South Africa has published a draft code of behavior setting out how institutional investors should engage with listed companies on corporate governance issues.
The draft “Code for Responsible Investing by Institutional Investors in South Africa” aims to provide guidance on how shareholders should exercise their rights and influence in a responsible and accountable way.
It was produced by a committee of business leaders, investors, and governance luminaries convened by the Institute of Directors, South Africa (IoDSA).
The Code is based on four broad principles, with notes explaining how they might be implemented. Investors are expected to comply on an “apply or explain” basis.
The principles state that shareholders should include “environmental, social, and governance” factors in their investment analysis; should declare their ownership approach and policy for engagement; should consider working with other investors to raise governance standards; and should report on how they apply the Code, with a full report to stakeholders at least quarterly.
The IoDSA said that South Africa would become only the second country in the world to have a shareholder code, once it is adopted. The first was the U.K.
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