Are your pension investments contributing to inequality?

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Are your pension investments contributing to inequality?

Published Date: 2019-02-26 | Source: INCE|Community | Author: Greer Blizzard

Are your pension investments contributing to inequality?

In 2018, a World Bank report found that inequality had deepened in South Africa since the start of democracy, and ranked the country the most unequal society in the world. Most of the blame for this and most of the responsibility for fixing poverty and inequality is laid at the government's door. But it is important for shareholders and pension fund beneficiaries to recognise the role they can play in alleviating this unsustainable situation.

Whether you are using the services of an asset manager to build an investment portfolio, or diligently contribute to a retirement annuity, your investments carry social and environmental costs which are shaping the country's future.

The deliberate act of investing and owning shares in a JSE-listed company, whether directly or via pension savings, puts you in a position of responsibility. This responsibility must go beyond a singular focus on financial returns. Considering the social and environmental impacts of your investments will help to ensure that the society you retire into will be stable and sustainable. Failing to do so will not only exacerbate social disruption, inequality and environmental degradation: it will also ensure that your long-term returns are severely compromised.

If you are concerned about increasing inequality, and what that may mean for future generations, you can play an important role as a shareholder or pension fund beneficiary in making the companies that you are invested in more responsible and accountable.

As a first step, engage with your asset manager or financial advisor on the topic of company remuneration and board diversity. Ask whether the people who run the companies you are invested in are remunerated fairly and responsibly in the context of the overall employee remuneration at the company. Allowing excessive executive pay and bonus packages to continue while the lowest paid workers at the same companies are not earning a living wage, will ensure that the cycle of poverty and inequality continue.

In response to ever-increasing concerns about inequality and the role that the investment industry can play in alleviating it, Just Share, a non-profit shareholder activism and responsible investment organisation, is convening the Investment for Inclusion Forum on 6 March in Johannesburg. The forum, featuring some of South Africa's foremost thought-leaders on responsible investment, including Nicky Newton-King (CEO of the JSE), Sipho Pityana (President of Business Unity SA) and Andrew Canter (Chief Investment Officer at Futuregrowth Asset Management), will feature a bold conversation about the challenges facing responsible investment in South Africa, and what we can do differently to ensure a more prosperous future.

Click here to find out more and register.

Without pressure from their clients, asset managers will continue to pay only lip service to responsible investment. Individual investors must better understand the social and environmental costs their investments carry. Starting with scrutinising your own investment choices is the first step in changing the status quo.


justshare.org.za


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