Investing responsibly for Investing for future: In the age of climate change governments and companies are voluntarily committing themselves to local and international disclosure about what they are doing to not only address environmental concerns, but also social and governance issues before investing and making decisions on investment activities. This is known as responsible investment. In South Africa, Government Employees’ Pension Fund (GEPF) has developed and adopted policies outlining the Fund’s approach to both responsible and developmental investment across its approximately US$130-billion portfolio. The changes that have seen South African investors increasingly required to pay attention to environmental, social and
governance (ESG) issues have been brought about by amendments to Regulation 28 of the Pension Funds Act, voluntary investor codes such as the UN-backed Principles for Responsible Investment (PRI), and the launch of the Code for Responsible Investing in South Africa (Crisa). These developments are a call to action for pension fund trustees and their service providers to align the fund’s investment policy, strategy and reporting frameworks to the new legislation and non-mandatory market-based investor codes, says Adrian Bertrand, ESG manager for the GEPF. The World Wide Fund for Nature, in a discussion paper on how to accelerate South Africa’s transformation towards a more sustainable and equitable economic future
concluded that there was no doubt that sustainable investment “is no longer just an academic exercise”, integration of ESG factors into investment decisions remained a work-in-progress.
Adria n Bert ra Mana ger fo nd, ESG r the G EPF.
The GEPF is a leader in responsible investment in South Africa, and is setting the example for other institutional investors, particularly pension funds, to follow suite in a new approach to investment analysis by including ESG factors into investment decision making and ownership practices.
Who’s Government Employees’ Pension Fund? • The largest pension fund in Africa; • One of the 10 largest pension funds in the world; • A defined benefits fund underwritten by South African government and governed by a board of trustees; • The GEPF was established following proclamation of the Government Employees Pension Law of 1996; • By far the most powerful investor in the South African economy with significant holdings in South African government issued bonds, including more than 50% of the government inflation-linked bond portfolio, corporate bonds, listed equity, including 10% of the Johannesburg Stock Exchange (JSE) All Share Index, as well as unlisted equity, and property; • The GEPF Portfolio of Investments equal a third of South Africa’s GDP; • The GEPF’s Developmental Investment Portfolio is limited to 5% of the GEPF’s total investment portfolio.
GEPF has (as at March 31 2012) • 1.242 million contributing members • 345 000 pensioners and beneficiaries • Net assets of approximately US$130 billion GEPF members include soldiers, policemen and women, teachers, social workers, nurses, doctors, teachers, school principals, clerks, directors-general and all other employees in the South African public service. Important: Any constraints on South Africa’s ability to grow its economy will have a similar impact on GEPF. GEPF is not a charity, donor, patient capital investor, DFI, or government.
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GEPF board of trustees believes that: Savings are not to be given away or put at higher risk without commensurate reward. Any additional risk should be compensated by additional returns, as the Fund has no intention of mis-pricing risk at the expense of its members and pensioners. Which international initiatives have we signed as a supporting investor? The UN-backed Principles for Responsible Investment (PRI) – and is one of more than 1,000 investors who have signed up and who collectively represent in excess US$30-trillion in assets under management. The Carbon Disclosure Project, an independent non-profit organization holding the largest database of primary corporate climate change information in the world.
We have also signed the 2011 Global Investor Statement on Climate Change which is to advocate for investment grade climate change and energy policies at the national and international level. Bodies that form part of the 2011 Global Investor Statement on Climate Change include the Institutional Investors Group on Climate Change (IIGCC) and the United Nations Environment Programme Finance Initiative (UNEP FI).
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