Old Mutual, one of South Africa’s largest insurers, is determined to keep Africa’s growth and development at the forefront of the global agenda. Its CEO answered our questions about the country’s insurance sector, ESG financing and the outlook for the coming year.
South Africa’s financial services sector is strong by global standards. What makes it a strong global performer?
The sector is relatively well capitalized and has worked hard to build resilience against global shocks. During the Covid-19 pandemic, for example, financial institutions worked to mitigate the impact of volatility in capital flows through flexible exchange rates, limiting the level of foreign currency exposure, and holding limits. of foreign investments.
The governance of the financial sector is very strong in South Africa. There is both a commitment to independent management and the implementation of international standards within the sector. However, the current challenging environment calls for more careful management and full implementation of the market’s ethical framework.
The sector continues to change to better understand its customers. More simplified products, driving digital adoption and improvements in line with growing internet and smart phone access and use have led to greater overall access and inclusion within the sector. In addition, greater competition, with new entrants continuing to challenge tradition, has also strengthened the sector, increasing access and affordability in the process.
How do you see the role of the private sector in revitalizing the South African economy?
The private sector has an important role to play in revitalizing the economy. It is already a significant contributor, employing nearly three-quarters of South Africa’s total workforce and accounting for over two-thirds of investment and spending on research and development.
The Covid-19 pandemic has highlighted how critical collaboration among players is to effectively address shared economic and social problems. However, there is an urgent need to move from talk to action.
Revisiting existing blueprints, such as “Operation Phakisa” – the plan established in 2014 to rapidly implement solutions to critical development issues through greater collaboration between the public and private sectors – one of the ways to ensure greater commitment to shared growth.
There is a lot of talk about sustainability and ESG financing. What does this mean for an institution like Old Mutual?
It is about rethinking the financial landscape, given the interconnectedness between the economic, social and environmental systems in which we operate.
We see ourselves as stewards of the resources of future generations and our goal is to use our core competency as a business to raise capital, invest it, and transfer risk, to transform or our collective growth path to become more social, low carbon and resource intensive. efficient.
We have a number of current initiatives and commitments related to ESG financing. Our inhouse-developed Green Economy Taxonomy allows us to track the portion of our investments invested in the green economy. Through our active stewardship program, we actively engage with company boards, market regulators, and stakeholder organizations on material ESG issues.
Last year, we concluded 78 company engagements and addressed 168 key issues including ESG integration, Environmental (climate change) and ESG Risk Management. We are the first South African insurer to join the Net Zero Asset Owner Alliance and the second South African Asset Manager to join the Net Zero Asset Manager’s Alliance. The Group has R150.5bn ($8.67bn) in assets under management invested in the Green Economy.
What do you hope for the meetings in Davos and for Africa in 2023 in general?
In line with this year’s official theme “Cooperation in a fraction of a word”, our commitment as an African business is to foster greater collaboration with various stakeholders to address shared challenges and achieve shared growth.
Throughout the Annual Meeting and beyond, we are determined to keep Africa’s growth and development agenda at the forefront of global action, as well as use our experience and expertise to drive shared value for our business and society.
While the operating environment for business as a whole remains difficult, we remain optimistic about the opportunities for growth that exist on the African continent, and we look forward to working with our partners to achieve this.
