DOES CONSIDERATION OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE ISSUES BY INSTITUTIONAL INVESTORS INFLUENCE SOCIAL RESPONSIBLE INVESTMENT DECISIONS IN SOUTH AFRICA?

Sa？etak Institutional investors have a fiduciary duty to manage the funds entrusted to them by contributors without pursuing their own self-interest. Adhering to the practice of sustainable and responsible investment is inconsistent with their fiduciary duties of generating profitable returns to contributors because it limits their choices of investment. In South Africa, the Code for Responsible Investing recommends the integration of environmental, social and governance issues into investment decisions by institutional investors. The study examines whether institutional investors in South Africa consider environmental, social and governance issues when making their investment decisions has recommended by the Code for Responsible Investing in South Africa. An explanatory qualitative content analysis approach was used to identify from the annual integrated and sustainability reports of investee companies whether they conduct their business activities in a sustainable manner. Findings reveal bias in the choice of investable companies by institutional investors because of the profit expectations of investors and the lack of the standardised use of environmental, social and governance issues in investee companies’ reports on sustainable business practices. An implication of this study is that, because of the large pool of funds available to institutional investors in South Africa, consideration of environmental, social and governance criteria in investing decisions by institutional investors can be used to influence improved sustainable business practice in investee companies