There are a number of challenges for LPs and GPs when collecting and analyzing ESG and diversity data. The lack of standardization makes it hard to...
Helping Asset Allocators Measure Progress against Diversity Targets
Focus on diversity in the investment sector has intensified around the world, and the direct correlation between higher returns and diversity, equality and inclusion factors has become more widely recognized. None more so than in South Africa, where the government introduced the Broad-Based Black Economic Empowerment policy in the early 2000's.
South Africa's Broad-Based Black Economic Empowerment policy
None more so than for asset allocators in South Africa, where the Broad-Based Black Economic Empowerment (B-BBEE) policy has been at the forefront of considerations since 2003 through the Broad-Based Black Economic Empowerment Act (Act No. 53 of 2003). The Act aims to promote economic transformation, increase employment opportunities, and enhance skills development within historically marginalized communities. It focuses on various sectors, including employment equity, ownership, management control, skills development, enterprise and supplier development, and socio-economic development.
The policy's primary objective is to ensure that Black South Africans have increased access to opportunities, resources, equity ownership and decision-making power within the country's economy.
B-BBEE and asset allocation
Asset allocators in South Africa take B-BBEE into consideration when making allocations to asset managers and funds by evaluating their B-BBEE compliance and performance. B-BBEE is an important criterion used to assess the commitment of asset managers and funds to promoting economic transformation and empowering previously disadvantaged individuals, including:
B-BBEE Scorecards: Asset allocators typically assess a manager’s B-BBEE scorecard which measures their performance across various elements, such as ownership, management control, employment equity, skills development, and socio-economic development. Asset allocators may give preference to asset managers and funds that have higher B-BBEE scores, indicating a stronger commitment to economic empowerment.
Ownership and Management Control: Asset allocators consider the ownership and management structure of asset managers and funds. They may prioritize those with meaningful Black ownership and effective Black representation in senior management positions. Asset allocators aim to support entities that actively promote Black participation and decision-making power within their organizations.
Employment Equity and Skills Development: Asset allocators assess the efforts of asset managers and funds in promoting employment equity and skills development initiatives. They look for evidence of diverse and inclusive recruitment practices, as well as ongoing training and development programs for previously disadvantaged individuals. Asset allocators favor asset managers and funds that demonstrate a commitment to nurturing talent from historically marginalized communities.
Enterprise and Supplier Development: Asset allocators consider the extent to which asset managers and funds engage in enterprise and supplier development. They evaluate whether these entities support and invest in Black-owned businesses, fostering their growth and sustainability. Asset allocators value partnerships that contribute to the broader economic empowerment ecosystem by promoting entrepreneurship and supporting B-BBEE compliant enterprises.
Digitizing the B-BBEE data collection and analysis process
Standardized questionnaires and reporting frameworks help gather relevant information in a structured manner, enabling consistent evaluation and comparison of different asset managers, and Dasseti takes these one step further, by digitizing them and enabling asset allocators to distribute to a wide universe of managers with a single click. When the results come in, they are viewed in real time via a dashboard in the Dasseti platform. Low scores or missing information can be quickly identified and investigated further.
Industry standard or custom questionnaires
Whether allocators are using industry standard templates such as the ASISA framework, or creating custom questionnaires, Dasseti can easily digitize and allow one click distribution.
Asset allocators may request asset managers to complete these questionnaires on a regular basis or as part of the manager selection due diligence process, using a platform like Dasseti can allow comparison via time series and charts, to track progress.
For a limited time (ends 31/08/23) Dasseti is offering asset allocators in South Africa a free use of its platform to create and distribute a B-BBEE questionnaire to an unlimited number of managers. Read more about the Free B-BBEE Questionnaire offer.