Johannesburg — There is no good track record in SA of interest in investing personally in socially responsible investments.

CADIZ Asset Management has won the Imbasa Yegolide Award for Socially Responsible Investor of the Year for the second time, much to Heather Jackson's delight.

Jackson is head of socially responsible investing at Cadiz and says the award marks an "incredibly proud moment of recognition" for the innovation that is the company's unique and strategic partnership with GreaterCapital to deliver sound investments with a measurable social change. The awards allow "principal officers in the retirement industry to recognise service providers who have rendered excellent service to retirement funds".

"There is a misconception about this sector," says Jackson, who has been in the investment market for more than 15 years. "People need to trust that responsible investing can deliver competitive returns. Investing in change in infrastructural services and addressing social backlogs in ... jobs and service delivery can be done while making good financial returns."

Cadiz started collaborating with GreaterCapital, a nonprofit organisation that "connects capital to change" and forms the part of the GreaterGood Group, in 2006 and got their first investor in 2007 - a client they still have and who is very happy.

"GreaterGood is plugged into so many social enterprise networks that we can tap into. And social impact analysis is possible through matrices we form for quantifying quality of life changes, such as home improvements, access to education as well as more easily measured job creation and service delivery impact," says Jackson.

While Cadiz and GreaterCapital integrate their areas of expertise every step of the way, ultimately the financial investment parameters rest with Cadiz, and the social ones with GreaterCapital.

In identifying what Dean Hand, CEO of GreaterCapital, calls suitable social purpose entities, intense research is conducted on a variety of areas. She says: "There is a growing development that these organisations be run along strong business lines, but with their primary mission to uphold a particular social or environmental challenge."

The project doesn't always have to be a nonprofit organisation, although Hand maintains nonprofit organisations can be defined as any organisation that creates social profit for a community. "It's not as simple as building a shopping centre somewhere," she says. "That doesn't necessarily mean there is a beneficial social impact. You have to look at how economic drivers in that community have been improved."

The process of identifying suitable investment vehicles and the attendant legal and business due diligence is as rigorous as for any other investment.

"We have, jointly, strong diagnostics to look at an organisation's capacity to deliver on its social promise as well as the risks that may prevent its delivery," says Hand.

"One thing that could seriously hamper delivery of the social promise is if an organisation doesn't have strong financial credentials. It must have the capacity to be able to manage an investment of this size and nature."

Hand is unequivocal about a great social mission without the appropriate financial chops not getting the nod. And vice versa. The social reporting to clients is consequently as vigorously audited as the financial.

Jackson used to be head of fixed interest, a "very dry area financially", and says this is the only time she ever asked for a job. "I was stale and thought, now is the time and I can do this. I organised a business proposal and helped set up the joint venture with GreaterCapital.

"Fortunately we had a few existing clients and it was a matter of planting the seed as a new concept.

"We are building up to a tipping point, both as a company and a country, so that this will become the mainstream way of investing for pension funds."

Jackson maintains we are overlooking the underdeveloped "third world" part of the country: "Our first-world sectors are very sophisticated, including the financial services arena.

"For SA to move to the next level we need investment in areas that lead to systemic improvement. And this area is potentially huge. Currently it comprises only 1% of total assets so there is still a very small portion going into these type of investments."

Jackson has never had anyone refuse to speak to her about such investing, and notes it is really hard for people to close the door on this model: "We're investing in areas where, unusually, both the need and the growth is greatest," she says.

"It's so simple; it makes sense and it works. Trust it."

It really does seem like a no- brainer. Doing good as your money works hard for you. Yet socially responsible investing in the private or retail market is nowhere to be seen. Personal investments, such as philanthropy, need to be kept private it seems. Perhaps it may be a little unseemly to earn money from doing good, although conflating commercial gain with charity strikes me as nothing but common sense.

"There is no good track record in SA of interest in investing personally in socially responsible investments," confirms Jackson.

"We did offer a product about 10 years ago, but the feedback was that there was really no demand. It will come as the demand is very big overseas, but it's about building critical mass."

For responsible investing to become the mainstream on the wholesale side, however, means advocacy - getting exposure and interacting with policy makers to fast-track change. Part of this was done with the formation of the Association for Savings and Investments SA (Asisa), which has a responsible investment committee that "does a lot of banging on doors".

Most significant is their work on the regulatory side, which means influencing the government to remove barriers in the current Pension Fund Act, and Regulation 28 in particular.

"It's a bit of a dinosaur," says Jackson. "It was enacted in 1953 and its most recent adjustment was just a fiddle around the edges in 1998."

While officially a guideline, the regulation is more of a diktat about how and where pension funds can invest. It "needs a fundamental overhaul" for all sectors, according to Jackson, as it doesn't address the importance of financial, environmental or social sustainability of investments.

Asisa has submitted a paper to the National Treasury which has the buy-in of the whole industry - and as Asisa represents the entire financial services industry excluding the banking sector, it is likely to carry some weight. Jackson is hopeful there may be a change by the end of the year.

She would like to see pension funds enabled to invest up to 5% in targeted investments as, "coming from zero, this would be a dramatic increase" with a commensurate increase in social benefit. Despite what she describes as "compliance fatigue", Jackson believes that if black economic empowerment and employment equity can make such significant gains, this can too.

Until then, Jackson will enjoy part of her job ("that doesn't feel like a job") being telling stories in a meaningful way to investors about how they're making a difference and getting the same return they would with a "dry government bond".

"Our clients can see how we deliver on a mandate with a feel-good factor, but still with returns. Last year one of our biggest clients said that speaking to us was the best appointment he ever made."