Johannesburg — SUSTAINABLE Capital, an asset manager based in Mauritius, last week launched Africa's first sustainable investment fund, with seed capital from Sanlam Investments.

The Africa Sustainability Fund will focus on listed companies that derive the majority of their economic benefit, including their revenue, cash flow, net asset value, production volumes and proven reserves, from Africa, excluding SA.

Kevin Macdonald, MD of Sustainable Capital, this week defined sustainable investing as the integration of environmental, social and governance factors into investment management practices with the conviction that they will have an effect on the long-term financial performance of companies and, ultimately, on shareholder value.

He said a recent IFC-Mercer report on the state of sustainable investing in emerging markets revealed there were no sustainable investment funds that offered African investment opportunities. "This is remarkable, given that signatories of the United Nations Principles for Responsible Investment, currently representing over 18- trillion in assets, have committed to integrate environmental, social and governance factors into their investment analysis and decision-making processes," said Macdonald.

Greg Barker, director of research at Sustainable Capital, said: "We're trying to change the behaviour of African companies by how we allocate capital."

He said Sustainable Capital focused on industry-specific sustainability factors that related to a company's core business. "For example, in our view, the most material sustainability factor for a bank is the extent to which it incorporates environmental, social and governance risks (and opportunities) into its lending practices.

"By contrast, analysis of a steel company would include a valuation of its socio-environmental balance sheet, including the carbon and pollution footprint of its operations." Barker said climate change was a "megatrend" for sustainability.