JSE Limited · JSE:JSE
JSE — Company Briefing May 2010 sflb
23 slides from JSE's investor presentation, May 2010
Slide 1: Information briefing: Annual Index review – 2010
Information briefing Annual Index review – 2010 Corli le Roux Head of SRI Index May 2010 www.jse.co.za Copyright© JSE Limited 2009
Slide 2: Highlights of Index evolution
Highlights of Index evolution Established May 2004 Fundamental principles • Enable SRI • Aspirational benchmark Broad sustainability assessment • Triple bottom line • Corporate governance www.jse.co.za 2
Slide 3: Recent developments
Recent developments 2007 • New model, EIRIS, Automatic universe 2008 • GEPF collaboration 2009 • Calculation of index in real time • Development of SRI Swix index 2010 • New criteria and best performer threshold • Exploring CDP collaboration www.jse.co.za 3
Slide 4: Current statistics
Current statistics 2003/4 2004/5 2005/6 2007 2008 2009 Number of companies 72 105 109 participating 74 58 62 (65 auto) (103 auto) (104 auto) Number of constituents 51 49 58 57 61 67 Not eligible - 1 1 - 1 1 Removed at company - - - - - 1 request www.jse.co.za 4
Slide 5: Performance by market cap
Performance by market cap Top 40 performance remains the strongest Strong improvement in relation to Mid-Caps (38% in 2008 to 51.7% in 2009) HEADLINE 2004/5 2005/6 2006/7 2008 2009 Top 40 32 34 35 36 34 Mid Cap 13 17 18 23 30 Small Cap 4 7 5 4 3 Total 49 58 58 61 67 www.jse.co.za 5
Slide 6: Value proposition
Value proposition Highlights imperatives of sustainability • Encourages best practice beyond compliance and regulation • Places local companies on par with international counterparts active in ESG • Enhanced reputation Framework for – • Risk management • Comprehensive reporting and disclosure • Enga
Slide 7: Eligibility
Eligibility Base Universe: FTSE/JSE All Share Index • For 2010 review: All Share as at March 2010 Automatic assessment • 2009 SRI Index constituents • Top 40 • Mid Cap Voluntary assessment • Small Cap If excluded from All Share at any time during process or after review, not eligible for SRI Index w
Slide 8: Eligibility (cont.)
Eligibility (cont.) Companies with structural complexities: current approach • Holding and investment holding companies • Policies and governance at holding level • Assessment also covers subsidiary contributing most to holding company revenue • Property investment funds (unit trusts/loan stock) • B
Slide 9: Criteria 2010: Outline
Criteria 2010: Outline Structured along ESG lines • Four areas of measurement • Broad areas: environment, society, governance & related concerns • Focus area: climate change Policy, Management and Reporting • Policy statements and documents, strategies and undertakings – ideally publicly available •
Slide 10: Criteria 2010: Environment
Criteria 2010: Environment Criteria as in 2009 Impact classification • High, medium, low - activity-based, assessed in relation to five key issues: climate change, air pollution, water pollution, waste, water consumption Minimum threshold • Varies according to level of impact • Requirements relative
Slide 11: Criteria 2010: Society
Criteria 2010: Society Criteria as in 2009 Thematic approach Core and desirable indicators BEE • Only companies with South African operations HIV/Aids • Only companies operating in high risk countries (includes SA) Minimum threshold • Majority of all indicators (core and desirable) – half plus one •
Slide 12: Criteria 2010: Governance
Criteria 2010: Governance Thematic approach Core and desirable indicators Amendments in line with King III • Incremental Board practice – new core indicators • Management and reporting: independent chairman OR LID where independence of the chairman is questioned or unclear (note exception for best p
Slide 13: Criteria 2010: Climate Change
Criteria 2010: Climate Change Companies to consider what risks they face from climate change Assessments made on the basis of a selection of introductory indicators, to be expanded over time • No impact classification • Policy and governance – Responsibility and commitment • Management and strategy
Slide 14: Process: Timelines
Process: Timelines Review comprises second half of the year Phase 1: EIRIS review of public information – commences in late June Profile mailings to companies in three tranches between end July and August Phase 2: Three weeks from receipt of preliminary profile to respond (extensions considered on m
Slide 15: Process: Phase 1
Process: Phase 1 EIRIS review of public information • Most recently available public information • Web sites, most recent annual report, brochures, etc. Preliminary profile of company compiled • Contains general overview of business, environmental impact classification and assessment of public data
Slide 16: Process: Phase 2
Process: Phase 2 Company response to profile assessment • Respond directly on profile AND/OR • Complete survey questionnaire in full or in part Directly on profile • Typically where reporting is more advanced and most indicators met • Mark up changes particularly to provide evidence for areas that s
Slide 17: Process: Phase 2 (cont.)
Process: Phase 2 (cont.) Survey questionnaires • Complete to the extent necessary in relation to areas that still have to be met, or to improve on areas met • Useful where reporting is limited, to provide detail Attach additional information that is relevant • Return to original researcher EIRIS inc
Slide 18: Borderline companies (BL)
Borderline companies (BL) Companies that meet most areas but fail marginally on one area Process: • EIRIS submits final analysis to JSE • JSE engages on that specific area with BL company • Deadline of a few days provided • JSE decides whether to include or not Repeat borderline issues: • Ground Rul
Slide 19: Controversial news stories
Controversial news stories EIRIS conducts news search flagging specific issues • Environmental violations, health & safety issues, major competition incidents, human rights violations JSE considers which issues warrant further engagement • Severity of issue, local impact Engagement with company rega
Slide 20: 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 www.jse.co.za 20
Slide 21: Publication of results
Publication of results Media pack • Press release • Names of successful constituents and best performers • Quotes by constituent companies Best performers must meet all of the following – • Relevant environmental threshold (relative to impact and coverage) • All core indicators in society • All core
Slide 22: Contact details
Contact details JSE • sri@jse.co.za • Corli le Roux +27 11 520 7104 • Makhiba Mollo +27 11 520 7022 EIRIS • jse@eiris.org • Yumika Mochizuki – Project Leader www.jse.co.za 22
Slide 23: www.jse.co.za
: WT JISE JOHANNESBURG STOCK EXCHANGE I / ANN SRI Index www.jse.co.za