Responsible investing for climate change and water in South Africa

The report argues that institutional investors in South Africa, acting as 'universal owners', face material financial risks from climate change and water scarcity. It identifies a lack of investment-grade, liquid low-carbon products and inadequate water risk disclosure as primary barriers. The document suggests that while some progress has been made through green bonds and low-carbon indices, significant regulatory shifts—including higher renewable energy targets and standardised reporting—are needed to scale responsible investing.

• Institutional investors in South Africa, particularly large pension funds and insurance companies, are 'universal owners' whose returns depend on the overall performance of the economy, making them vulnerable to climate-related economic disruption.
• The South African securities market is highly carbon-intensive due to its resource-based economy; research shows the FTSE JSE top 100 has a larger carbon footprint than several global indices, including the UK FTSE All-Share and MSCI World.
• Opportunities for institutional investment in renewable energy are currently limited by a lack of investment-grade products at scale, a low government target of 9% for new electricity generation from renewables by 2030, and regulatory hurdles for Independent Power Producers (IPPs) outside the government's procurement process.
• Bonds are identified as an attractive instrument for infrastructure and energy mitigation due to their long-dated liabilities matching the portfolios of pension funds and insurers, with examples including a ZAR 5.2 billion IDC bond.
• Water risk reporting by listed companies in South Africa is inadequate, hindering the ability of investors to diversify away from high water risk or identify stewardship opportunities.
• The 'water-energy nexus' creates a paradox where fossil-fuel based energy production consumes vast amounts of water and pollutes resources, such as in the Olifants catchment, which can then impair the operation of power stations.
• Trucost research estimates the external value of water used by JSE top 100 companies and their first-tier suppliers at over ZAR 56 billion per annum, while they currently pay only R224 million, which is less than 1% of the true value.
• Short-termism in financial markets, driven by annual benchmarking cycles, is misaligned with the longer-term capital investment horizons required for low-carbon and water-responsible technologies.
• Legislative changes to Regulation 28 of the Pension Funds Act now endorse the principle that pension funds must consider environmental, social, and governance (ESG) factors as part of their fiduciary duty.
• The proposed 'Solar Park' model in the North-East of South Africa, targeting 1,000MW capacity by 2017, is highlighted as a potential way to achieve the scale necessary to attract significant private institutional investment.

APA

Mughogho, M., & Dhirani, R. (2012). Responsible investing for climate change and water in South Africa. WWF South Africa. http://awsassets.wwf.org.za/downloads/responsible_investing_for_climate_change_and_water_wwf_nov_2012.pdf

Chicago

Mughogho, Malango, and Ray Dhirani. Responsible investing for climate change and water in South Africa. WWF South Africa, 2012. http://awsassets.wwf.org.za/downloads/responsible_investing_for_climate_change_and_water_wwf_nov_2012.pdf.

Wikipedia

{{cite report |last1=Mughogho |first1=Malango |last2=Dhirani |first2=Ray |title=Responsible investing for climate change and water in South Africa |publisher=WWF South Africa |date=November 2012 |url=http://awsassets.wwf.org.za/downloads/responsible_investing_for_climate_change_and_water_wwf_nov_2012.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mughogho2012responsible, author = {Mughogho, Malango and Dhirani, Ray}, title = {{Responsible investing for climate change and water in South Africa}}, institution = {WWF South Africa}, year = {2012}, month = nov, url = {http://awsassets.wwf.org.za/downloads/responsible_investing_for_climate_change_and_water_wwf_nov_2012.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }