Overview of FSCA Guida
Sustainability of Investments an Fund’s Investment Policy Statem 1. PURPOSE OF THE GUIDANCE NOTE
To provide guidance to boards of funds on how the board must comply with Regulation 28(2)(b) read with Regulation 28(2)(c)(ix investment philosophy and objectives, as reflected in its investment policy statement, seeks to ensure the sustainability of its investm set out the Authority's expectations regarding disclosure and reporting on issues of sustainability.
2. BACKGROUND TO THE GUIDANCE NOTE 2.1 Regulation 28(2)(b) of the regulations to the Act requires all funds to have an investment policy statement and Regulation 28(2)(c)(ix) requires that boards of funds consider ESG factors before investing in an asset. 2.2 Regulation 28 promotes responsible investing of fund assets, based on sustainable, long-term, risk-aligned and liability-driven investment philosophy. The preamble to Regulation 28 sets out the expectations of funds when they are investing their assets: "Prudent investing should give appropriate consideration to any factor which may materially affect the sustainable long-term performance of a fund's assets, including factors of an environmental, social or governance character. This concept applies across all assets and categories of assets and should promote the interests of a fund in a stable and transparent environment." 2.3 This requirement to consider the sustainability of a fund's assets is repeated in the principle contained in Regulation 28(2)(c)(ix), which states that a fund and its board must: "Before making an investment in and while invested in an asset consider any factor which may materially affect the sustainable long term performance of the asset including, but not limited to, those of an environmental, social and governance character."
3. SUSTAINABILITY OF INVESTME ASSETS IN THE CONTEXT OF A RET FUND’S INVESTMENT POLICY STA
3.1 The sustainability of the assets of a fund is a ke inform its investment policy statement. To this with Regulation 28(2)(b) read with Regulation 2 should reflect in its investment policy statemen investment philosophy and objectives seeks to sustainability of its assets, including (but not li
(a) when the investment policy statement was whom; (b) how often the investment policy statement (c) how the fund intends to monitor and evalu sustainability of the asset which it owns an to acquire, including the extent to which ES considered by the fund, and the potential im assets of the fund; and (d) its active ownership policy.
3.2 Where a fund holds assets that limit the applic sustainability criteria or the full application of policy, the investment policy statement should as to why this limitation is to the advantage of and its membership. Alternatively, the investm should set out the remedial action the fund has taking to rectify the position. Where no remedi considered or taken, the fund should set out the
3.3 The Authority would also expect a fund's inves stipulate that the matters referred to in paragra applicable, be reflected in the relevant investm
This document is only a summary extract of the Guidance Note and should be read in conjunc Guidance Note available on the FSCA website https://www.fsca.co.za 20
