Information briefing annual index review corli le roux head of sri index april 2011
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Information Briefing: Annual Index Review Corli le Roux, Head of SRI Index April 2011. Highlights of Index evolution. Established May 2004 Fundamental principles Enable SRI Aspirational Benchmark Facilitate Debate Broad sustainability assessment Triple bottom line Governance

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Information Briefing: Annual Index Review Corli le Roux, Head of SRI Index April 2011

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Information briefing annual index review corli le roux head of sri index april 2011

Information Briefing: Annual Index Review Corli le Roux, Head of SRI IndexApril 2011


Information briefing annual index review corli le roux head of sri index april 2011

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


Current statistics

Current statistics


Performance by market cap

Performance by market cap


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

    • Engagement with investors


Information briefing annual index review corli le roux head of sri index april 2011

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 level introduced


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


Eligibility cont

Eligibility (cont.)

  • Companies with structural complexities:

    • Holding and investment holding companies with no staff

      • Policies and governance at holding level

      • Subsidiary contributing most to revenue

    • Property funds

      • Basic full assessment

      • Where no employees, similar to investment holding companies


Criteria 2011 outline

Criteria 2011: Outline

  • Structured along environment, society and governance (ESG)

    • Four areas of measurement

      • Broad areas: environment, society, governance & related sustainability concerns

      • Focus area: climate change

    • Within each area: Policy, Management and Reporting

      • Policy statements and documents, strategies, undertakings, commitments – ideally publicly available

      • Management and performance: systems, implementation of systems, programs, targets, objectives, monitoring and measuring of performance

      • Reporting and disclosure: content – publicly available from 2012


Information briefing annual index review corli le roux head of sri index april 2011

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 consistency of research


Information briefing annual index review corli le roux head of sri index april 2011

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 “whole group” wrt coverage: >95%


  • Information briefing annual index review corli le roux head of sri index april 2011

    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)


  • Information briefing annual index review corli le roux head of sri index april 2011

    Criteria 2011: Governance

    • No changes from 2010 criteria

    • Thematic approach

    • Core and desirable indicators


    Information briefing annual index review corli le roux head of sri index april 2011

    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, Methodology, Trend data (new)


    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


    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)


    Entry level threshold governance

    Entry level threshold: Governance

    • Majority of all indicators – half plus one

    • 1/3 of indicators met must be core


    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


    Best performer bp level

    Best performer (BP) level

    • Meets

      • BP level in Environment

      • All core indicators in

        • Society

        • Governance and related sustainability concerns, including independent chair

      • All climate change indicators, except for trend data


    Bp level environment

    BP level: Environment

    • Meet one or more of policy, management or reporting


    Information briefing annual index review corli le roux head of sri index april 2011

    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 controversial engagements during September

    • EIRIS/USB incorporates feedback and perform QA during October

    • JSE conducts borderline engagements early November

    • Advisory Committee meets mid-November

    • Results announced end November


    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: Monday 4 July

      • Tranche 2: Monday 25 July

      • Tranche 3: Monday 15 August


    Process phase 2

    Process: Phase 2

    • Company response to preliminary profile

      • Respond directly on profile

        • Where reporting advanced, most indicators met

        • Mark up changes

        • Provide evidence

      • Complete survey questionnaire in full or in part

        • Where unsure of which information required to meet

        • To extent necessary to meet ‘not met’ areas, or to improve ‘met’ areas by providing detail / context


    Process phase 2 cont

    Process: Phase 2 (cont.)

    • Attach evidence

    • Return to original researcher

    • Final profiles sent with company results shortly before announcement


    Borderline companies bl

    Borderline companies (BL)

    • Companies meeting most areas, failing marginally in one

    • Process:

      • JSE engages with BL company on specific area

        • Three working days to respond

        • JSE considers with Advisory Subcommittee

        • JSE decides whether in / out

    • Repeat borderline issues

      • Number of times for BL limited by Ground Rules

      • Must show commitment to improve after second BL status

      • If not improvement by third BL status, excluded until additional criteria met


    Controversial stories

    Controversial stories

    • Covers two elements

      • EIRIS news search covering specific areas

        • Environmental violations, health & safety issues, major competition incidents, human rights violations, etc.

      • Stakeholder complaints

    • JSE filters for engagement

    • Engages with company on particular issue

      • Engagement will happen during course of review

      • Company has seven working days to respond

      • If excluded, re-entry criteria set


    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


  • Publication of results

    Publication of results

    • Public announcement

    • Media pack

      • Press release

      • Constituents

      • Best performers and consistent Best Performers


    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


    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


    Contact details

    Contact details

    • JSE

      • [email protected]

      • Corli le Roux +27 11 520 7104

      • Makhiba Mollo +27 11 520 7022

    • EIRIS

      • [email protected]

      • Charlotte Hine – Project Leader


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