/ Corporates remain engaged with sustainability following JSE 2013 SRI Index transition to public data
Uncategorized - 28/11/2013
Corporates remain engaged with sustainability following JSE 2013 SRI Index transition to public data
The number of JSE SRI Index constituents fell by only 4 to 72 yesterday as the Johannesburg Stock Exchange implemented its decision to require public disclosure of all relevant information and widened the underlying universe to 157 stocks. The transition to only public data in this year’s review raises the bar as part of the JSE’s continued focus on encouraging expanded sustainability disclosure by listed corporates. Research, completed on behalf of the JSE by global environmental, social and governance research provider EIRIS and its local partner, the Centre for Corporate Governance in Africa at the University of Stellenbosch Business School, suggests that the widening of the index to take into account small cap companies for the first time this year, also identified strong progress by small caps in a number of ESG areas.
All 157 companies in the FTSE/JSE All Share Index were assessed for the JSE SRI Index for the first time in 2013 (last year, 108 companies assessed), which resulted in the JSE SRI index 2013 being broadened to include small cap companies. Whilst only 6 out of 57 small cap companies qualified for the JSE SRI index in full, EIRIS’ underlying data reveals that overall the small cap companies show great signs of strength on ESG areas:
a further 6 small cap companies that did not qualify were borderline (i.e. met all but one area),
82% of all the small caps assessed met the main governance criteria,
35% of all the small caps assessed met the environmental criteria,
33% of all the small caps assessed met the main social criteria,
16% of all the small caps assessed met the climate change criteria and
only 9 failed all of the above criteria.
The switch to public data also means that investors can now access the underlying assessments via EIRIS’ Global Platform, an innovative new platform for EIRIS’ sustainability data. Investors can use this data to support engagement, integration and work on disclosure with companies. “We were surprised that as many as 17 of the 20 stocks that depended upon additional non-public data to qualify last year managed to make that data public in time to qualify this year. This has underlined the value of the JSE SRI Index as a driver for greater disclosure,” commented Peter Webster, CEO of EIRIS. “It was also good to see that level of engagement by companies with our research partner remaining above the 80% mark for those covered last year and this. Now that investors can gain access to the underlying data for stock valuation, stewardship and portfolio construction purposes we can expect to see the level of investor engagement growing to match this sustained corporate interest in the JSE SRI Index as a valuable benchmark.”
EIRIS has worked with the JSE since 2007, providing research and analysis services to help the JSE develop and grow its sustainable index. Having worked with a number of stock exchanges around the world, including also the Bolsa Mexicana de Valores in Mexico and most recently the Borsa Istanbul in Turkey, EIRIS can help stock exchanges to define criteria and collect data, develop and implement new index rules, and engage with companies and the investment community. EIRIS’ international network of research partners strengthens EIRIS’ knowledge and expertise in key emerging markets. Recommendations to help stock exchanges realise effective initiatives in the future are shared in EIRIS’ recent report ‘Sustainability Initiatives: Insights from Stock Exchanges into Motivations and Challenges’.
JSE SRI Index Review 2013
157 companies were assessed (2012: 108)
72 of the companies assessed qualified for the SRI Index (2012: 76)
5 companies are in the index for the first time, 3 of which were assessed for the first time in 2013
The index comprises 35 Top 40 companies, 31 Mid Cap companies and 6 Small Cap companies
6 companies have been identified as best performers (2012: 10)