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Beware of talking in an 'echo chamber' about sustainable investment - JSE CEO

Jan 12 2019 14:39
Carin Smith, Fin24

Sustainable investment is a theme whose time has come, but it is currently more like an "echo chamber" of people who already believe in the cause, Nicky Newton-King, CEO of the Johannesburg Stock Exchange (JSE), said on Friday.

She took part in a panel discussion on how investments at scale could be lured to sustainable projects in a meaningful way. This was part of the 3rd Partnership for Action on Green Economy (PAGE) Ministerial Conference in Cape Town this week.

"We try to highlight to stakeholders how they can do things differently and try to provide them with suitable products."

It is also important to get the right level of “investable data” available for investors to direct capital to sustainable projects, she explained.

"In the sustainability space, investors can start by saying that they are willing to take a longer-term return because it is the right thing to do," said Newton-King.

She cautioned against investors just saying they will wait for government to bring incentives before they consider sustainable options.

"Don't just wait for a big thing to happen before you make a start. Make a start even if it is small," was her message to the corporate world.

For her it remains a big job to get people to understand why they should be going for sustainable investment options and why it matters.

"I think we have to be driving a better type of financial reporting (by companies). A kind that is not just 'marketing' but done in such a way as to enable investors to see the long-term drivers and strategy of a company regarding sustainability," she suggested.

"We must continue with robust advocacy in the private sector about the role it can play, including challenging the short-term framing of investment that many investors have."

What is needed, in her view, is to challenge boards of trustees and boards of directors on how they channel investments.

Companies can look at things they do well and see how they can do it differently (with sustainability in mind). The JSE, for instance, tries to provide products so that the issuers of shares can access capital.

"There is a real opportunity to get data out. It is an ideal space for private public partnerships to make data digestible for investors," she concluded.

Regulatory policies would best help to re-orientate investments at scale towards sustainable projects in a meaningful way, according to a poll among delegates which followed this panel discussion. Financial incentives came in second place in the survey.

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