Press / Media | Cadiz News
Responsible investments can provide good returns for retirement funds and society
29 March 2010
Socially responsible investment (SRI) can and should provide sound returns for retirement funds, Heather Jackson, the head of SRI at Cadiz Asset Management, says.
Jackson, who spoke at a closed-session debate on SRI at the recent Association for Savings & Investment SA conference, says there is no question that targeted funding is required to build infrastructure, create jobs, and provide a foundation for vibrant and healthy socio-economic growth.
"The next move by the state has the potential to provide a carrot to the investment community, through bolstering a regulatory environment which incentivizes investment in development," she says.
Adopting a prescriptive approach to SRI assumes there is no other viable way to fund development, Jackson says.
SRI could be encouraged by including responsible and sustainable investments as a viable option within updated pension fund regulations and developing a conducive and supportive environment for such investment, she says. The state can play a role in encouraging disclosure and removing barriers to SRI.
Jackson says both life assurance companies and retirement funds are realising that a short-term focus on narrow returns does not result in meeting their long-term liabilities.
Investments need to yield sustainable returns while mitigating social and environmental risks. And by and large, recent studies show that the correlation between incorporating environmental, social and corporate governance (ESG) factors into investment decision making and the investment performance is a positive one.
She rejects as "Largely unfounded" the skepticism about the risks associated with SRI.
High-impact responsible investments, such as inner-city rejuvenation projects, the building of schools and hospitals, housing development projects and affordable credit for the poor, can offer competitive financial returns, as well as far-reaching social returns, Jackson says.
"We need to find a way to bring the available capital for social development to the people who can make the best use of it: whether these are social businesses, pioneering non-profit organisations or social entrepreneurs.
"By creating and adopting a rich diversity of strategies - all of which are now coming together within the field of SRI - markets and business, capital and commerce can be harnessed not simply for the creation of individual wealth but also for the creation of wealth, prosperity and value in its fullest sense," Jackson says.
