Suzette Viviers

Key challenges facing the socially responsible investment (SRI) sector in South Africa

ABSTRACT This study explores the factors that impact the growth and development of the Socially Responsible Investment (SRI) sector in South Africa. In addition it investigates the role that SRI has to play in ensuring sustainable economic growth and development for South Africa going forward. Consistent with earlier research, the studys findings suggest that there are a number of factors which directly impact the growth and development of the local SRI sector. The success of the local SRI sector is dependent on a solid understanding of the concept as well as the ability of the various stakeholders to overcome the identified challenges.

Responsible investing in South Africa

ABSTRACT Given growing interest in the phenomenon of Responsible Investing (RI), both locally and internationally, the purpose of this paper is to provide an overview of the RI sector in South Africa. It focuses on the definition and characteristics of RI within the South African context; the size and nature of the local RI sector and the obstacles which impede on the growth of the local RI sector. Recommendations are made on overcoming these barriers. It is suggested that local institutional investors drive the rebranding of RI in South Africa and that more RI products be developed to cater for the diverse needs of RI investors, both locally and internationally.

The risk-adjusted performance of responsible investment funds in South Africa

Empirical evidence shows that the phenomenon of responsible investing (RI) is gradually moving from a fringe investment strategy to a mainstream consideration in the global investment arena (Knoll, 2002:681; Schueth, 2003:189). Responsible investing essentially refers to a set of approaches which include moral as well as environmental, social and corporate governance (ESG) considerations along with conventional financial criteria in decisions regarding the selection, retention and realisation of particular investments (Mansley, 2000:3).

Perspectives on capital budgeting in the South African motor manufacturing industry

Purpose – Capital budgeting is a key issue in corporate finance and over time major theoretical developments have been incorporated into the appraisal processes of capital intensive companies. The purpose of this paper is to investigate the capital budgeting practices of a sample of motor manufacturing companies in South Africa and compare the empirical findings to the existing literature in order to establish whether the theoretical aspects are still widely practiced. Design/methodology/approach – Semi-structured personal interviews were conducted with respondents at eight motor manufacturers in the Eastern Cape and Gauteng provinces of South Africa. Findings – The net present value (NPV) and internal rate of return criteria are the two most popular appraisals methods used in practice. Most respondents used multiple criteria before making substantial capital investments. These findings conform to contemporary capital budgeting theory. Practical implications – Financial managers should first calculate the discounted payback period of a project before embarking on a more detailed analysis. Once all the data are available, NPV should be used as the primary means of evaluating investments, as this criterion gives the best indication of how much shareholder value the project will add. It is further recommended that more attention be given to “green” considerations in the capital budgeting process. Originality/value – The paper evaluates the applicability of existing literature on capital budgeting to the practice thereof in a capital intensive industry in South Africa. No similar study has been done previously.

The relative importance of ethics, environmental, social and governance criteria

Responsible investing (RI) is a growing phenomenon in the international investment arena. This article investigates the level of knowledge of members of South African pension/provident funds with regard to RI and the importance with which they view various ethical, environmental, social and governance (ESG) criteria. Respondents (n = 281) indicated a relatively low level of understanding of the concept of RI. Significant differences were noted in the perceptions of respondents about the relative importance of ethical and ESG criteria based on their gender and level of education. The findings could assist asset owners in reformulating their investment mandates, which in turn, will enable fund managers to invest in a more responsible manner.

Does business education cultivate environmental citizenship

Reductive management theories (based on the utility maximisation economic model) are increasingly being criticised as the cause of recent corporate scandals. Management education has neglected the interwovenness of humans and the environment, and the moral obligation of businesses towards the natural environment. This study identified perceptions of students and academics at a prominent South African university regarding levels of environmental awareness and values, implications of environmental management, environmental education, pro-environmental behaviours, and incentives to go green, using a questionnaire. The results revealed that business students and academics differ from their counterparts in other faculties regarding perceptions of factors that influence environmentally responsible citizenship.

Executive performance evaluation and remuneration: Disclosure and practices of selected listed South African companies (2002−2015)

Given growing inequality in South Africa, shareholders are increasingly questioning the size and composition of executive remuneration packages. They are also demanding greater transparency on the criteria and processes used to award performance incentives. The researchers hence investigated the extent and depth to which a sample of companies listed on the Johannesburg Stock Exchange (JSE) disclosed details on their executive performance evaluations. Attention was furthermore given to whether these companies reported a link between their executives’ pay and performance. The criteria and time frames used to evaluate and reward executive performance were also explored. Content analysis was performed on 2 136 annual/integrated reports over the period 2002 to 2015. Semi-structured personal interviews were also conducted with six directors serving on local remuneration committees. Controlling for company size, a significant increase was noted in the number of JSE-listed companies that disclosed information on their executive performance evaluations over the research period. The depth of these disclosures, however, remains superficial. As such, shareholders are constrained in their ability to hold remuneration committees accountable. These committees are encouraged to adopt a wider range of performance criteria and re-assess their focus on short-term performance. It is also suggested that commerce educators cultivate an appreciation for long-term, sustainable value creation among graduates.