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The need for academic and research intervention in Corporate ...

  1. 1. The need for academic and research intervention in Corporate Citizenship – Introducing the CCC Presented by: Prof Derick de Jongh 8 August 2006 Responsible Investment Seminar 30 th August 2006 By Prof. Derick de Jongh & Samuel Payne
  2. 2. International reality U N Secretary-General Launches “Principles for Responsible Investment” “ Developed by leading institutional investors, the Principles provide a framework for achieving better long-term investment returns and more sustainable markets. I invite institutional investors and their financial partners everywhere to adopt these Principles” Kofi Annan 27 April 2006 =475&ArticleID=5265&l=en
  3. 3. Local reality State pension fund to turn up heat on corporate SA The country's biggest retirement fund, the Government Employees Pension Fund (GEPF), has issued a strong warning that it will use its financial might to force corporate South Africa to shape up in the areas of good governance, social responsibility and environmental protection. 28th May 2006 http:// =3264739
  4. 4. What does it mean? Most of the investment today is conducted by a small number of institutional investors, pension funds and investment managers — who manage the pensions and saving funds of millions of people around the globe. (Sullivan & Mackenzie, 2006) The biggest question is how do these institutional investors invest and discharge their responsibilities for a better social, economic and environmental world of tomorrow…..
  5. 5. <ul><li>Responsible Investment </li></ul><ul><li>An approach that integrates economic, social, environmental and corporate governance (ESG) considerations into the investment process </li></ul><ul><li>A framework to evaluate market structures, corporate performance and long-term investment policies and prospects </li></ul><ul><li>A mechanism to support sustainable economic development with financial returns plus social, corporate governance and environmental rewards. </li></ul>
  6. 6. <ul><li>The drivers….. </li></ul><ul><li>Globalization, economic growth, technological progress, deregulation and privatization allowed capital and ownership to spread from the 1980s (investors can choose where they want to trade) </li></ul><ul><li>Corporate impacts and power of capitalism challenge legal frameworks and national policies – affecting capital and labour markets including pension funds </li></ul><ul><li>1990’s brought explosive SRI growth with SRI forums and indices </li></ul><ul><li>By 2006 Kofi Annan launched the PRI, over $4 trillion under management with ESG instruments, principles, objectives and practices. </li></ul>
  7. 7. <ul><li>The drivers (continued)….. </li></ul><ul><li>Media and public attention </li></ul><ul><li>Investors protecting their investments </li></ul><ul><li>Leading sustainability performers call for more transparency, accountability and stakeholder value creation </li></ul><ul><li>Advocacy & engagement – encourage constructive influence and business alignment </li></ul><ul><li>Formal resolutions – increasing proxy voting on recommendations to companies during annual general shareholders meetings </li></ul>
  8. 8. <ul><li>The drivers (continued)….. </li></ul><ul><li>Negative & positive screening </li></ul><ul><li>ESG reporting as a tool to attract broad stakeholders including customers and investors </li></ul><ul><li>Impact of increased disclosure and managing public perception </li></ul><ul><li>Increased debate on risk - return when including ESG factors on a company’s performance </li></ul><ul><li>Emerging markets crucial for northern pension funds in terms of growth and investments </li></ul>
  9. 9. <ul><li>The SA landscape </li></ul><ul><li>Weak general performance of RI funds in S.A. </li></ul><ul><li>Low levels of awareness of investing public </li></ul><ul><li>Limited willingness among the S.A. community to consider ESG in investments </li></ul><ul><li>ESG regarded as price sensitive issues </li></ul><ul><li>Immense opportunities based on current frameworks </li></ul>
  10. 10. <ul><li>The role of the CCC in RI? </li></ul><ul><li>Raise awareness by hosting seminars related to ESG issues </li></ul><ul><li>Offer courses related to ESG </li></ul><ul><li>Academic research into RI from a South African and African perspective is needed i.e. RI survey </li></ul>
  11. 11. We are proud to announce: The Noah Chair in Responsible Investment in the Unisa College of Economic and Management Sciences, Centre for Corporate Citizenship
  12. 12. Thank you!