The Second Code for Responsible Investing in South Africa, 2022 (“CRISA 2”) has been issued by the CRISA Committee, and is endorsed by the Association for Savings and Investment South Africa (ASISA), the Batseta Council of Retirement Funds for South Africa, the Financial Sector Conduct Authority (FSCA), the Government Employees Pension Fund (GEPF) and the Institute of Directors South Africa (IoDSA).
CRISA 2 builds on the first CRISA Code (2011) and contains five voluntary principles for stewardship and responsible investment as a key component of the South African governance framework.
CRISA 2 applies to asset owners, asset managers and service providers who wish to voluntarily align themselves with the principles therein contained. “Asset owner” is defined as follows:
“An organisation that represent the holders of long-term retirement savings, insurance and other assets. Examples include retirement and pension funds, sovereign wealth funds, foundations, endowments, insurance and reinsurance companies and other financial institutions that manage deposits.”
CRISA 2 accordingly also applies to retirement funds.
The effective date for reporting publicly on the application of CRISA 2 is 1 February 2023.
The main objective of CRISA 2 is to reaffirm a framework of principles for stewardship and responsible investment as a key component of the South African governance framework. For purposes of CRISA, diligent and effective stewardship means managing investment arrangements and activities towards the creation of long-term value for the economy, the environment and society as part of the delivery of superior risk-adjusted returns to clients and beneficiaries.
The five principles laid down by CRISA 2 are the following:
- Investment arrangements and activities should reflect a systematic approach to integrating material environmental, social and governance (ESG) factors.
- Investment arrangements and activities should demonstrate the acceptance of ownership rights and responsibilities diligently, enabling effective stewardship. Active ownership is, with reference to a retirement fund, defined as the prudent fulfilment of responsibilities relating to the ownership of, or an interest in, an asset.
- Acceptance and implementation of the principles of CRISA 2 and other applicable codes and standards should be promoted through collaborative approaches and targeted capacity building throughout the investment industry.
- Sound governance structures and processes should be in place to enable investment arrangements and activities that reflect and promote responsible investment and diligent stewardship, including proactively managing conflicts of interest.
- Investment organisations should ensure disclosures are meaningful, timeous and accessible to enable stakeholders to make informed assessments of progress towards the achievement of positive outcomes.
Retirement funds or other clients requiring more information should not hesitate to contact their consultant