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Cape Town - Investment capital of the Government Employees Pension Fund (GEPF) can be used to pursue social justice without compromising returns, its principal officer said on Tuesday.
"We believe we can make good financial returns... while helping to make South Africa and the rest of the continent more competitive... by growing the economy and making it more sustainable," John Oliphant said.
"It [GEPF] is not a charity and it most certainly not a development finance institution nor government, but rather it is a long-term investor that understands that its success cannot be isolated from the success of South Africa."
Oliphant was addressing members of the Cape Town Press Club in Newlands.
He said many companies took a short-term view and looked only at quarterly or half-year earnings.
The GEPF had decided to go against this "herd mentality" and instead adopt the "new norm", which was to effectively manage environmental, social and governance risks.
Companies in listed markets who took note of these risks consistently outperformed those who did not.
"In re-thinking our overall investment strategy, we were determined to include infrastructure investments as a separate asset class to be pursued.
"Our thinking was that infrastructure investment provided diversification benefits and excellent long-term returns. It fulfilled our fiduciary duties. This has become the core of our developmental investment policy."
The pension fund had committed 5% of its assets under management, around R50bn, to pursue key areas in its developmental policy.
These were economic infrastructure, social infrastructure, environmental infrastructure, enterprise development, broad-based black economic empowerment, and job creation.
The GEPF was set to announce further details on two related funds at the end of May. The first was a renewable energy fund, in which it would invest R5bn. The fund would apparently be run by the Public Investment Corporation.
The second was called the Priority Sectors Fund, which would apparently help commercial farmers expand underdeveloped farms, among other things.
Oliphant said a number of filters would apply to the developmental portfolio.
"First, all developmental investments must be based on sound investment sense and not be ideologically driven. Second, the GEPF is agnostic about private or public sector developmental investment opportunities," he said.
"Third, our developmental investments will subject investee companies to high standards in respect of good corporate governance and environmental and social impacts."
The GEPF is the largest pension fund on the continent and holds assets worth more than R1.2 trillion as of February. It has 1.2 million members and over 360 000 pensioners on its books.
Oliphant said the fund owned almost 50% of the government inflation-linked bond portfolio and about 10% of any company that was listed on the Johannesburg Securities Exchange.
