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Let’s measure up to more rigorous corporate governance standards

Jun 20 2018 10:16
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Recent scandals in both the corporate and public sectors have highlighted the need for appropriate risk controls to ensure the sustainability and capital security of investments. This is according to Khaya Gobodo, Managing Director of Old Mutual Investment Group, who believes that fund managers have a responsibility to their clients to take the necessary steps towards playing a meaningful role in changing South Africa and creating a more sustainable economy.

Gobodo’s comments come after Andrew Canter, CIO of Futuregrowth Asset Management, Old Mutual Investment Group’s fixed income boutique, was recognised at this year’s CFA Conference in Hong Kong as one of only six CFA Charterholders globally to represent the Institute’s ‘Let’s Measure Up’ campaign for their contribution to upholding the CFA Institute’s exacting standards of ethical and professional conduct. The campaign – launched earlier this year – aims to ensure that the 149 000 CFA Charterholders in 165 countries and regions show their investors, their firms, and society that they always put investors’ needs above their own and are committed to building trust in the industry.

As part of the campaign, the Institute produced videos of the six charterholders recognised for their contribution. You can watch the short video on Andrew here.

In 2016, Futuregrowth ceased ongoing funding for six State-owned Enterprises (SOEs), citing governance concerns. Gobodo points out that Futuregrowth demonstrated rigorous analysis and genuine investment insight, well before there was a publically acknowledged problem with SA’s SOEs. “Andrew and his team applied professional scepticism to the management of SOEs and identified key issues involved in the decay in governance and the mismanagement of state entities,” he explains.

“I believe that, as an industry, we need to go beyond simple improvements in regulatory tools and move towards higher levels of engagement and activism by professional investors with companies and their respective boards,” he adds. “Investment professionals will need to improve the quality and rigour of corporate governance evaluation and the potential risks associated with a catastrophic failure in that area.”

Gobodo highlights that Futuregrowth applied judgement based on experience and insight well before the availability of complete information. “They developed significantly more rigorous tools in SOE governance analysis and followed this up with intense engagement in order to improve governance standards.

“By applying these key principles in our company evaluations, we will be able to create a more sustainable industry, build trust with our clients and contribute to the creation of an economy focused on long-term sustainable outcomes.”

 

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