Shareholder Activism

South Africa - Investors press for social change

While South Africa doesn’t have US-style activists yet, its culture of corporate transparency has encouraged a domestic form of activism, emphasizing social transformation.

South Africa was an early adopter of a set of world-class “best practice” principles for corporate governance called the King Reports. These include increases in reporting transparency that are required for a listing on the Johannesburg Stock Exchange.

To help reverse the dire socio-economic effects of apartheid, the government created the Black Economic Empowerment program, targeting areas such as black management control and ownership, and support for smaller black business.

Controlling assets of more than R1.6 trillion ($115 billion) – comprising mostly government employee pension funds – South Africa’s Public Investment Corporation is Africa’s largest fund manager and engages in a form of socio-economic impact activism. While independent, the PIC has what it calls a “dual mandate, to generate returns on behalf of clients and to contribute to the developmental goals of South Africa.”

The PIC has supported a number of state policies, including blocking Chile’s CFR Pharmaceuticals’ bid for local healthcare company Adcock Ingram, to keep control in South Africa. The PIC also supports income equality by voting against excessive pay, and has pressed for more black directors at companies such as fuel maker Sasol and industrial services supplier Barloworld.

As shareholder activism continues to grow in South Africa, it is likely that this intersection of politics and business will remain critically important, and the power of investors to act as agents of social policy will increase.

Carol Roos and Timothy Schultz are Directors in Brunswick’s Johannesburg office.

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