Planners, Clients, And Investment Managers Building Alignment On Esg

By Gontse Tsatsi, Head of Retail Clients: Old Mutual Investment Group

Gontse Tsatsi

According to The Wealth Report 2022 Attitude Surveys, financial planners think that Environmental, Social and Governance (ESG) investing and generational wealth transfer will have an impact on how their clients invest about 50% of the time. The issues that they felt would influence their clients’ investments more were technology/digital adoption, private equity venture capital, real estate, equity markets and blockchain technology.

Yes, the well-publicised growing global threat of climate change, resource depletion, rising pollution and unethical practices in the private and public sectors, has led to an escalation in demand for more ESG aligned practices and products from companies and governments alike. However, for millennials and gen Z who make up 48% of the global population, this goes beyond investments. ESG is integrated in how they live their lives. They are activists in every sense of the word whether physically or virtually; across environmental, social and governance causes and therefore their values and beliefs are aligned to their investment strategies and choices.

Growth in Global ESG flows

Considering this, if ESG living is part of the millennial and Gen Z culture, it is unlikely that it is a passing fad. Millennials and Gen Z are the key drivers of growth in ESG investments. But even their parents seem to be at the very least ESG curious because according to MSCI, Gen X and baby boomers are not far behind. This is shown by the recent cumulative exponential growth in global ESG fund inflows over the past 5 years – even though 2022 had smaller inflows, they were still net positive.

ESG part of Old Mutual Investment Group DNA

For Old Mutual Investment Group, the focus on ESG investing was an organic development for a company that is a founding member of the Code for Responsible Investing South Africa (CRISA). We have always been at the forefront of building South Africa, by taking our relationship as custodians of clients’ money further and not just thinking about their personal financial goals, but about how to invest for a sustainable future for generations to come.

Our offering includes:

  • ESG Integration – integrating material environmental, social and governance (ESG) risks and opportunities into all our investment decision making processes.
  • ESG products – One SA active  ESG fund, One Global active ESG Fund, and two global ESG index feeder funds
  • Stewardship – being responsible stewards of our clients’ investments.

The financial planners who are already investing their clients’ assets with Old Mutual Investment Group know that ESG is part of our investment process. This means their clients’ portfolios benefit from the work we do as part of our everyday processes, even when they are not directly invested in an ESG fund. The fact that they continue to invest in Old Mutual Investment Group, knowing this means that they indeed understand the importance of ESG for current and future clients.

ESG products for individual clients                              

In South Africa, the retail market for responsible investment funds is still young with few funds on offer. Indeed, in Old Mutual Unit Trusts’ own client survey there was a distinct interest in investing in ESG products from those clients 35 years and under. This is also proven by new investments into our ESG funds being relatively higher from millennials and gen Z.

Simplifying ESG investing for individuals

We launched the first retail focused global ESG index funds in 2018, and an SA Active ESG equity fund in 2020 which remains the only active ESG fund focusing on South African assets with good ESG scores and in June 2023, we launched a global ESG equity fund. We currently manage eight responsible investment funds available to retail investors; these are the Old Mutual MSCI World ESG Index Feeder Fund, Old Mutual MSCI Emerging Markets ESG Index Feeder Fund, Old Mutual ESG Equity Fund,Old Mutual Global ESG Equity ESG Feeder Fund, Old Mutual Albaraka Income Fund, Old Mutual Albaraka Balanced Fund, Old Mutual Albaraka Equity Fund and Old Mutual Global Islamic Equity Feeder Fund.

We are particularly proud of the significant strides we have made in promoting both BEE and ESG. In 2021, we partnered with MSCI to rate Old Mutual funds listed on the Old Mutual Wealth platform according to MSCI’s methodology.

Our ESG efforts have also been widely recognized, as evidenced by the following accolades:

• Most Sustainable African Investment Manager 2022 from Global Banking and Finance Awards

• Best ESG Responsible Investor Africa 2022 from

• Top 3 Best Responsible Investment Manager 2022 from 27four

  • Old Mutual Investment Group Portfolio Managers Maahir Jakoet and Fawaz Fakier were adjudged Best Global Equity Managers Portfolio Managers for the Old Mutual Global Islamic Equity Fund. This fund is offered as a unit trusts to individual investors through the Old Mutual Global Islamic Equity Feeder Fund launched in 2022  which apart from assets in liquid form and exchange rate swaps, only holds participatory interests in the Old Mutual Global Islamic Equity Fund.

It’s about the long term

Financial planners work on long-term plans for sustainable growth. ESG is about thinking and investing long term to sustain the planet. We also see that millennials are all about responsible living to sustain the beauty of what surrounds them. It seems to us there is perfect alignment here between planner, (prospective) investor, and investment manager. While securing financial future should always be a priority, it is safe to say that we most come to the realisation that financial security will mean little if we don’t have clean air to breathe, water to drink, safe communities, and institutions with integrity. Or a planet to live in.

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