South Africa’s largest asset management firms are lagging their global counterparts in responsible investment practices, nonprofit organisation Just Share’s ‘Asset Manager Responsible Investment Benchmark 2025’ report reveals.

The report assessed the performance of 20 of South Africa’s largest asset management firms against key standards that reflect best practice for responsible investment across four areas: governance and stewardship, climate change, biodiversity and social impacts, providing overall rankings and key findings across the different areas.

The report used survey methodology developed by UK-based nonprofit organisation ShareAction, enabling Just Share to benchmark South Africa’s largest asset management firms against global best practices for responsible investment.

The report found that South African asset management firms are now lagging in meeting global best practice, incongruent with their claims of commitment to responsible investment practices for over 15 years.

A total of 20 key standards were identified across the themes in the survey – six in the climate change section, five each in biodiversity and social impacts, and four in governance and stewardship.

The top performing asset manager in the Just Share survey received a “D” Grade and a score of 30%.

This would have put the asset manager at a tied twenty-fourth place out of the 76 global asset managers covered in the global ShareAction report.

The asset manager met only a quarter of the key standards.

Comparatively, ten of the 76 asset managers assessed by ShareAction achieved more than half of the key standards.

The majority (65%) of the assessed South African asset managers received an “E” Grade, for meeting between one and three key standards, while four received an “F” Grade, for failing to meet any of the key standards.

Only three asset managers met four or five of the key standards to achieve a “D” grade.

The majority (85%) of the South African asset managers surveyed received an “E” or “F” grade, with scores below 25%.

By comparison, 51% scored “E” or “F” grades in the global ShareAction Report.

These results show that, across the sector, South African asset managers are underperforming in comparison to international peers in terms of responsible investment practices, Just Share states.

Outlining key findings from the report on February 25, Just Share senior analyst Karishma Bhoolia explained that there were three reasons for the performance gap.

The first was inadequate disclosure, with public claims not being substantiated by transparent data. This undermined accountability and limited assessment, she pointed out.

There is also weak stewardship, with a preference for ad-hoc or “closed door” engagements, reflecting the lack of robust policies, clear engagement objectives and meaningful escalation tactics.

Lastly, there was inaction on systemic risks. Despite the country’s heightened exposure to both physical and transition risks, current practices had limited real world impact, she warned.

Key points from the report include that South African managers lag behind their global peers in addressing climate change and biodiversity risks.

The majority of South African managers have not set science aligned decarbonisation targets, nor have they assessed the biodiversity risk of their portfolios, the report shows.

There is also a notable disconnect between South African asset managers’ claimed intentions on social development and the just transition and their capital allocations. Despite half of the surveyed managers emphasising the importance of a just transition, evidence of this translating into capital allocation shifts remains minimal, the report reveals.

South African asset managers claim to favour engagement with investee companies over exclusions and divestment, but reported engagements fail to set clear objectives over stipulated timeframes with steps for when engagements fail, the report indicates.

The data in the report is updated to end June 2025; therefore, there is a possibility that asset managers may have addressed some of the gaps noted in the interim.

Several firms did indicate that they were working on updated policies and processes, but these had not been finalised for the purposes of assessment for the report.

Just Share is recommending that asset managers use the benchmark to identify and address key areas for improvement.

It also calls for them to considerably improve public disclosure on policies, engagement approaches and portfolio metrics.

Moreover, they should build clear, timebound escalation triggers into engagement policies, the organisation suggests.

Just Share says asset owners and consultants should use these findings to challenge asset managers; integrate this benchmark into manager selection and review process; and set clear, best-practices expectation for responsible investment performance in investment mandates.

The organisation advises policymakers to identify sector-wide weaknesses to determine appropriate policy actions. Moreover, they should use examples of leading global practice as evidence of what can be achieved; and should also consider mandatory disclosure requirements to bolster standards industry-wide.

Bhoolia pointed out that the benchmark was not a set of “impossible ideals”, but rather, a measure of what was already being achieved, and the question was whether "those entrusted with the retirement savings of millions in the country" would rise to meet it.