New man will work to ensure investors stay responsible

- Finance - Aug 20, 2013

An organisation charged with ensuring companies invest responsibly has appointed a new South African leader.

The role of South Africa Network Manager for the international network of investors working together that is Principles for Responsible Investment (PRI), has gone to one Xolisa Dhlamini.

Dhlamini will work to ensure South African firms take responsible investment seriously.

PRI is supported by the United Nations and is charged with encouraging collaborative engagement and getting firms to better incorporate environmental, social and governance issues in decision-making and ownership practices – thereby ensuring that investment practice holds itself responsible in the way it performs.

PRI believes that the market-based economy that drives the allocation of the earth’s scarce economic resources has given rise to a number of social inequalities and environmental impacts which affect organisations and individuals alike. Food and water insecurity, limited natural resources and climate change have become material to the world of business.

Dhlamini says that an important aspect of managing the imbalances is responsible investing.

“The impact of poor corporate governance on shareholder value, accentuated by the global financial crisis, has lifted issues such as transparency, corruption, board structure, shareholder rights, business ethics and risk management to the top of the investor agenda,” he said.

Dhlamini feels that by putting into place responsible investment practice, South Africa has an opportunity to overcome poor corporate governance.

He said: “Africa has an abundance of natural resources. We need to make sure we develop economies without damaging those – we need to find ways to avoid previous mistakes, and the mistakes of developed countries. This is where responsible investment plays an important role.”

Ensuring this takes place is at the core of the UN-supported PRI; Dhlamini accepted his position in April 2013, after completing his MPhil in Development Finance at the University of Cape Town’s Graduate School of Business.

Having studied a BCom in Economics and Business Finance at the University of the Witwatersrand in 2004, Dhlamini went into the world of investing, gaining eight years of experience in investments and knowledge of financial markets, investment instruments and the economic and financial regulatory framework.

Dhlamini says he was left feeling unfulfilled by this role.

“After the 2008 crisis I became disillusioned by the financial services industry,” he said.

“And at the time I was advising pension fund trustee boards to invest in an industry that was collapsing from short-termism poor governance and poor transparency. This did not sit well with me ethically as I was not sure if I could trust the investment vehicles offered by financial industry. This made want to contribute to using finance for the greater good and reminded me how much I wanted to be involved in socio-economic development”.

After this realisation he decided to re-qualify and took a new course, the MPhil in Development Finance, which offers the skills to influence development trends in an emerging context and make large-scale changes that can impact positively on the quality of life of people around the world.

Dhlamini said: “Growing up in one of the poorest townships in South Africa (Alexandra Township) had shown me the need for economic and social development, and my experience in investing made me realise what part I could play in this.

“It’s very clear that responsible investing in private equity and venture capital can contribute to the sustainability of economic development in emerging economies.”

According to PRI, responsible investment is an approach to investment that explicitly acknowledges the relevance to the investor of environmental, social and governance factors, and the long-term health and stability of the market as a whole. It recognises that the generation of long-term sustainable returns is dependent on stable, well-functioning and well governed social, environmental and economic systems.

Dhlamini added: “I feel like I’m in my dream job, able to apply my experience and skills into a cause that I believe in.

“At the end of the day, responsible investing is just sensible for a business’ bottom line, and offers a chance to minimise any negative consequences that may threaten the sustainability of economies.

“But more than that, it’s also a chance for businesses to stand up and make a significant social impact. Businesses need to ask themselves – ‘what are you doing to make a difference?’ One might be surprised how often social impact is aligned with financial impact, and in the end, is in one’s own interest.”

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