Khwela Capital is heavily cognisant of the impact that Environmental, Social, and Governance (ESG) matters can have on our investments. This is why we have created an ESG policy that integrates completely into our investment procedures. This is a bottom-up and valuation focused approach. Our view is that the current worth of an asset and its projected future cash flows are innately affected by ESG considerations. 

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As a long-term investment business that has an internationalist investment approach, we consistently monitor and consider every aspect that affects business value and sustainability over the long term. In general, ESG factors impact among others, the implicit discount rate that we use to assess business valuation as well as future cash flows of businesses that we invest in. 

 

Good Corporate Governance is crucial to ensure the correct analysis of businesses or assets that we invest in from an ESG viewpoint. Khwela Capital purposefully invests alongside management teams where we believe all-encompassing integrity and governance structures are in place. Considering the long-term investment horizon we have for our investments, the sustainability of businesses that we invest in is important. 

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ESG essentially refers to the sustainability of the assets and companies that we have in our investment portfolio and the environments in which they function. Measuring the durability of the income streams of our investments is a key part of the investment progression. Khwela Capital seeks to invest in companies that can sustainably grow their earnings over long periods. 

 

Our governance and internal controls have been benchmarked to international standards. We are guided by best practices. This includes adhering to relevant governance frameworks such as King IV Code, Responsible Investing Framework, Markets in Financial Instruments Directive, the Capital Requirement Directive and the Alternative Investment Fund Managers Directive, US Securities and Exchange Commission, among others. As part of our global compliance obligations, we are required to make certain disclosures to our investors and potential investors, and also to make certain information publicly available. 

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Endorsing CRISA 

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Khwela Capital supports the tenants of the Code for Responsible Investing in South Africa (CRISA) code, namely: 

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• An institutional investor should incorporate sustainability considerations, including ESG, into its investment analysis and investment activities as part of the delivery of superior risk-adjusted returns to the ultimate beneficiaries. 

• An institutional investor should demonstrate its acceptance of ownership responsibilities in its investment arrangements and investment activities 

• Where appropriate, institutional investors should consider a collaborative approach to promote acceptance and implementation of the principles of CRISA and other codes and standards applicable to institutional investors 

• An institutional investor should recognise the circumstances and relationships that hold a potential for conflicts of interest and should pro-actively manage these when they occur 

• Institutional investors should be transparent about the content of their policies, how the policies are implemented and how CRISA is applied to enable stakeholders to make informed assessments