Our goal is to invest in growing African companies with enduring business models and that offer investors outstanding financial value, whilst also addressing the challenges of sustainability.

Sustainable investment started life over 20 years ago as Socially Responsible Investment (SRI). In the early days, this mainly consisted of a process of negative screening, with investment funds excluding certain products or sectors from their portfolio as a matter of principle. Typical examples would be tobacco, guns or alcohol.

Over time this process evolved, incorporating positive screening that involved seeking out particular sustainability niches or ‘best-in-class’ enterprises in terms of good practice. Today SRI has evolved into sustainable investing with environmental, social and governance (ESG) issues incorporated into the investment process.

Alquity believes that ESG issues have the potential to create or destroy long-term shareholder value in the companies in which the fund invests. Understanding and dealing with these ESG-related risks and opportunities is a key element of Alquity’s philosophy in managing the Africa Fund and is consistent with protecting the long-term interests of the fund’s investors.

Alquity is a signatory to the United Nations Principles for Responsible Investment and is guided by the ten international standards for business as set out by the United Nations Global Compact.

Alquity places particular emphasis on identifying companies that have sustainable business models and are able to maximize financial returns to the investor over the long term. This means analysing the operations of companies to ensure that they are not based on a short-term exploitation of new markets or resources. It also means taking an intelligent view of how ESG relates to the particular circumstances in which a company is operating and how international standards can be applied to very specific, evolving local markets.

ESG is integrated into the investment process at four points in particular:

• An initial ESG review is conducted as part of reducing the overall investment universe down to a more manageable pool for further research and analysis.
• The subsequent evaluation of individual stocks in this pool includes in-depth ESG analysis.
• Portfolio monitoring and management includes ESG tracking and, where appropriate, company engagement.
• Alquity also undertakes strategic engagement and advocacy to promote sustainable and responsible business practices in Africa as a whole.