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Our Responsible Investing Report | 2023, ESG Reporting – Disclosure Frameworks

| Inside Institutional, Sustainable Investing

Our Responsible Investing Report | 2023

Driving sustainability through transparency and stewardship

We are proud to share our latest Responsible Investing Report, which looks back on another year of achievements in sustainable and impact investing.

The 2023 Responsible Investing Report is an all-encompassing testament to our efforts to pursue responsible investment practices at a time when SA is facing a number of critical challenges. These challenges include energy security, water scarcity, high unemployment and social inequality.

“We understand that these issues not only pose risks to the companies in which we invest,” said Carl Roothman, CEO of Sanlam Investments, “but also present opportunities for us to deploy our available capital to address them head-on to make a tangible impact in the communities in which we operate.”

Transparency in ESG reporting

One of the key themes to emerge in this year’s report is transparency in sustainability reporting. Tinyiko Mabunda, ESG analyst at Sanlam Investments, acknowledged that companies’ unwillingness to disclose their ESG integration data is a major challenge  when assessing them. However, this is slowly starting to change as ESG frameworks, such as the Global Reporting Initiative, are becoming more widely accepted.

“There are many ESG reporting frameworks internationally and there is a trend towards aligning these frameworks to create a unified standard,” she said. “Convergence will strengthen the integrity of company information for improved decision-making by all stakeholders.”

Mabunda added that Sanlam Investments is a strong proponent of transparency in sustainability reporting, which was one of the key drivers in launching the Sanlam ESG Barometer in March 2023 with Intellidex. “The barometer is well positioned to offer companies an opportunity to highlight their ‘ESG additionality’ to investors,” she commented. “Investors will now be able to better assess the quality of companies’ ESG integration.”

Vision for the future

“The report not only records our achievements, but articulates our vision for the future and our commitment to driving sustainable investing practices across our organisation and in the communities around us,” said Roothman. “It is designed to provide transparency, accountability and tangible proof points in line with the high ESG standards we expect from our underlying investments.”

Download the full report here, which outlines all Sanlam Investments’ sustainable and impact investing efforts over the last year.

 

ESG Reporting –  Disclosure Frameworks

By Tinyiko Mabunda, ESG and Impact Analyst

The content in this piece is an extract from our 2023 Responsible Investing Report that can be accessed here.

Environmental, Social and Governance (ESG) integration has become an indispensable tool in the responsible investing universe. However, the variability, or complete lack of ESG disclosures by companies presents a major challenge for investors.

Both institutional and retail investors are increasingly taking non-financial considerations into account in making investment decisions, but this interest is not matched by companies’ disclosures of non-financial information. Similarly, more asset managers are incorporating some form of ESG integration into their investment processes, but this relies on investee companies providing ESG information in alignment with available disclosure guidelines.

The emergence (and refinement) of ESG frameworks has steadily expanded over the past 20 years. In June 2022, the JSE issued the Sustainability and Climate disclosure Guidance notes, adapted for the South African market. The Guidance documents are aligned with the IFRS Sustainability Disclosure Drafts, the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, Sustainability Accounting Standards Board’s (SASB) standards, the Global Reporting Initiative (GRI) Sustainability Reporting, Draft European Sustainability Reporting Standards (ESRS) and the Sustainable Development Goals recommendations. The JSE disclosure guideline is intended to assist JSE-listed companies and will also be useful to investors seeking to integrate ESG into their processes.

Globally, there is a convergence of reporting frameworks and guidelines. This alignment will contribute to creating standards that are unified and comparable, thereby strengthening the integrity of company information for improved decision-making by all stakeholders.

Sanlam’s ESG barometer is intended to strengthen the quality of ESG practices by JSE-listed companies by assessing how companies are changing their businesses to deliver improved ESG outcomes. As the world moves towards standardised reporting frameworks and disclosures, the ESG Barometer offers companies an opportunity to highlight to investors their “ESG additionality”.

At Sanlam Investments, we believe the incorporation of our ESG reporting framework and guidelines to our investment philosophy and processes ensures that we drive our vision on sustainable investing and impact, we remain accountable to our sustainability objectives, and that we promote relevant disclosure of ESG information in the market. Although disclosure of sustainability reporting is largely voluntary at present, over time, ESG reporting will no longer be a “nice-to-have” but a “must-have”. Future-ready companies must ensure they are ahead of the ESG curve.

