Code for Responsible Investing in South Africa formally launched
The Code for Responsible Investing in South Africa (CRISA) has been launched, making South Africa one of two globally to encourage institutional investors to make decisions that are centred on environmental, social and governance (ESG) matters. This code is directed at institutional investors such as pension funds and insurance companies as well as asset managers and consultants. It hopes to encourage shareholders and companies to operate in the concept of responsible investing.
CRISA aims to provide the investor community with the guidance needed to give effect to the King III Report as well as the United Nations-backed Principles for Responsible Investment (PRI) initiative. Both require institutional investors to take ESG issues seriously and the new code encourages best practice conduct by shareholders and companies.
The code was drawn up by the Institute of Directors (IOD,) the members of the King III committee and endorsed by the Principal Officers Association, the Association for Savings and Investment South Africa, the Financial Services Board and the Johannesburg Stock Exchange.
Mr Gordhan, affirmed that institutional investor should make decisions that are centred on environmental, social and on governance (ESG) issues and they are tasked with the responsibility to ensure that they invest in a way which promotes long-term sustainability. The new regulation 28 requires pension fund trustees to consider ESG factors and broader developmental factors that may affect the sustainable long-term performance of an asset before making investment decisions.
This code will be treated as a voluntary guide that institutional investors should use when implementing operational policies and the daily plan.
At the start CRISA comprised four principles but after consulting with other stakeholders, the fifth principle addressing conflict of interest was added. These principles of CRISA are supported by the Financial Services Board (FSB) and the Johannesburg Stock Exchange (JSE).
CRISA's five principles
The Code requires institutional investors to publicly inform their stakeholders annually on how they have applied the five principles the Code. If they fail to apply one of the principles, they must also disclose their barriers in public.
