Active ownership reporting among South African asset managers, and why it matters

Abstract

Orientation: Asset owners should be able to distinguish between asset managers based on their commitment, accountability, and quality of their environmental, social and governance (ESG) screening, and engagement practices.

Research purpose: Although there were 48 asset managers in South Africa who were Principles for Responsible Investment (PRI) signatories at the end of 2020, to the best knowledge of the authors this is the first academic study on the nature of active ownership reporting among South African PRI asset manager signatories.

Motivation for the study: Asset managers are often accused of greenwashing and reporting practices that are mere ‘box ticking’.

Research approach/design and method: The authors investigated the nature and extent of local PRI asset manager signatory active ownership reporting over the period 2016–2020, using content analysis and a self-constructed measurement instrument to ascertain the quality of reporting.

Main findings: Vast differences were noted in the depth and breadth of shareholder engagement reporting, and as expected, the size of the asset manager played an important role in the quality of reporting.

Practical/managerial implications: South African asset managers who claim to be responsible investors, by virtue of being PRI signatories, should ensure that public reporting accurately reflects their engagement activities and outcomes, given the potential reputational benefits and the increasing importance of ESG issues.

Contribution/value add: The research may be valuable to asset managers and owners seeking a competitive advantage within the growing RI sector, by highlighting the importance of clear and transparent disclosure.