Medical Scheme Investment Conference 2012 Should ESG/CRISA considered when making investment decisions?

Transcription

1 Medical Scheme Investment Conference 2012 Should ESG/CRISA considered when making investment decisions? Xolisa Dhlamini Independent Actuaries and Consultants August 2012 Contents Background to Responsible investing principles UNPRI/CRISA Timeline UNPRI in brief CRISA in brief Questions for Discussion 1

2 Timeline UN Secretary-General invites a group of the world's largest institutional investors to join a process in developing the Principles for Responsible Investment South Africa becomes 3 rd country in the world to launch PRI Network led by GEPF Code for Responsible Investing in South Africa launched July Principles of responsible investing incorporated in Regulation 28 of the Pension Funds Act (Equivalent of Regulation 30 of Medical Schemes Act) UN Principles of Responsible Investing launched in April 2006 with 20 founding members including GEPF. First Draft Code for Responsible Investing by Institutional Investors released in South Africa for public comment CRISA affective from 1 February 2012 What are the UNPRI Reflect the view that environmental, social and corporate governance (ESG) issues can affect the performance of investment portfolios and therefore must be given appropriate consideration by investors if they are to fulfil their fiduciary (or equivalent) duty. 6 Principles providing a voluntary framework by which all investors can incorporate ESG issues into their decision-making and ownership practices. Signatories commit to: Incorporating ESG aspects into investment analysis and decision-making processes. Being active owners and incorporating ESG issues into their ownership policies & practices. Seeking appropriate disclosure on ESG issues by the entities in which they invest. Promoting acceptance and implementation of the Principles within the investment industry. Working together to enhance their effectiveness in implementing the Principles. Each reporting on their activities and progress towards implementing the Principles. 2

3 UNPRI Signatories Number of signatories * Globally South Africa Asset owners Investment managers Professional service partners Total SA Asset owners consists of 2 Retirement Funds and 2 Insurance Companies Less than 10 Medical Schemes globally. (Out of 259 asset owners) No SA Medical Schemes signed up yet ( out of 95 Registered schemes on Council of Medical Schemes **) Sources * ** What is the CRISA Voluntary framework providing guidance to institutional investors in executing investment analysis, investment activities and exercising rights so as to promote sound governance. Applies to asset owners, fund managers and intermediaries providing services to institutional investors. The 5 principles encourage : Sustainability considerations: including ESG into investment analysis and activities. Acceptance of ownership responsibilities: in its investment arrangements and activities. Collaborative Approach: to promote acceptance and implementation of the principles. Potential for conflict of interest: should be identified and pro actively managed. Transparency: about the content of their policies, how they are implemented and how is CRISA applied. 3

4 CRISA CRISA Committee Asset owners 2 Investment manager representatives 12 Industry bodies & associations 8 Independent members 4 UNPRI representatives 2 Intermediaries/Service providers 2 Total 30 SA Asset owners consists of 1 Retirement Fund and 1 Insurance Company No SA Medical Schemes asset owner in the committee. Sources * CRISA Endorsers and supporters Endorsed by Supported by What about Medical Schemes? Sources * 4

5 Are Medical Schemes Engaging investment managers in the background? Manager 1 We do have a handful of medical scheme clients but none of them has ever asked about ESG issues or expressed any interest in an SRI-type portfolios Manager 2 We manage a handful of Reg 30 mandates but I can honestly say that none have engaged us on ESG issues and we currently have no allocation to our SRI portfolios. Manager 3 We have had one Medical Aid client who enquired about our ESG/SRI policy. (12) Manager 4 With regards with ESG, we have not been approached directly by the Medical Aid Schemes themselves. However, the asset consultants on a number of funds (Medical Aid and Non-Medical Aid) Manager 5 we don t have any medical scheme clients who have specifically engaged (Manager X) on ESG issues or who have expressed interest in SRI type portfolios. Manager 6 we do not have any Medical Aid Scheme clients invested in our SRI portfolio or who have engaged with us on ESG issues. Manager 7 Most of our medical aid clients have engaged with us on CRISA/ESG in some way whether directly from the client or through their consultants Manager 8 They have asked specific questions on ESG when we do report-backs but have not expressed an interest in an SRI-Type portfolio Questions for discussion Is Responsible investing being considered by Medical Schemes as Asset Owners Why are there no SA medical schemes signed on the UNPRI? Why are medical schemes under-represented in the Codes for Responsible Investing in South Africa committee? Is the consolidation of medical schemes industry a factor in SRI and ESG? Is regulation 30 in its current format a hindrance or enabler for SRI investments? Should regulation 30 of the Medical Schemes Act follow the lead of Regulation 28 of the Pension Fund Act by including the principle of sustainable and responsible investing? Do regulation 29 & the proposed SAM hindrances or enablers for responsible investing? In the context of pooled portfolios that are offered as linked policies of insurance?. Is it practical for medical schemes to apply CRISA and UNPRI? If so, how so? If not, why not? 5

6 Speakers Russell Shanglee (Trialpha) And YOU the delegates Medical Scheme Management Asset Management 6