Socially responsible investing is a topic that still does not get the necessary attention in the retirement fund industry. This is despite the fact that Boards of Trustees and Management Committees of retirement funds have a clear fiduciary duty in this regard. Corporate failures related to a lack of proper governance have destroyed close to R800 billion in value for retirement fund members in recent times. Uncertainties related to government policies such as prescribed assets have become an additional concern for members of retirement funds. As asset owners, retirement funds should have more influence in how corporates and government conduct themselves from an environmental, social and governance perspective. But nothing will change until the Boards of Trustees start taking their fiduciary responsibility in this regard more seriously. Corporate governance failures at companies such as Steinhoff, Resilient, EOH, MTN, British American Tobacco and most recently Old Mutual has again highlighted the role that retirement funds have to play as asset owners that represent the interest of fund members.

Constructive active shareholder engagement by asset managers on behalf of institutional investors like retirement funds, should seek to convince executive management of companies that they need to adopt a more strategic approach in how they conduct business. While it is important for Boards of Trustees and Management Committees to monitor the investment returns achieved by members, it is not sufficient for ensuring that members live in a stable and sustainable society once they retire. The recent Guidance Notice issued by the Financial Sector Conduct Authority (FSCA) on 14 June 2019 deals with the sustainability of investments and assets in the context of a retirement fund’s investment policy statement. This notice again served as a call to Boards of Trustees and Management Committees to start paying attention to this matter and provides guidance to boards of retirement funds on how and why they should comply with regulations relating to sustainable investing.

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