Tuesday, 7 September 2010

South Africa: the Code for Responsible Investing by Institutional Investors - draft published

A draft of the Code for Responsible Investing by Institutional Investors in South Africa has been published: see here (pdf). The purpose of the Code, in conjunction with the King III Code, is "to provide a voluntary framework that can be used to ensure that sound governance is practised. The framework relates to the governance role of boards of companies, institutional shareholders and the ultimate beneficiaries".

The Code will operate on the 'apply or explain' basis and contains the following four principles:
  • An institutional investor should incorporate ESG [environmental, social and governance] considerations into its investment analysis and activities as part of the delivery of superior risk-adjusted returns to the ultimate beneficiaries.
  • An institutional investor should demonstrate its ownership approach in its investment arrangements and activities.
  • Where appropriate, institutional investors should consider a collaborative approach to promote acceptance and implementation of the principles of this Code and other codes and standards applicable to institutional shareholders.
  • Institutional investors should be transparent about their policies how the policies are implemented, and how the Code is applied to enable stakeholders to make informed assessments.
Further background information (including how to comment on the draft) is available here.

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