Alexforbes Investments releases 2026 Stewardship Report

Water insecurity, governance weaknesses and infrastructure constraints are increasingly affecting business performance and investment returns in South Africa, according to the latest stewardship report from Alexforbes Investments. The report is based on engagements with 32 asset managers responsible for R8 trillion in assets under management. It shows how these risks are shaping company performance, portfolio resilience and long-term economic growth.

Alexforbes Investments says stewardship helps assess whether asset managers are identifying material risks, engaging companies and supporting long-term outcomes for clients.

Water risk is becoming a business risk

This year’s report highlights the growing pressure that water-related challenges are placing on businesses and investment portfolios. South Africa receives roughly half the global average rainfall and, in key economic regions, close to half of treated water is lost before it reaches paying users. Water shortages, ageing infrastructure and governance shortcomings are already disrupting operations across several sectors, making water security a direct business and investment risk.

Asset managers reported the following risks across core holdings:

• 88% of holdings operate in water-scarce regions
• 63% have already experienced disruptions
• 99% are exposed to future water risk

In sectors such as property, most holdings have experienced disruptions, while financials and healthcare also face material exposure. These challenges can affect investment portfolios through operational disruptions, higher capital costs, weaker credit quality and broader economic impacts.

Risks drawing greater attention from asset managers

The findings point to a shift in the way asset managers apply responsible investing, with asset managers moving beyond broad environmental, social and governance (ESG) labels and focusing on risks that can affect cash flows, valuations and long-term resilience.

The report shows that corporate governance remains the single largest area of engagement for asset managers. Executive remuneration, climate-related risks and water security are also receiving greater attention as investors assess their effect on company performance and shareholder value.

Across asset managers:

• Governance accounts for 21.43% of engagement focus
• Remuneration accounts for 16.33%
• Climate accounts for 14.29%
• Water accounts for 13.27%

This reflects a more deliberate approach, with ESG risks increasingly assessed as part of day-to-day investment decision-making rather than treated as separate sustainability considerations.

From engagement to accountability

Stewardship is about ensuring that concerns raised with companies and asset managers lead to measurable change. Alexforbes Investments conducted 395 formal engagements with asset managers during the year, with a stronger focus on accountability.

Outcomes are being tracked more closely: 33% of engagements achieved their objectives, 59% remain ongoing and 8% were either partially achieved, still under monitoring or awaiting final confirmation.

Voting remains an important part of that process. During the year, 23 227 shareholder resolutions were voted on. Around 8% were opposed, mainly because of governance concerns. Abstentions were also used to signal where engagement remained ongoing.

This reflects a balanced approach in which voting is used alongside ongoing engagement to encourage accountability.

Linking investment capital to real-world outcomes

The report also examines how stewardship and capital allocation can support economic and social progress while delivering returns for investors.

Across Alexforbes’ private markets portfolio, invested businesses support more than 30 000 small and medium-sized businesses, employ more than 25 000 women and contribute to energy projects that power millions of households.

These examples show how investment decisions can support economic and social outcomes while maintaining a focus on long-term value.

A model grounded in local context

The report argues that investment decisions must be grounded in South Africa’s realities. Investors need to balance environmental objectives, social needs and economic growth in a market shaped by energy security, water availability and infrastructure reliability.

Governance remains the anchor. While environmental and social risks are becoming increasingly urgent, strong governance often determines whether businesses can respond effectively to those challenges.

Looking ahead

Premal Ranchod, Head of Research at Alexforbes Investments, says: ‘Water security, governance failures and infrastructure constraints are no longer future risks. They are already shaping business operations and investors’ assessment of portfolio risk. Stewardship helps us identify these risks early, engage where necessary and make better-informed decisions for clients.’

As expectations evolve, Alexforbes will continue strengthening data quality and deepening engagement to ensure stewardship supports better investment outcomes for clients.

Read the full Alexforbes Investments 2026 Stewardship Report.