JSE Limited · JSE:JSE
JSE — ESG Presentation (April 2011)
31 slides from JSE's sustainability presentation, April 2011
Slide 1: Information Briefing: Annual Index Review
Information Briefing: Annual Index Review Corlilele Corli Roux, Head of SRI Index Roux April 2011 April 2011
Slide 2: Highlights of Index evolution
Highlights of Index evolution Established May 2004 Fundamental principles Enable SRI 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 72 105 109 106 Companies 74 58 62 (65 (103 (104 (102 participating auto) auto) auto) auto) Number of 51 49 58 57 61 67 74 constituents Not eligible - 1 1 - 1 1 1 Removed at - - - - 1 - - company request
Slide 4: Performance by market cap
Performance by market cap HEADLINE 2004 2005 2006 2007 2008 2009 2010 Top 40 31 32 34 34 36 34 36 Mid Cap 17 13 17 18 23 30 33 Small Cap 3 4 7 5 4 4 5 Total 51 49 58 57 61 68 74
Slide 5: Value proposition
Value proposition Highlights imperatives of sustainability Encourages best practice beyond compliance Places local companies on par with international counterparts Enhanced reputation Enhanced stakeholder engagement Framework for – Risk management Comprehensive reporting and disclosure
Slide 6: Recent developments
Recent developments 2007 – New model, international data provider, automatic universe 2008 – GEPF collaboration 2009 – Index moves to real time, Swix Index launched 2010 – Climate change introduced, local research partner, data sales launched 2011 – Higher threshold, environmental best performer lev
Slide 7: Eligibility
Eligibility Base universe: FTSE/JSE All Share Index as at March 2011 Automatic assessment 2010 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 8: 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 9: Criteria 2011: Outline
Criteria 2011: Outline Structured along environment, society and governance (ESG) Four areas of measurement o Broad areas: environment, society, governance & related sustainability concerns o Focus area: climate change Within each area: Policy, Management and Reporting o Policy statements and do
Slide 10: Criteria 2011: Environment
Criteria 2011: Environment Impact classification High, medium, low Activity-based, assessed relative to five key areas: climate change, air pollution, water pollution, waste and water consumption Minor amendments to clarify reporting criteria Ensure cumulative nature of indicators Supporting
Slide 11: Criteria 2011: Environment (cont.)
Criteria 2011: Environment (cont.) High impact: reporting Removing optional coverage criteria Text of environmental policy specified Medium impact: no change Low impact: reporting Text of environmental policy specified rather than description of impacts Policy and Reporting: Definition of “who
Slide 12: Criteria 2011: Society
Criteria 2011: Society No changes from 2010 criteria 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 2011: Governance
Criteria 2011: Governance No changes from 2010 criteria Thematic approach Core and desirable indicators
Slide 14: Criteria 2011: Climate Change
Criteria 2011: Climate Change Principles Incremental Risk assessment and management No impact classification Minor changes from 2010 criteria Policy: Senior responsibility and Public commitment, Policy context (new) Management: Any targets / goals Reporting: Emissions disclosure, Scope,
Slide 15: Entry level threshold: Environment
Entry level threshold: Environment Varies according to impact level, coverage and number of indicators met Policy statement required to be public Addressing all key areas 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) – public CDP submissions accepted
Slide 19: Best performer (BP) level
Best performer (BP) level Meets BP level in Environment 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: BP level: Environment
BP level: Environment Meet one or more of policy, management or reporting Impact Policy Management Systems Reporting 5 core plus 3 desirable 6 indicators, (including quantitative 4 core plus independent HIGH (including ‘moves to objectives/targets); OR verification and 3 other environmental sustaina
Slide 21: Process: Timeline overview
Process: Timeline overview Review comprises second half of the year Phase 1: EIRIS/USB review of public information – commences on 16 May Profile mailing to companies between July and August Phase 2: companies have three weeks to respond (EIRIS considers extensions on merit) JSE conducts controversi
Slide 22: 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 Tranche 1: M
Slide 23: Process: Phase 2
Process: Phase 2 Company response to preliminary profile 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 o To extent necessary to
Slide 24: Process: Phase 2 (cont.)
Process: Phase 2 (cont.) Attach evidence Return to original researcher Final profiles sent with company results shortly before announcement
Slide 25: 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 26: 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 27: 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 28: Publication of results
Publication of results Public announcement Media pack Press release Constituents Best performers and consistent Best Performers
Slide 29: Data sales approach for 2011
Data sales approach for 2011 Companies will be asked to opt in Opt in companies to comment during Phase 2 on publication of confidential information
Slide 30: Developments for 2012
Developments for 2012 Finalise approach to holding, investment holding and property investment companies May require engagement with relevant companies Reporting criteria From 2012, all reporting criteria must be found in public domain
Slide 31: 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 – Charlotte Hine – Project Leader