JSE Limited · JSE:JSE
JSE — SRI Company Briefing April 2012 sflb
30 slides from JSE's investor presentation, April 2012
Slide 1: Information Briefing: Annual Index Review
Information Briefing: Annual Index Review Corlile le Corli Roux, Head of SRI Index and Sustainability Roux April 2012 April 2011
Slide 2: Highlights of Index evolution
Highlights of Index evolution Established May 2004 Fundamental principles Enable responsible investment Aspirational benchmark Facilitate debate Broad sustainability assessment Triple bottom line Governance Deliberately developmental Focus areas Incremental thresholds
Slide 3: Current statistics
Current statistics 2004 2005 2006 2007 2008 2009 2010 2011 72 105 109 106 109 Companies 74 58 62 (65 (103 (104 (102 (107 assessed auto) auto) auto) auto) auto) Number of 51 49 58 57 61 67 74 74 constituents Not eligible - 1 1 - 1 1 1 -
Slide 4: Performance by market cap
Performance by market cap HEADLINE 2004 2005 2006 2007 2008 2009 2010 2011 Top 40 31 32 34 34 36 34 36 36 Mid Cap 17 13 17 18 23 30 33 31 Small Cap 3 4 7 5 4 4 5 7 Total 51 49 58 57 61 67 74 74
Slide 5: Value proposition
Value proposition Pioneering initiative providing thought leadership Impact Channel between responsible investors and companies • Provides value add for major investors as they unroll own RI policies Helps companies along the path of sustainability • Enables the assessment of risks and opportuni
Slide 6: 2012 Strategic review
2012 Strategic review Developing five year vision for evolution of Index 2012 annual review continues as normal Consultations with companies, investors and other stakeholders during April Proposal to JSE Exco and Advisory Committee early in Q3, implementation plans developed during remainder of year
Slide 7: 2012 Annual SRI Index review
2012 Annual SRI Index review No changes to individual criteria indicators 2 changes to process Only public data for reporting indicators Profile approach to assess disclosure
Slide 8: Eligibility
Eligibility Base universe: FTSE/JSE All Share Index as at March 2012 Automatic assessment 2011 SRI Index constituents Top 40 Mid Cap Voluntary assessment Small Cap Ineligible if excluded from All Share at any time during process or after review
Slide 9: Eligibility (cont.)
Eligibility (cont.) Companies with structural complexities: Holding and investment holding companies with no staff o Policies and governance at holding level o Subsidiary contributing most to revenue Property funds o Basic full assessment o Where no employees, similar to investment holding compa
Slide 10: Criteria 2012: Outline
Criteria 2012: Outline Structured along environment, society and governance (ESG) No change in indicators from 2011 Four areas of measurement o Broad areas: environment, society, governance & related sustainability concerns o Focus area: climate change Within each area: Policy, Management and
Slide 11: Criteria 2012: Environment
Criteria 2012: Environment Impact classification High, medium, low Activity-based, assessed relative to five key areas: climate change, air pollution, water pollution, waste and water consumption Cumulative nature of indicators
Slide 12: Criteria 2012: Social
Criteria 2012: Social No changes Thematic approach Core and desirable indicators BEE Only companies with South African operations HIV/Aids Only companies operating in high risk countries (including South Africa)
Slide 13: Criteria 2012: Governance
Criteria 2012: Governance No changes Thematic approach Core and desirable indicators
Slide 14: Criteria 2012: Climate Change
Criteria 2012: Climate Change No changes Principles Incremental Risk assessment and management No impact classification or coverage requirements
Slide 15: Entry level threshold: Environment
Entry level threshold: Environment Varies according to impact level, coverage and number of indicators met Key points Policy statement required to be public Addressing all key areas (air, water, waste, energy, climate change) Distinguish between quantified and documented targets
Slide 16: Entry level threshold: Society
Entry level threshold: Society Majority of all indicators – half plus one 1/3 of indicators met must be core One core from each of BEE and HIV/Aids (where applicable)
Slide 17: Entry level threshold: Governance
Entry level threshold: Governance Majority of all indicators – half plus one 1/3 of indicators met must be core
Slide 18: Entry level threshold: Climate Change
Entry level threshold: Climate Change Three indicators Senior responsibility (portfolio specifically includes climate change mandate) Public commitment to manage climate change impacts Emissions disclosure (absolute or normalised) – only public CDP submissions accepted
Slide 19: Best performer (BP) level
Best performer (BP) level Meets BP level in environment on one of policy, management or reporting All core indicators in o Society o Governance and related sustainability concerns, including independent chair All climate change indicators, except for trend data
Slide 20: Process: Timeline overview
Process: Timeline overview Phase 1: May – August Review of public information – commences in May Profile mailing to companies between July and August Phase 2: July – September Companies have three weeks to respond (extensions considered on merit) Data provider incorporates feedback and perfo
Slide 21: Process: Phase 1
Process: Phase 1 Review of public information Most recently available Web sites, annual reports, etc. Preliminary company profile compiled* General overview of business Environmental impact classification Assessment of public data against criteria Profiles mailed to companies for comment/s
Slide 22: Process: Phase 2
Process: Phase 2 Company response to preliminary standard profile (as per normal) Respond directly on profile o Where reporting advanced, most indicators met o Mark up changes o Provide evidence Complete survey questionnaire in full or in part o Where unsure of which information required to meet
Slide 23: Profile approach for 2012
* Profile approach for 2012 Strategic review will investigate move to assessing public information only Need to assess extent of information available – data capturing to date does not distinguish Companies will receive two profiles JSE SRI Index updated profile – 2011 profile updated with most re
Slide 24: Borderline companies (BL)
Borderline companies (BL) Companies meeting most areas, failing marginally in one Process: JSE engages with BL company on specific area o Three working days to respond o JSE considers with Advisory Subcommittee o JSE decides whether in / out Repeat borderline issues Number of times for BL limite
Slide 25: Controversial stories
Controversial stories Covers two elements EIRIS news search covering specific areas o Environmental violations, health & safety issues, major competition incidents, human rights violations, etc. Stakeholder complaints JSE filters for engagement Engages with company on particular issue Engageme
Slide 26: Final results to companies
Final results to companies Cover letter Indicates individual company result and salient matters, e.g. relevant controversial stories that were considered Summary sheet Indicates overall performance in relation to each area of measurement Final profile
Slide 27: Publication of results
Publication of results Public announcement Media pack Press release Constituents Best performers and consistent Best Performers
Slide 28: Data sales approach for 2012
Data sales approach for 2012 Companies will be asked to opt in (standard profiles only) Opt in companies to comment during Phase 2 on publication of confidential information
Slide 29: Strategic review consultations
Strategic review consultations CT and DBN sessions 17-18 April JHB sessions 24-26 April Broad consideration of role of JSE in sustainability space Vis a vis companies, investors and other stakeholders such as NGOs Role of tools such as listing requirements, index products Facilitation of trans
Slide 30: Contact details
Contact details • JSE – sri@jse.co.za – Makhiba Mollo +27 11 520 7022, makhibam@jse.co.za – Corli le Roux +27 11 520 7104 • EIRIS – jse@eiris.org – Charlotte Hine – Project Leader