Responsible investment is an investment strategy that aims to generate both financial and sustainable value. It is focused on long-term value creation, and consists of a set of investment approaches that integrate environmental, social and governance (ESG) and ethical issues into financial analysis and decision-making.
The Code for Responsible Investing in South Africa (CRISA) came into effect in February 2012. CRISA was drafted, like the King Report on Corporate Governance, under the auspices of the Institute of Directors, together with the Association of Savings and Investments in South Africa (ASISA). CRISA was developed in response to the King III Report, as a result of the recognition by institutional investors that failure on their part to engage with the companies they invested in would diminish the impact and effectiveness of King III.
CRISA provides guidance to institutional investors, in the form of five “principles”, in relation to how they should execute investment analysis and investment activities, and exercise their shareholder rights to promote good governance by the companies they invest in.
The principles of CRISA are aligned with those of the Principles for Responsible Investing (PRI). Launched in 2006, the six Principles for Responsible Investment “are a voluntary and aspirational set of investment principles that offer a menu of possible actions for incorporating ESG issues into investment practice”. There are currently 1834 signatories to the UNPRI, including 44 South African asset owners and asset managers.