ESG investing: The future of impact investing

In a recent interview with CNBC Africa, Teboho Makhabane, the Head of ESG and Impact Investing at Sanlam, discussed the significance of impact investing in addressing pressing issues such as unemployment and climate change in South Africa. Makhabane highlighted the importance of impact investing, which focuses on allocating investment capital towards specific social and environmental issues. At Sanlam Investments, they have launched several impact funds to tackle high unemployment rates in the country, particularly among the youth. These funds aim to create jobs by investing in sectors that promote job creation and targeting companies at a growth stage. Despite the challenges of mobilizing impact funding, Makhabane emphasized the competitive performance of their funds, showcasing a track record of success in job creation and climate-focused investments. He noted that while climate investments may present greater challenges, it is crucial to address the pressing climate crisis through innovative funding approaches. Makhabane also discussed the importance of blending different types of capital, including philanthropic and developmental finance, to de-risk climate projects and attract commercial investors. When it comes to the size of impact funds, Sanlam Investments aims to raise an average of around four billion rand for their impact projects, with the support of commercial investors. Makhabane expressed optimism about the shift towards impact investing from traditional ESG considerations, highlighting the opportunity to address critical societal issues through innovative financing. In terms of government support, Makhabane stressed the importance of policies that align with the National Development Plan and prioritize key areas such as infrastructure, water, and employment. By directing capital towards these priorities, investors can contribute significantly to addressing societal challenges and creating a positive impact in South Africa. Ultimately, Makhabane's insights shed light on the potential of impact investing to drive meaningful change in South Africa by addressing unemployment and climate change challenges. Through strategic investment strategies and collaboration with various stakeholders, impact investors like Sanlam are paving the way for a more sustainable and inclusive future.