Significant geopolitical movements and the rise of artificial intelligence (AI) are shaping how investors view the opportunity set. As we launch the 2025 Stewardship Report, chief investment officer Duncan Artus discusses our enduring long-term approach to investing responsibly on behalf of our clients.
The activities outlined in our 2025 Stewardship Report build on more than five decades of exercising stewardship responsibilities on behalf of our clients. While this is the 11th edition of our formal report, our focus on sustainable, long-term value creation has been embedded in our investment philosophy since Allan Gray was founded in 1973. We have consistently held the view that companies that fail to operate sustainably ultimately erode their profitability. We introduced our annual Stewardship Report to share transparently how we integrate environmental, social and governance (ESG) considerations into our fundamental research and how we act as engaged, long-term shareholders on behalf of our clients. The report also provides an opportunity to highlight year-on-year developments, offer examples of our engagements and voting activities, and discuss the broader environment in which we and the companies we invest in operate.
Given that the ESG pillars do not exist in isolation, trade-offs are inevitable. Policies intended to advance environmental objectives may have social or economic implications; technological innovation may unlock productivity gains while simultaneously disrupting labour markets. The rapid development of AI exemplifies this tension.
In an ever-changing world, our philosophy remains consistent. While a tick-box or scorecard approach may offer simplicity, it rarely captures the nuances that drive long-term value. Instead, we focus our engagements on issues most likely to influence corporate behaviour and improve outcomes for our clients. Executive remuneration alignment, capital allocation discipline, board effectiveness and the management of material environmental and social risks remain key areas of attention.
Alongside company-specific analyses and engagements, we have expanded our thematic research in several areas that we believe are material to our clients’ portfolios. We showcase three of these in this year’s report:
1. Trends in alcohol consumption: We explored evolving patterns of consumption and the implications of regulation, social norms and affordability. We considered how these dynamics may affect demand, pricing power, product mix, reputational risk and the sustainability of returns for alcohol producers, with a particular focus on Anheuser-Busch InBev, which was our clients’ largest holding as at 31 December 2025.
2. State of the nation in South Africa: We deepened our work on the structural factors shaping South Africa’s investment environment – including governance and institutional capacity; infrastructure constraints, with a particular focus on the water crisis; and energy and logistics reform. This research helps us assess the resilience of company strategies, the credibility of corporate guidance for SA Inc. companies, and the risks and opportunities created by shifting policy and operating conditions.
3. AI and the social equation: AI has the potential to transform industries and improve living standards, yet it continues to raise profound questions about employment, misinformation and information integrity, data governance and systemic risks. The impacts – both positive and negative – are rarely binary. As investors, we seek to evaluate these issues holistically. Against this backdrop, we examined the implications of AI adoption on work, opportunity, trust and long-term economic resilience.
As we have written previously, responsible investing and corporate citizenship may mean different things to different stakeholders. However, investment management is fundamentally a business built on trust. Our duty is to act with integrity, independence and a clear focus on our clients’ long-term interests. This principle guides how we engage with companies, make voting recommendations and conduct ourselves as a firm.
We believe that disciplined stewardship – rooted in fundamental research, thoughtful engagement and a long-term mindset – can contribute positively to our clients, the asset management industry and the broader society in which we operate.