Strong momentum for asset manager’s sustainable investment ambitions 

Sanlam Investments was ranked one of the leading investment managers across five impact investment categories in the African Investing for Impact Barometer, released earlier this year. The findings demonstrate how the investment house, one of South Africa’s largest black owned asset managers, is delivering on its commitment of leading sustainable investment across the continent. 

In its 2022 Sustainable Investments and Impact Report, released today, Sanlam Investments outlines the extent of its sustainable investment activities over the past year. These include:

18* active in-house shareholder engagements between quarter three of 2021 and quarter two of 2022 spanning remuneration practices, board strength and diversity, ESG controversy, environmental risks and multiple ESG issues.

3 976 shareholder resolutions through proxy voting between the third quarter of 2021 and second quarter of 2022, 90% voted for and 10% voted against. Of those voted against, 46% was for declining resolutions related to remuneration, 33% against director re-election/appointment, 16% against access to capital.

Investments through the Investor’s Legacy Range, an initiative launched during Covid-19 to help the economy and business recover by financing business and helping create or preserve jobs.

Nersan Naidoo, CEO of Sanlam Investments, says the asset manager’s commitment to embedding sustainable investing in every aspect of the business has gathered steam over the past year. “2021 was about laying foundations; we formed a partnership with international asset manager and leading sustainable investment house, Robeco, staffed up with experts in this area and developed ways of working. What we’ve seen in 2022 is strong momentum and real, measurable outcomes.”

Sanlam Investments scored highly in the barometer categories of ESG Integration, Investor Engagement, Screening, Sustainability-themed Investment and Impact Investing. Naidoo says this independent review shows that the company’s ambitions are showing up strongly in its day-to-day activities. 

With over R540-billion in assets under management, the business is using its financial muscle to invest for impact in the areas of environment, society and governance. 

“Our well-defined processes allow us to make investment decisions based not on ‘noise’ but on the reality of what is going on in a company. Glencore, a case study outlined in the Sustainable Investments and Impact report, is one example of this. We’ve dug deeply into the stock and recognise that it has a huge role to play in the circular economy. Besides being a supplier of transition metals like copper, cobalt, nickel and zinc, the group intends to also play a major role in the recycling of end-of-life electronics, batteries and battery metals,” said Naidoo.

While it may take some time for a market applied “governance discount” to be fully removed, Glencore now has above average preparedness measures to address potential further bribery and corruption issues. “We therefore believe the risks of similar market manipulation incidents re-occurring are now significantly diminished. Overall, we believe that the potential upside far outweighs the risks the company faces – even after taking ESG factors into account.”

Naidoo says, “Investing for impact and sustainability can be driven more rapidly through alternative investments than listed entities. We have seen quick and profound successes from our Private Equity, SME Debt teams and Infrastructure teams. Much of our early impetus has come from those areas.

“Driven to reduce inequality in South Africa, the Investor’s Legacy SME Debt Fund has provided finance to small and medium businesses and, in the process, protected or created thousands of jobs. Investing in the Devland social housing project in Soweto is a great example. The construction of 26 three-storey buildings of 870 one-, two- or three-bedroom rental apartments has helped to facilitate housing in a part of the rental market that is vulnerable and underserved. As a ‘green certified’ project, Devland will save 20% in building electricity and 20% in water,” he says.

Another project with tangible impact is Sanlam Investments’ Private Equity team’s investment in Absolute Pets. The specialised pet food and supplies retailer expects to open at least 15 new stores next year, creating three to four new jobs per store. The investment also helped secure the jobs of the existing 370 full-time staff members. 

The Sanlam Investments Sustainable Infrastructure Fund was launched in September 2021 with the goal of investing in local projects for market development and job growth. With an emphasis on economic development and environmental sustainability, the team has transactions worth approximately R750m in the pipeline. 

Notably, the Bokpoort Concentrated Solar Power plant is one of the first concentrated solar power projects under the South Africa’s Renewable Energy Independent Power Producer Programme. The plant has 50 MWe net power output, but because the project is equipped with thermal storage, the plant can provide electricity to the national grid for up to nine hours after sunset.

Naidoo concludes: “The past two to three years have been seminal for us. Not only is our commitment to investing for good coming through externally, but also internally, with a series of staff-driven sustainability projects. These include a roof-top vegetable garden at our Tygervalley offices as well as vegetable gardens at Valley Pre-Primary and Klippies Kids Pre-School, feeding over 600 children daily and, making an impact on the communities in which we operate.

“In the National Development Plan, it states that we have inherited a mixed legacy of inequalities in South Africa. In navigating a new world to create positive outcomes and mitigate the negative ones, asset managers need to work together with the public sector and each other to change the narrative and alter the course of history. As 2050 and net zero rapidly approach we look forward to playing an increasingly meaningful role every year going forward.”