Corporates urged to consider impact investment
Botswana companies have been urged to adhere to strong corporate governance ethos as this is key to business sustainability, investment attraction and profitability. This is the message which came out clearly from different speakers at the inaugural Environment, Social & Governance (ESG) and Sustainable Finance conference organised by MN Capital group which started on Wednesday in Gaborone.
ESG is a framework used to assess an organisation's business practices and performance on various sustainability and ethical issues. It also provides a way to measure business risks and opportunities in those areas. “No investor will like to put money in a company which has poor corporate governance culture. Increasingly, consumers want to buy from producers who protect the environment and communities they operate in,” said Gosego January, the Chief Executive Officer of Debswana Pension Fund (DPF). January, who has been the CEO for the Fund for over ten years, explained that, perhaps that is part of reasons why there seems to be too much regulations in most sectors of the economy.
He cited the pension and or financial services sector which is regulated by various institutions among others, finance ministry, Non-Bank Financial Institutions Regulatory Authority (NBFRIA), Bank of Botswana. “Sooner than later the industry will complain of too much regulations,” she said at an event which was attended by players drawn from the pension fund, asset management, commercial banks and insurance companies. January further urged corporates to consider the environment when making decisions.
“We should not look at the bottom line only. We need to protect our environment for future generations,” he added. ‘We need to do our business in a responsible manner,“ she stressed. Business Botswana President , Gobuamang Keebine, said companies should consider ESG principles as a necessary evil to live with. He said, being ESG compliant, is itself a motivating factor for business growth and stability. “We need to capacitate companies on ESG principles at all levels-small to large scale.
As business leaders, we need to consider ESG in all our thinking and decision making processes at all times,” said Keebine. Meanwhile, speaking on a topic closer to ESG, Executive Chairman of DNA Economics, Elias Masilela explained that, there has been an appetite for impact investing as more institutional investors continue to place positive social-environmental outcomes in line with financial return objectives. Impact investing is the act of purposefully making investments that help achieve certain social and environmental benefits while generating financial returns. Some of the companies which have grown successfully, after heeding the call of impact investing include Tata and Neflix.
“There is need for corporates to look beyond profits,” advised Masilela, who was previously the CEO of South Africa’s Public Investment Corporation(PIC) the biggest pension fund in Africa. 'Investors are now looking into companies which have positive human impact.' Masilela further stressed that, both the owners of capital as well as asset managers need to take the lead on impact investment. Ahead of the conference, MN Capital Chief Executive Officer, Michael Ndinisa said Botswana, as a whole stands to benefit from ESG and Sustainable finance forum.
“ESG Principles are hinged on the triple-bottom line; People, Planet and Profits, which acknowledges the need of investors to meet their financial goals and investment returns targets, and calls for the redressing of the impact of carbon emissions on the planet and also addressing the socio-economic challenges that weighs heavily on emerging markets like Botswana. 'In the carrot and Stick analogy, the ESG principles are regarded as both, in the sense that organisations are compelled to comply, yet there are opportunities in the sector that they can leverage,” stated Ndinisa.