We have a screen which takes into account major global risks and/or activities such as:
- Production or trade in ozone depleting substances
- Drift net fishing in the marine environment using nets in excess of 2.5 kilometres in length.
(These are just two examples). Please note these screens do not automatically lead to a decision not to invest but instead helps to flag major risks.
Beyond this, the team has developed an ESG management systems which assess potential investors with over 150 environmental, social and governance factors to determine risks and opportunities for that particular investment. Post investment, the team will then use this opportunity to engage with the company (or issuer), and the wider ecosystem, to improve/mitigate any ESG risks identified.
We believe that the South African (and pan-African) opportunity set to be narrow compared to say Europe or the USA, and as such have decided to focus on an integration and engagement based approach to ESG integration. On the other hand, an exclusion (or negative screening) based approach would drastically reduce the South African (and pan-African) fixed income opportunity set, and make efficient portfolio construction a challenge.