We believe ESG matters are integral to good client outcomes as they can affect risk-adjusted returns materially.

As long-term and valuation-based investors, our primary aim is to ensure that we achieve superior risk-adjusted returns for our clients that are in line with our mandates. We believe that factoring pertinent environmental, social, and governance (ESG) factors into this long-term view helps us to achieve this. 

What is ESG investing?

ESG investing (also known as socially responsible investing, impact investing, and sustainable investing), refers to investing that considers optimal ESG factors or outcomes.

How do we think about this?

1. We believe ESG factors are crucially important to achieve risk-adjusted returns for investors.
2. There are many approaches to responsible investing; we adopt a valuation-based approach by accounting for ESG in our assessment of company value.
3. Our ESG policy is aligned with the United Nations Principles for Responsible Investment (UNPRI), which is an international organisation working to promote the incorporation of ESG factors into investment decision-making. We will constantly evolve and enhance these as we go through the ESG journey.
4. If necessary and appropriate, we engage with company management and the board of directors, with the aim of ensuring better ESG outcomes.

The foundation: The United Nations (UN) Sustainable Development Goals (SDG).

The UN has defined 17 SDGs. These form the backbone of what most corporates and countries in the world are focusing on. The green ones indicate the nine goals that we at Nedbank have aligned ourselves with.
 

Focusing on too many goals won’t be effective and may mean we don't accomplish anything.

We believe that companies need to focus on where they can and should have an impact, eg for a mine in the middle of the country, ‘life on land’ is a much bigger concern than ‘life below water’.

How we incorporate the UNPRI.

We have adopted these principles as part of our investment and decision-making process.  

UN principles

• Incorporate ESG issues into investment analysis and decision-making processes.
• Be active owners and incorporate ESG issues into ownership policies and practices.
• Seek appropriate disclosure on ESG issues by the entities in which you invest.
• Promote acceptance and implementation of the principles within the investment industry.
• Work together to enhance your effectiveness in implementing these principles.
• Report on activities and progress towards implementing these principles. 

How the UN principles are reflected in our investment process

• Very strong, well-defined governance approach.
• Engage with boards and the industry.
• Active voters on proxies.
• Making reporting on our own proxy voting and ESG policy publicly available on our website.

Defining our approach.

As long-term orientated, valuation-based investors, we focus on factoring pertinent ESG factors that a company can influence into our company valuations. We believe ESG factors should be a component of investment decisions, and we consider the valuation, sustainability and fundamental risks inherent in every portfolio position. We therefore integrate ESG in our investment analysis to improve the investment risk-and-reward profile of our portfolios.

How we do this: 

• We have adopted a principle-based approach that we strive to implement daily.
• Our investment process incorporates ESG matters into both the qualitative and quantitative sections. Our ESG analysis focuses on areas that we believe are essential for a company to sustain competitive advantage over the long term.
• Over longer-term time horizons, we believe that ESG risks are more likely to materialise and should therefore be priced into the value of securities. 
  

We will:

1. Incorporate ESG issues into investment analysis and decision-making processes.
2. Be active owners and incorporate ESG issues into our ownership policies and practices.
3. Seek appropriate disclosure on ESG issues by the entities in which we invest.
4. Promote acceptance and implementation of the principles within the investment industry.
5. Work together to enhance our effectiveness in implementing the principles.
6. Report on our activities and progress towards implementing the principles.

Important factors to consider

• Nedgroup Investments Responsible Investment Report 2022
  Despite its challenges in 2022, the field of ESG continues to attract assets. Climate change and the energy transition receive the bulk of investor attention and will have central roles to play in addressing today’s and tomorrow's sustainability challenges. By managing such risks we believe our investments will be more resilient and participatory in the real economy.

• Our ESG Investing Policy
  This policy sets out Nedbank Private Wealth’s guidelines and approach to the incorporation of ESG factors into our valuation and portfolio construction approaches.

• Engagement is key
  ESG requires a transition, and most companies that we look at are embarking on this transition. We therefore follow an engagement approach, not an exclusionary one.

• Our Engagement Policy
  This defines how we engage with investee companies and other stakeholders about ESG.

Speak to your wealth manager today

Your wealth manager can provide advice on how you can connect your investment decisions to the future you want, and have a positive impact too. 

• Contact your wealth banker.
• If you’re not a client yet and want to find out more, we would love to hear from you. You can call us on 0800 111 263 or complete an online contact form.