and governance codes that drive
responsible investment in Africa?
Marjorie: Each country must comply with its own laws. For
example in Zimbabwe, the Companies Act guides the conduct
of and relations between companies and their stakeholders.
However, the Act is porous when it comes to a number of the
softer ESG issues, as it was enacted in 1951 and times have
changed since then. For listed companies, the Act is assisted
by the Listing Rules, which largely promote governance
aspects for all listed companies. The Act is currently under
review and improvements are expected. A positive milestone
in Zimbabwe’s responsible investment space was achieved in
April 2015 when the country launched its own National Code
on Corporate Governance, which provides the framework
for corporate conduct for both public and private sectors.
Governance drivers are also being developed in Kenya, such
as the Code of Corporate Governance Practices for Issuers of
Securities to the Public. However, despite this step in the right
direction, there is still a lot that needs to be done to bolster the
responsible investment initiative throughout Africa. A number
of our local companies also subscribe to the King III Code
on Corporate Governance in South Africa and, as a member
of the Old Mutual Group, we have adopted the corporate
Responsible Investment Standard.
Jonathan: What are some of the initiatives of the
Marjorie: During 2016, the committee stepped up its
efforts to increase awareness of responsible investment across
all the African business units, and we have launched proxy
voting policies for Malawi, Kenya and Zimbabwe. The
committee will also be responsible for embedding ESG issues
in the valuation models for analysts and in ensuring that all
Old Mutual Africa countries speak with the same voice when it
comes to responsible investment. Engagement with companies
on ESG issues has been in full swing in 2016, as we continue
to pioneer responsible investment in Africa. Efforts will also
be made to improve and increase the ESG research of listed
companies, and increase ESG capacity building.
Jonathan: Is ESG research limited in African
Marjorie: Yes, unfortunately coverage is still limited in Africa.
However, we are not letting that slow our momentum and we
are working closely with MSCI to deepen ESG research in the
markets in which we operate. Over and above this, we are
encouraging Old Mutual Africa countries to develop their own
internal ESG ratings on their investee companies as a stopgap
measure. This will complement the research that will later
come through from MSCI. We strongly believe that this is the
course of action we should take, as it is in firm support of our
responsible business agenda for 2016 and beyond.
Jonathan: How will this change the way that
Old Mutual Africa does business?
Marjorie: Responsible investment practices will place
us on an equal footing with how business is conducted in
developed nations, as these are the same issues that investors
and businesses in first-world countries are grappling with.
In addition, these initiatives will greatly increase the human
face of all our investments and enhance our competitive edge
across the African continent. I strongly believe that responsible
investment is the way of the future, and ensuring that we deliver
on the long-term goals of our customers in a sustainable and