Mutually Beneficial New Investment Strategies

Old Mutual Investment Group’s Rob Lewenson explains how he and his team stay ahead of the game when it comes to responsible investing.

Old Mutual Investment Group (OMIG), an entity within the 177 year old South African life assurer, Old Mutual Limited, is at the forefront of responsible investing. The company embraced sustainability over a decade ago and has consistently been at the vanguard when it comes to ESG integration and effective listed equity stewardship.

Rob Lewenson has continued to cement and drive this capability forward since becoming Head of Responsible Investment at the beginning of February this year. Prior to this appointment, he was a memberof the Responsible Investment team for eight years and has been an integral contributor to Old Mutual Investment Group’s success in this field.

“I am proud to have been a part of the progress that OMIG has made in moving the responsible investment agenda forward into the future and am excited about what this future will bring as we continue to drive impact through capital allocation,” he said.

In fact, OMIG has shown a deep commitment to investing for a low carbon, resource-efficient and socially inclusive world.

He believes that one silver lining of the Covid-19 pandemic is that it has changed the way we view the world and the way we conduct business, moving the focus towards sustainable, more inclusive growth.

In 2021, South Africa committed to reducing its greenhouse gas emissions to no more than 420 million tons by 2030. A much more ambitious target than what the country put forward five years ago when the Paris Agreement was struck.

OMIG is completely in step with this target having made its own commitment to Net Zero and has embedded ESG into its investment strategies, retrofitting where necessary as well as innovating investment products wherever possible.

Since appointing its first Responsible Investment professional in 2010, when very few investment houses were paying little more than lip service to sustainability, the company has regularly led the way, winning awards and attaining the top responsible investment ranking in 2017. A year later, OMIG launched its South Africa ESG Indexation Funds and in 2020 its South African ESG Equity Fund.

Rob cites the energy and chemicals business, Sasol, which has significantly increased its ambition to deal with its climate transition risks, improving its emissions reduction targets to 2030 and setting out a climate response plan as a prime example of how OMIG contributes in driving that impact. Its influence has seen the company, one of the largest employers in the country, not only significantly increase its emissions reduction targets, but also tying executive remuneration to those outcome targets..

“Stewardship will emerge as our biggest impact tool to deliver sustainable development outcomes,” he says. By way of example, OMIG has achieved no fewer than 14 “stewardship milestones” with major emissions culprit Sasol, going back to November 2014.

Lewenson is aware of socio-economic realities and believes that where renewable energy is seen as a luxury, it should be a right. That has to be weighed against the fact that he and his colleagues sell financial products and count among their clients organisations such as mining pension funds.

“We cannot turn off our coal industry overnight.”

That would shut down the South African economy, so a different approach is necessary when working with organisations with a poor environmental record.

“We continue to interact with the executive teams and board members at these companies, specifically discussing opportunities that exist in shifting their operations into the green economy, which we define as low carbon, resource-efficient and socially inclusive.”

He is pleased with OMIG’s levels of transparency when it comes to its responsible investing credentials: “We welcome scrutiny. We self-regulate and make a lot of our responsible investment activities and outcomes public to avoid accusations of not walking the walk and to stay ahead of the inevitable policy response that increased regulation of ESG products will bring..”

Notwithstanding all the enormous challenges that lie ahead, Lewenson is optimistic, believing that the 2020s will be a transformative decade in the field of responsible investment. He anticipates and hopes for a more sustainable and resilient global economy as a result of the changes happening all around us.

“After ten years of corruption and under-investment in the country, things are changing and there has been extraordinary regulatory reform of the energy sector. This is the ideal time for all our thinking on ESG to percolate into all our areas of investment.”

Please see here for Old Mutual Investment Groups’s RI Report.