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SRI creates better returns for potential investors – Tsheole

Publishing Date : 18 June, 2019

Author : TLHABO KGOSIEMANG

Socially Responsible Investing (SRI) is the incorporation of environmental, social and governance ESG issues into investment decisions and Investment ownership.


It has been regarded as responsible investing based on creating value, mitigating ESG risks and taking of ESG opportunities. SRI generates a measurable, beneficial social and environmental impact alongside a financial return. This was revealed by Botswana Stock Exchange Limited (BSE) Chief Executive Officer, Thapelo Tsheole at the Botswana Resource Sector Conference in Gaborone recently.


He observed that the Schroders Global Investor Study of 2017 indicated that 22 thousand investors in 30 countries will at least have €10 000 in investable assets. The standout results were 78 percent of investors felt sustainable investing was more important than five years ago, 64 percent have increased their sustainable investments over the last 5 years while 75 percent of millennials have increased their sustainable investment over the past 5 years.


During his presentation at the conference, Tsheole said the Sustainable Stock Exchange initiative is a leading proponent of the ESG in global financial markets. He noted that it is a peer to peer learning platform for exploring how exchange in collaboration with investors, regulators and companies can enhance corporate transparency and ultimately performance on ESG issues and encourage sustainable investment.


Tsheole also indicated that the SSE initiative being a driver of the ESG investing into African Frontiers has 14 partners exchange in Africa, where Botswana Stock Exchange joined in 2016. “It is a historic moment for the BSE as we join the sustainable stock exchange initiatives of the United Nations. This comes at an opportune time when the BSE is positioning itself as an international player within global markets"


“Promoting sustainability through robust environmental, social and governance reporting in the capital markets landscape is fundamental to our strategic positioning as we look to attract ESG oriented investment mandates from across the globe. The BSE is pleased to be part of this global network. It is indeed a great learning and networking experience for us," recalled Tsheole.


He highlighted that BSE fulfils its commitment to publish guidance on ESG reporting for its listed companies on reporting environmental, social and governance information to investors. The BSE made the commitment as part of the SSG's campaign to close the gap of ESG disclosure guidance, and they are the 28th exchange to publish such guidance since the beginning of the campaign, and in total there are now over 42 stock exchanges with guidance on ESG reporting, with a further seven having made commitment to do so in future.


Whilst ESG reporting remains voluntary for BSE issues, the availability of guidance will make transparency on ESG issues easier to achieve and should increase the influence of companies choosing to disclose such information. Tsheole further said: "We see this guidance as an opportunity for issues to meet the ever-increasing demands by investors and regulatory bodies in relation to the consistency and depth of corporate reporting.


This tool also enables issues to help investors understand the drivers of, and the risk to, sustainable value creation. On an ongoing, we will monitor the reporting of issues in relation to ESG, so that we develop capacity where necessary and most importantly, develop instruments that publicise and incentivise those that consistently promote ESG reporting as well as undertake sustainability initiatives.


Global sustainable investment reached 22.9 Dollars Trillion US Dollars in 2016, compared with 18.3 Trillion US Dollars, a 25 percent increase. Africa constitutes a small portion of global SRI at 0.02 percent (surveyed countries of South Africa, Nigeria and Kenya). South Africa earned 678 Billion US Dollars, Nigeria 30 Billion US Dollars while Kenya 13 Billion US Dollars.


Proportion globally placed Europe at 52.6 percent, United States of America at 38 percent, Canada 4.7 percent and Australia at 2.3 percent. Tsheole concluded that BSE promotes sustainability among listed companies, adding that their own role is to promulgate rules, enforce compliance, disclosure and reporting. He noted that they also harmonise regional listings requirements.

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