Chronicle EditorBusiness Reporter—
LOCAL pension funds should start looking at incorporating Environmental, Social and Governance issues in their investment policy statements in line with global trends, the Zimbabwe Association of Pension Funds has said.The ESG is a set of standards for a company’s operations that socially conscious investors use to screen investments. The environmental aspect of the ESG looks at how a company performs as a steward of the natural environment.
It focuses on issues such as energy use, waste, pollution, natural resource conservation and animal treatment.
It also evaluates, which environmental risks might affect company’s income and managing those risks.
ESG’s social element examines how a company manages relationships with its employees, suppliers, customers and the communities where it operates.
Governance deals with a company’s leadership, executive pay, audits and internal controls, and shareholder rights.
In a note members, the Zimbabwe Association of Pension Funds said responsible investment had become a global agenda that will ensure sustainable development of economies.
The issue was on the agenda of ZAPF’s 2016 annual conference which was held in Johannesburg, South Africa.
ZAPF subsequently sent two representatives to the World Conference on responsible investment where institutional investors and investment managers such as asset owners discussed progress that they have made in implementing ESG factors.
“Asset owners the world over, have accepted that incorporating ESG factors is part of the 21st century fiduciary duties to clients and beneficiaries,” said ZAPF this week.
“Responsible investment is no longer just a moral issue, but an investment issue because it has an impact on risk and return in the long run.
“It has become a global agenda that will ensure sustainable development of economies. Economies cannot just focus on one aspect of development.
“There is need to look at the impact of economic activity on the environment and to channel resources for production and consumption in ways that ensure sustainability and making responsible investment a part of good business.
“Just as health and safety has become a necessity in well run companies, so has responsible investment become an integral part of the investment business.
“In line with global trends, council encourages all ZAPF members to incorporate ESG issues in their investment policy statements, outlining the Pension Fund’s expectations and to communicate these expectations to fund managers.”
Early this year, the United Nations PRI representative for Africa and the Middle East conducted an introductory seminar for ZAPF members in February 2016, and a follow up workshop will be held in February 2017.
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