Interview: Teboho Makhabane, Sanlam Investments
By Izabela Hamilton
ESG and Impact Implementation Specialist at Sanlam Investments, Teboho Makhabane, overlooks how funds help to integrate ESG and create impact. She advises on policies while helping clients understand regulations and deliver the right impact in ESG framework and policies for investment.
In this interview, Teboho, who was recently in Mauritius during the Africa ESG Forum and Africa Investment Funds and Asset Management (AIFAM) Forum, speaks about the role played by ESG and Impact Investment, opportunities for risk management, and the role of intentionality.
As we discuss key topics pertaining to long-term investment and value-addition to the interest of African Institutional Investors, could you tell us what is the difference between ESG and Impact Investment?
ESG is mostly about the designing of investment in the context of risk framework. It is coupled with the right government policies or structure in place and deployed to assess whether the investment is not harming the environment or the society as a whole.
Impact investment, on the other hand, is about conducting investment with the aim to do good, to have an additional positive or good outcome. It is about setting the intention and measuring it. Therefore it goes beyond just avoiding risks or harm.
What role Impact Investment holds for businesses in terms of risk perspective and opportunities?
When one conducts impact investment, it involves putting an ESG layer to help the business avoid any harm, which may usually be costly in terms of the harm caused, any externalities, or reputational risks posed, especially if they don’t adhere to expectations, for instance, an oil spill taking place.
In terms of impact investing for opportunity, it comes down to businesses making a difference in society and goes beyond more than just offering a service or selling a product. The bottom line is to conduct business armed with an intention to do good beyond that, coupled with addressing some societal’s issues that go in line with the UN Sustainability Goals. In short, Impact Investing gives a business an opportunity to just be a good corporate citizen.
Why is intentionality important?
Intentionality remains important because if you don’t set an intention to make an impact you won’t be able to measure it. With intention, you can set targets and review them annually, and measure the performance. So, just because it doesn’t happen accidentally, it has to be targeted and measured. That’s the reason why there is a need to put the right intention behind investing decisions.
Speaking of measurement, I cannot help ask about data and why it remains an issue?
Data remains an issue we grapple with. And that is the reason why we are asking companies for impact measurement. We are asking THEM to collect things that they never used to do beforehand, for instance, climate data. We want them to measure how much Co2 or any greenhouse gases they emit, and we are asking in different forms.
Take for example Scope 1, Scope 2, and Scope 3. Now, Scope 3 is the hardest in terms of how much emissions flow from the supply chain, and to those companies, you supply. So, data remains a real challenge for us investors, investment managers, and also for the companies we invest in.
