Speaker 0:
Hello and welcome to this insight session. I'm joined today by Sonya Sanderson, the chief investment officer at the Eskom Pension and Provident Fund. Welcome, Sonya.

Speaker 1:
Thank you, Chloe.

Speaker 0:
So? So the EPPF recently hosted their annual business breakfast and the theme being beyond Tomorrow.

Speaker 0:
What are some of the key announcements that were made specifically surrounding the unveiling of the EPPF sustainable investments policy?

Speaker 1:
Yes. Um, I, I think part of why we had the event is we wanted to bring the industry together and a lot of our stakeholders ranging from some of our own staff, our service providers, fund managers and consultants in the market as well as, of course, the members and, uh, the the board of the EPPF itself to make sure

Speaker 1:
that we are actually talking about topics that are relevant to all of us and affect all of us in some way, shape or form.

Speaker 1:
Um, why it's important to us is we realise that the industry has come a long way. And the fund, the EPPF fund, has come a long way in terms of how it thinks about sustainability. We certainly have a a long and proud history of sustainable issues. having done a lot of good work in the industry, but we want to make sure that we move it to a next level and we wanted to make sure that our stakeholders understand what that means and that they are part of that journey.

Speaker 1:
So why is it different and why are we excited about it is really because of the fact that we think that sustainability as much as it has come a long way in terms of measuring non financial issues like climate and like societal benefit and like impact and those kinds of issues, there certainly is a lot more data. There certainly are a lot more systems available that can help you with it.

Speaker 1:
So we've come a long way as an industry. But we're still not quite at the point where we understand that we've reached the limits of certain things that we're consuming, whether from a financial perspective or whether from a planetary perspective.

Speaker 1:
So we were discussing with the audience that our sustainability policy recognises that there are certain planetary boundaries as they're called from a Stockholm research perspective, global researchers that that identified this topic and whereas the industry has been focused a lot on climate.

Speaker 1:
There are other planetary boundaries that we need to consider, like the ozone like biodiversity, like ocean health. There's there's a lot of these planetary boundaries that will materially affect human beings plant life, animal life on the earth if we don't look after those things.

Speaker 1:
So because of the fact that we feel that we don't always realise those things, and this is difficult to measure and monitor it, we wanted to make sure that we move our sustainability approach to a more holistic theme of regeneration, where it really gets the necessary urgency and the impetus and attention of what it needs.

Speaker 1:
So to give you an idea of what that means, we decided to unpack it across three different pillars, first of all, from an environmental regeneration perspective.

Speaker 1:
Second of all, uh, a social justice perspective. And then thirdly also, to make sure, from an economic parity perspective, that we think of each and every investment decision that we make and the impact that it's got on these three pillars.

Speaker 1:
Examples of these are that from a climate perspective, we felt it necessary and compelling to stress ourselves a little bit in terms of setting targets and making sure that we get to those targets and that we have a means of measuring and monitoring it

Speaker 1:
from a social perspective. We will continue with transforming the industry and thinking about the impact that our investment decisions have on not only the industry but on our society as a whole

Speaker 1:
and also making sure that we focus on themes of gender representation. So that was a a key focus of our event, and certainly a key focus of our, uh, strategy as well from a sustainability

Speaker 0:
perspective. So Sana yesterday a key announcement around the EPPFS launch of an in infrastructure vehicle, um, was announced. Perhaps you can take us through this.

Speaker 1:
Yes, it's another initiative as part of us addressing the economic disparity that's currently uh, present within our economy

Speaker 1:
and that is that infrastructure investing we feel is such a critical part for us to get right. If you think about the presidential demand

Speaker 1:
that President Cyril Ramaphosa made for our industry to be responsive in terms of helping our economy and growing our economy, we certainly in our own portfolios have felt the successes of doing that. But we also all see that in South Africa there still is a dire need for us to still continue investing in infrastructure.

Speaker 1:
But the reality is pension funds do not do this together, and therefore we've got a very fragmented approach towards infrastructure.

Speaker 1:
And it is by virtue of the illiquidity of this asset class, as well as the fact that you typically have quite large projects, scale projects where you do need scale to be able to enter these investment opportunities, that it is very difficult for smaller pension funds and for the retail man on the street. The moms and pops, if you will of the world but also want to invest in this investment, opportunity said, it's almost impossible for them to do so.

Speaker 1:
So we felt it's a compelling need for us not only for our own members and the fund that will ultimately benefit from the multiplier effect that inflation, uh, asset losses like infrastructure has in the economy, not only from that angle but also from the financial inclusion angle of opening this vehicle up for others in the market

Speaker 1:
that we started working with the rest of the Asset Owner forum in South Africa to say Well, let's create a bit of a vehicle that can help towards democratising access to infrastructure in South Africa. It is still in its conceptual phases, exactly the detail of what that pulling vehicle will look like. We are busy fleshing out with a couple of parties in the industry, but the idea is that we create something that will help mobilise the assets

Speaker 1:
that will make sure that there is readily available capital, that we can share the costs amongst different pension funds and and asset owners essentially in terms of accessing investment opportunities. That there therefore also is a natural risk sharing amongst the pool of investors for this and that. We then open up a pipeline of discussing it with the right DFIS and government and and the rest of the private sector

Speaker 1:
of opportunities that are available. So it's certainly something that we hope,

Speaker 1:
uh, will help mobilise capital. We will also address an area within our economy that is severely needed.

Speaker 0:
No, absolutely so. So as one of South Africa's largest asset owners, the EPPF, now reaching 100 and 90 billion um rand in assets under management. How does the EPPF then aim to advocate for integrating um, sustainability amongst asset owners and across the industry.

Speaker 1:
I think there's a lot of work that we're trying to do to advocate that first off, simply by being able to to dialogue with each other by lobbying together by having conversations by including each other in learnings, I think is something that's already very valuable.

Speaker 1:
That's also why we at the event yesterday, to make others aware of how we're evolving as a business and how we're thinking as a fund. We should be operating within South Africa.

Speaker 1:
Then there's, of course, by virtue of the assets that we placed to put it in places where we can actually influence what different businesses, whether listed or unlisted, are thinking about whether it's fund managers in the market, but where we can dialogue them and also influence them in terms of how they think about sustainability issues,

Speaker 1:
and then there are other programmes and and industry initiatives that we want to participate in. Some of them are development programmes where we place assets with, uh, black and startup businesses to make sure that they have an opportunity to succeed,

Speaker 1:
but not just to give them assets but also to help them think through. How should they be thinking about sustainability? What are the kinds of things from a from a climate perspective that they should be aware of? What are the minimum requirements that we need from a monitoring and a measurement perspective in terms of climate and decarbonisation? So it's a real value chain alignment, if you will, and and creating an ecosystem of people coming together

Speaker 1:
that debate these things and learn from each other, and not just within South Africa either, but to do it as part of broader initiatives from a local and a global perspective. There's lots of learnings for us as South Africans from other pension, from funds from other, uh, asset managers from banks overseas from custodians overseas. There's lots of learnings that we can share if we collaborate more.

Speaker 1:
So, one of our key themes were, Let's collaborate more and let's find the angles for solutions within our context.

Speaker 0:
Absolutely. Collaboration is key. Sonya. Thank you very much for sharing your insights. We appreciate your time.

Speaker 1:
Thank you, Gloria.