Sustainable and responsible investment in emerging markets: integrating environmental risks in the South African investment industry

Abstract

This article analyses the views of South African investment organizations about the likelihood of commodification of environmental risks in their investment decision-making processes. It is based on an empirical qualitative survey of 22 investment organizations, which are signatories to the United Nation's Principles for Responsible Investment. We describe a range of issues, identified by the investment professionals interviewed, that are likely to prevent or accelerate the internalization of environmental risks in the South African investment industry. The chance that broader commodification will occur within the South African investment industry seems to be linked to a realization of an adequate political framing. This means legislating standardized environmental disclosures by corporations and a long-term commitment by institutional investors to sustainable and responsible investment philosophies. The tension between social developmental goals and environmental goals is seen as a major political obstacle at the national level.