South Africa's Remarkable Rise In Responsible Investing: Insights From DPA South Africa ESG Review 2023

Mili Devnath — Mon, 25 Sep 2023 09:55:48 +0000

Responsible Investing is well entrenched in South Africa, finds Decimal Point Analytic’s (DPA) paper ‘SOUTH AFRICA ESG Review 2023’. The proportion of South African funds with responsible investing (RI) focus is more than several larger countries. Further, the regulatory sector has been proactive with creating legislation enabling companies and funds to focus on responsibility investing.
South African funds have been pioneers in RI adoption. As of July’23, 77 entities from South Africa are signatories with UN PRI, giving the nation the 17th rank globally on this count. This is much better than South Africa’s global GDP rank of 37. South African funds had started committing to Responsible Investing under the UN PRI umbrella as early as 2006, making the country one of pioneers of Responsible Investing globally, and in Africa in particular.
The CRISA code for RI was also a pioneering effort in promoting RI focus. The first Code for Responsible Investing in South Africa (CRISA) was launched as early as in 2011 to encourage institutional investors and service providers to integrate environmental, social and governance (ESG) issues into their investment decisions. An updated code CRISA2 was issued in 2022; this builds on the first CRISA Code (2011) and contains five principles for stewardship and responsible investment as a key component of the South African governance framework,
On actual per capita emissions, South Africa fares adversely, indicating need for more emission focus. South Africa is the 13 largest carbon emitting nation in the world, accounting for 1.3% of global emissions. South Africa’s population is 60m, or about 0.77% of the global population. It is the 24th largest nation in the world in terms of population. In other words, South Africa’s emission rank is higher than its population rank, and its GDP rank. This suggests a need for a greater sense of urgency with respect to emission control.
The country’s updated Nationally Determined Contribution (NDC), released in 2021, displays greater ambition in emission reduction compared to the first 2015 version. South Africa is the first African country to adopt a carbon tax policy. South Africa’s corporate sector is increasing its focus on the environment and Net Zero action. At this point, 16 large corporates are working with SBTi for net zero target validation.
Social focus has always been strong in South Africa led by the B-BBEE program. South Africa has taken considerable action in improving social equity, aimed at addressing its history of black oppression, via its the Broad-Based Black Economic Empowerment (B-BBEE) program. There is scope for the compliance to improve. The country has also done well in promoting gender equality. The proportion of women in the formal sector is much better than most countries (while still inferior to males). For example, in the public sector, women are more than 40% of employment at both middle and senior levels. This compares to 25-30% female participation at top levels in Canada, a much more advanced economy.
South African funds need to improve TCFD reporting focus. We looked at the RI practices amongst South African managed asset companies. We find the practices here are on par with most major economies, and better than many Asian countries that are still lagging on RI practices. Most funds have RI policies, several have internal frameworks for assessing ESG performance; funds are using external data and research sources as well as conducting their own research. Funds are publishing some form of sustainability reports, however, TCFD focus is still nascent and has scope to pick up, less than 10% have published TCFD reports as per a study.
To sum up, South Africa has a great chance to be an example to the rest of the world, and in Africa in particular, on climate and social goals.
Get detailed insights about South Africa’s ESG Landscape in our South Africa ESG Review 2023 Whitepaper, Download Now.

Integrating Large Language Models (LLMs) in RFP Response Management

Mili Devnath — Mon, 11 Sep 2023 07:33:33 +0000

Integrating Large Language Models (LLMs) in RFP Response Management

Swift response to investor RFPs is critical for building solid initial relationships with potential clients. Decimal Point Analytics recognizes the criticality of the function and has been supporting investment managers with end-to-end RFP response management solutions. Our services include creating a structured repository of responses, drafting the first cut response on behalf of the client, establishing processes to capture periodic changes in data, maintaining the content library updated, and upload final RFP document on client systems and consultant platforms.

*Unraveling the Crucial Role of First-Cut Response
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In the entire value chain, creating first-cut responses is the most pivotal task because it forms the basis of the final response sent to the client later. However, most steps in preparation for the first cut response including:

Accessing responses from content library
Selecting the most relevant and the latest answer
Learning the articulation of responses and utilizing the same for similar questions
Utilizing latest data points in responses, for e.g. - updating latest answers AUM/NAV numbers automatically

are still manual processes and hence are susceptible to challenges like slower turnaround time and scope for human errors.

*Leveraging the Technological Advancement with LLMs
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Staying ahead of the Technology Curve, Decimal Point Analytics (DPA) has explored Large Language Models (LLMs) for making the first cut response with minimal human intervention. The AI-backed LLM algorithm can recognize, summarize, translate, predict, and generate content using large datasets and can replace the manual tasks involved in RFP responses. The model can be trained to pick the latest information so that the most updated data and financial numbers are shared with the potential client.

*Overview of the Tasks Performed by LLMs
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Train machine learning (ML) models for articulation of custom responses
Autofill latest responses from content library for new RFPs
Customize responses with data from internal documents
Automatically update the latest data points in exist ing responses from factsheets /internal documents

*Advantages of Integrating LLMs in Preparing First-Cut Response
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Faster Turnaround Time
Reduced Manual Intervention
Significant Reduction in Scope of Errors
Automated Specific Responses in Customized Format
Time-Preference LLM Picks up the Chronologically Latest Data

For more details on how LLM can add value to your RFP response management and streamline your client interactions, please do not hesitate to reach out to us at info@decimalpointanalytics.com

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South Africa's Remarkable Rise In Responsible Investing: Insights From DPA South Africa ESG Review 2023

Integrating Large Language Models (LLMs) in RFP Response Management