Old Mutual issues open letter to South Africa company CEOs on ESG stance

Ignore ESG risk at your peril, investor tells top listed firms

South Africa’s Old Mutual Investment Group has outlined its position on ESG to the country’s listed companies in an open letter to CEOs, as the R650bn (€39bn) asset manager ramps up its engagements efforts.

The letter, which was also sent personally to the CEOs of the top 100 companies listed on the Johannesburg Stock Exchange (JSE), was published along with a full-page colour ad in two of South Africa’s leading newspapers.

The “clear message” to be drawn from the recent governance scandals to hit the country, the letter states, is “ignore ESG risk at your peril”, and it claims to seek to “establish an open dialogue” with the companies on the issue.
Three key areas of engagement are outlined:

1) Transformation: the contribution companies make to driving socially inclusive growth
2) Long-term sustainable strategy: towards a “sustainable business model”.
3) Ethical leadership.

The CEOs, who are called upon in the letter to show “leadership”, are also warned that that the level of change needed will “demand robust, frank engagements”, including a reassessment on “how we measure performance”.The letter was signed by the signed by the firm’s Managing Director, Khaya Gobodo and Director of Investments, Hywel George.

Jon Duncan Old Mutual’s Head of Responsible Investment, told RI that the firm has been “deepening [its] processes around engagement” over the last few years, including the hiring of a person dedicated to it within its five-strong responsible investment team.

The letter, he said, complements Old Mutual’s existing engagements with individual companies, and provides what he referred to as the firm’s “beta engagement”, that is, engagement with the whole market.

Old Mutual’s “strong public statement on ESG issues” was praised by Tracey Davies, Executive Director of shareholder activist non-profit, Just Share.

But the lack of detail on how Old Mutual would “monitor and measure” the companies and the absence of the phrase “climate change” in the letter was “disappointing” she said, especially “given that Old Mutual has taken the lead on engagement with Sasol [the South African energy giant] as part of the Climate Action 100+ initiative”.

To see our recent South Africa country snapshot, please click here.