The Dynamics Influencing Progress Towards Responsible Investment: A Process Study of the Agency of the Code for Responsible Investment in South Africa (CRISA)

Feront, Cecile (2016-03)

Thesis (MPA)--Stellenbosch University, 2016.

Thesis

ENGLISH SUMMARY: Changes in investment strategies and capital flows are needed in order to support a transition to a sustainable economy. However, despite the rise in popularity of the concept of responsible investment, which recognises the need to take into account environmental, social and governance issues into investment decisions, the pace of change within the investment industry appears slow and disconnected from sustainability challenges. In South Africa, notwithstanding a leading voluntary and regulatory framework in line with international recommendations, progress towards responsible investment appears slow and uneven. Given the importance of time in sustainability issues, the research investigates responsible investment and the agency of supporting institutional strategies in the context of a process study. The objective of the research is to gain an understanding of the dynamics at play within the investment industry and to assess the agency of the Code for Responsible Investment in South Africa (CRISA) to promote progress towards responsible investment in South Africa. Using grounded theory methodology and drawing on the discipline of Systems Dynamics, the study develops a conceptual process framework to explore the underlying processes influencing progress towards responsible investment and evaluate the extent to which these are affected by institutional strategies. The conceptual process framework shows how responsible investment, in its current implementation, is unable to shift investment practices in time to support a sustainable economy. The dynamics of change are too slow relative to the time horizon to generate a meaningful transformation. Drawing attention to the role of learning processes and mental models, the conceptual process framework challenges the theories, assumptions and practices underlying the intentions of the investment industry and calls for new institutional strategies to encourage an ideological framework consistent with the operating principles of a sustainable economy. In light of the conceptual framework, the study evaluates the agency of the Code for Responsible Investment in South Africa (CRISA) and its supporting regulatory framework to drive transformational change within the South African investment industry. The empirical study is constructed as a multi-method research using quantitative and qualitative methods as well as expert reviews to analyse progress over three years. The findings indicate that the Code for Responsible Investment in South Africa (CRISA)’s agency to modify the investment practices of institutional investors and their service providers in South Africa is limited, slow and difficult to substantiate. While some disclosure trends appeared encouraging, these mask major issues with regards the quality, consistency, comparability and reliability of data available. Except for a few leaders, the industry is characterised by an instrumental and discretionary approach to responsible investment, which yields little effective change in terms behaviour and practices. Finally, confronting theoretical propositions with empirical findings, the research challenges the strategies used so far to promote responsible investment. The research advances that unless the regulatory environment offers conceptual clarity and takes a firm and consistent stance in support of the sustainability imperative, the Code for Responsible Investment in South Africa (CRISA)’s agency within the dynamics of change in South Africa is likely to remain limited, inconsistent and temporarily disconnected from the problems it tries to address.

AFRIKAANS OPSOMMING: Ten spyte van die styging in gewildheid van die konsep van verantwoordelike belegging wat die behoefte om omgewings, sosiale en bestuurskwessies in beleggingsbesluite erken en in ag neem, kom die tempo van verandering binne die beleggingsbedryf stadig en verwyderd van volhoubare uitdagings voor. In Suid-Afrika, ten spyte van 'n baanbreker vrywillige en regulerende raamwerk in lyn met internasionale aanbevelings, kom dit voor asof vordering na verantwoordelike belegging stadig en oneweredig is. Gegewe die belangrikheid van tyd in volhoubare kwessies, ondersoek hierdie navorsingstuk verantwoordelike belegging en die rol van die ondersteuning van institusionele strategieë in die konteks van 'n proses studie. Die doel van die navorsing is om 'n beter begrip van die dinamika in die beleggingsbedryf te verkry en die rol van die Kode vir Verantwoordelike Belegging in Suid-Afrika (CRISA) te evalueer om sodoende vordering na verantwoordelike belegging in Suid-Afrika te bevorder. Deur gebruik te maak van gegronde teorie metodologie en te leen van die dissipline van Stelsel Dinamika, ontwikkel die studie 'n konseptuele proses raamwerk om die onderliggende prosesse wat vordering na verantwoordelike belegging beïnvloed te verken en om die mate waarin dit beïnvloed word deur institusionele strategieë te evalueer. Die konseptuele proses raamwerk dui aan hoe verantwoordelike belegging, in sy huidige implementering, nie in staat is om beleggings praktyke betyds te verskuif om 'n volhoubare ekonomie te ondersteun nie. Die dinamika van verandering is te stadig, relatief tot die tydlyn, om betekenisvolle transformasie te genereer. Deur aandag te vestig op die rol van leerprosesse en verstandelike modelle, toets die konseptuele proses raamwerk die teorieë, aannames en praktyke onderliggend aan die intensie van die belegging bedryf en behoefte vir nuwe institusionele strategieë om 'n ideologiese raamwerk in ooreenstemming met die bedryfstelsel beginsels van 'n volhoubare ekonomie aan te moedig. Gesien in die lig van die konseptuele raamwerk, evalueer die studie die rol van die Kode vir Verantwoordelike Belegging in Suid-Afrika (CRISA) en sy ondersteunende regulerende raamwerk om transformasie binne die Suid-Afrikaanse beleggings bedryf aan te moedig. Die empiriese studie is saamgestel as 'n multi-metode navorsingstuk met behulp van kwantitatiewe en kwalitatiewe metodes sowel as deskundige resensies om vordering oor die afgelope drie jaar te ontleed. Die bevindinge dui daarop dat die Kode vir Verantwoordelike Belegging in Suid-Afrika (CRISA) se rol om die beleggings praktyke van institusionele beleggers en hul diensverskaffers in Suid-Afrika te verander beperk, stadig en moeilik om te staaf is. Terwyl sommige bekendmakings tendense bemoedigend is, word belangrike kwessies met betrekking tot die gehalte, konsekwentheid, vergelykbaarheid en betroubaarheid van beskikbare data verskans. Buiten vir 'n paar banbrekers, word die bedryf gekenmerk deur 'n instrumentele en diskresionêre benadering tot verantwoordelike belegging, wat min effektiewe verandering in terme van gedrag en praktyke oplewer Ten slotte, deur die teoretiese stellings met empiriese bevindinge te konfronteer, formuleer die navorsing 'n kousale verduideliking van CRISA se rol binne die dinamika wat die vordering na verantwoordelike belegging in Suid-Afrika beïnvloed. Die navorsing beveel aan dat, tensy die regulatoriese omgewing konseptuele duidelikheid kan bied en 'n ferm en konsekwente houding met betrekking tot die ondersteuning van die volhoubaarheidsdoelwitte inneem, sal die Kode vir Verantwoordelike Belegging in Suid-Afrika (CRISA) se rol binne die dinamika van verandering in Suid-Afrika waarskynlik beperk, teenstrydig en tydelik ontkoppel van die probleme wat dit probeer aan spreek bly.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/98638
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