 

Disclaimer:

Sanlam Investments consists of the following authorised Financial Services Providers: Sanlam Investment Management (Pty) Ltd (“SIM”), Sanlam Multi Manager International (Pty) Ltd (“SMMI”), Satrix Managers (RF) (Pty) Ltd, Graviton Wealth Management (Pty) Ltd (“GWM”), Graviton Financial Partners (Pty) Ltd (“GFP”), Satrix Investments (Pty) Ltd, Amplify Investment Partners (Pty) Ltd (“Amplify”), Sanlam Africa Real Estate Advisor Pty Ltd (“SAREA”), Simeka Wealth (Pty) Ltd, Absa Asset Management (Pty) Ltd (“ABAM”) and Absa Alternative Asset Management (Pty) Ltd (“AAM”); and has the following approved Management Companies under the Collective Investment Schemes Control Act: Sanlam Collective Investments (RF) (Pty) Ltd (“SCI”), Satrix Managers (RF) (Pty) Ltd (“Satrix”) and Absa Fund Managers (RF) (Pty) Ltd. Sanlam is a full member of ASISA. Please note that past performances are not necessarily an accurate determination of future performances, and that the value of investments/collective investment units/unit trusts may go down as well as up.

Although all reasonable steps have been taken to ensure the information in this document is accurate, Sanlam Investment Management (Pty) Ltd does not accept any responsibility for any claim, damages, loss or expense, however it arises, out of or in connection with the information in this document. No member of Sanlam gives any representation, warranty or undertaking, nor accepts any responsibility or liability as to the accuracy of any of this information. This document is intended for information purposes only and the information in it does not constitute financial advice as contemplated in terms of the FAIS Act. Use or rely on this information at your own risk. Independent professional financial advice should always be sought before making an investment decision. Past performance is not a guide to future performance. Changes in currency rates of exchange may cause the value of your investment to fluctuate. The value of investments and income may vary and are not guaranteed.

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Sanlam Investments consists of the following authorised Financial Services Providers: Sanlam Investment Management (Pty) Ltd (“SIM”), Sanlam Multi Manager International (Pty) Ltd (“SMMI”), Satrix Managers (RF) (Pty) Ltd, Graviton Wealth Management (Pty) Ltd (“GWM”), Graviton Financial Partners (Pty) Ltd (“GFP”), Satrix Investments (Pty) Ltd, Amplify Investment Partners (Pty) Ltd, Sanlam Capital Markets (Pty) Ltd (“SCM”), Sanlam Credit Fund Advisor Proprietary Limited, Sanlam Africa Real Estate Advisor Proprietary Limited and Sanlam Employee Benefits (“SEB”), a division of Sanlam Life Insurance Limited and Simeka Wealth (Pty) Ltd; and has the following approved Management Companies under the Collective Investment Schemes Control Act: Sanlam Collective Investments (RF) (Pty) Ltd (“SCI”) and Satrix Managers (RF) (Pty) Ltd (“Satrix”).

The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium- to long-term investments. Please note that past performances are not necessarily an accurate determination of future performances, and that the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available from the Managers, Sanlam Collective Investments (RF) Pty Ltd & Satrix Managers (RF) (Pty) Ltd, a registered and approved Managers in Collective Investment Schemes in Securities. Additional information of the proposed investment, including brochures, application forms and annual or quarterly reports, can be obtained from the Manager, free of charge. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in the portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of the portfolio and the investor will differ depending on the initial fees applicable, the actual investment date, and the date of reinvestment of income as well as dividend withholding tax. Forward pricing is used. The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The performance of the portfolio depends on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-div date. Lump sum investment performances are quoted. The portfolio may invest in other unit trust portfolios which levy their own fees, and may result is a higher fee structure for our portfolio. All the portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No 45 of 2002 (“CISCA”). The fund may from time to time invest in foreign instruments which could be accompanied by additional risks as well as potential limitations on the availability of market information. The Manager has the right to close any portfolios to new investors to manage them more efficiently in accordance with their mandates. The portfolio management of all the portfolios is outsourced to financial services providers authorized in terms of the Financial Advisory and Intermediary Services Act, 2002. Standard Bank of South Africa Ltd is the appointed trustee of the Sanlam Collective Investments Scheme & Standard Chartered Bank is the appointed trustee of the Satrix Managers Scheme.