Responsible investing

One of the more significant changes in the global investment industry over the past two decades has been the continuing rise of responsible investing approaches. This period also saw the establishment of the private equity industry in Africa, with the development finance community playing a key role as cornerstone investors. This has inevitably created an industry in which environmental, social and governance (ESG) practices have been ingrained, and which by its nature is more impactful than in other regions.

Responsible investing approaches vary based on several factors which include geography, asset type, and investor type. These can range from negative screening (using selection criteria that screen out companies that have exposure to themes that are deemed to be unacceptable), to positive screening (which similarly seeks exposure to companies with desirable themes), to ESG integration, impact investing, as well as program- and mission- related investing.

The specific ESG factors are typically dependent on the company, geography and/or industry-specific contexts.

‘Responsible Investing’ an investment strategy which seeks to generate both financial and sustainable value, and fully integrates environment, social and governance (ESG) factors into investment management.