Based on global best practice
The JSE promotes global ESG principles, which support entities that commit to sustainability
A key facet of transformation in business, globally, is the adoption of responsible and sustainable practices, and the JSE uses its role as a connector of buyers and sellers to influence how listed companies behave, and how investors think about environmental, social and governance (ESG) principles.
JSE senior manager of strategy and sustainability Shameela Ebrahim says ESG is not just about compliance. “It is about saying how can every entity look at what it does and consider integrating environmental, social and governance issues and measures alongside traditional financial considerations into the way that they do business, into the way that they conduct themselves, and how they want to continue to grow.”
ESG, she says, is part of good governance and creating long-term value for all stakeholders. So how is the JSE promoting sustainable development? “Our approach has evolved over time in response to what is global best practice. We apply mandatory, voluntary and advocacy approaches as appropriate and where we think these will be most effective. Our overarching aim is to create an enabling environment within which transparent and responsible policies and practices can be fostered,” she says.
Ebrahim describes the JSE’S work as multidimensional, using four key elements: investment tools, regulatory frameworks, engagement and advocacy.
The regulatory context is enhanced through the incorporation of the requirement that companies must confirm the adoption of the King code of corporate governance, which continues with King 4 now being effective. Application of the codes is on an “apply and explain” basis. However, there are certain recommendations that have been mandated in the listings rules and continuing obligations such as those around board composition and disclosure and the nonbinding votes on remuneration.
In relation to investment tools, there has been growing interest among investors in integrating ESG considerations into their investments, and the JSE has been at the forefront in developing investment tools to facilitate responsible investment.
The flagship SRI index (which was the first of its kind in emerging markets and by a stock exchange) ran from 2004 until 2014 and was replaced in 2015 with the current FTSE/JSE responsible investment index, which uses the FTSE ESG ratings methodology. Companies have to meet a