Socially Responsible Investment Index Company briefing

1. Socially Responsible Investment IndexCompany briefing Corli le RouxHead of SRI Index2009 Review

2. Highlights of Index evolution • Established May 2004 • Crystallise debate • Enable SRI • Identify companies with good sustainability practices • Aspirational benchmark • Broad sustainability assessment • Triple bottom line • Corporate governance • 2007 introduction of automatic assessment and international data provider • Automatic universe expanded in 2008

3. Value proposition • Highlight imperatives of sustainability • Globally aligned • Locally relevant – close the loop for companies around local concerns • Framework for – • internal risk management • comprehensive reporting • Enhanced reputation • Framework/reference for awards, investment, ratings tools

4. Eligibility • Base Universe: FTSE/JSE All Share Index • For 2009 review: All Share as at March 2009 • Automatic assessment • 2008 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

5. Eligibility (cont.) • Companies with structural complexities • Holding companies • Holding company policies and influence over holdings as guiding principle • Full consideration of holdings above revenue threshold (to be determined) • Board practice and other governance issues at holding company level • Property investment funds and companies without staff • Appropriate approach still being investigated • For the time being, assessed with basic approach or similar to holding companies

6. Criteria overview: General • Full sustainability approach structured along ESG lines • Criteria as for 2008 • Core and desirable indicators • Core indicators reflect what should be regarded as minimum by companies (even though index does not at present require meeting all core indicators) • Desirable indicators reflect aspirations – as Index becomes more demanding, desirables will gradually become core

7. Criteria overview: General (cont.) • Policy, Management and Reporting • Policy statements and documents, strategies and undertakings – ideally publicly available • Management and performance cover implementation of systems, programmes, targets, objectives, includes monitoring and measuring of performance • Reporting – content areas specified by indicators, should ideally be publicly available, Index does at present still accept internal reporting – aim to move towards public only in 2010

8. Criteria overview: Environment • Aligned with FTSE4Good • Impact classification • High, medium, low - activity-based, assessed by EIRIS in relation to five key issues: climate change, air pollution, water pollution, waste, water consumption • Overall classification based on highest impact • High impact in one key issue or medium in more than four = high • Medium impact in at least two issues = medium • Rest = low • Thresholds based on impact and coverage of environmental policies, systems and reporting

9. Criteria overview: Social • Thematic approach • BEE and HIV/Aids • Applies only to companies with South African operations • Threshold at two / three levels, all of which must be met • Majority of all indicators (core and desirable) – half plus one AND • One third of indicators met must be core AND • SA companies only third level requirement: at least one core in each of BEE and HIV/Aids

10. Criteria overview: Governance and related sustainability concerns • Thematic approach • Covers basic corporate governance and listings requirements • Covers economic issues and indirect impacts • Threshold at two levels, both of which must be met • Majority of all indicators (core and desirable) – half plus one AND • One third of indicators met must be core

11. Criteria overview: Additional issues - roadmap • Climate change • Intention to include specific criteria in 2010 • Climate change questionnaire included to help gather data for benchmarking • Engagement will take place during the year to set level for SRI Index criteria • Reporting • Move towards core indicators met by public data only • To be implemented 2010 – bear in mind for upcoming reporting

12. Process: Timelines • Review comprises second half of the year • Phase 1: EIRIS review of public information – commences in July • Profile mailings to companies in three tranches: • Tranche 1 – end July • Tranche 2 – mid-August • Tranche 3 – end August • Phase 2: All companies have three weeks from receipt of preliminary profile to respond (extensions considered on merit by EIRIS) • EIRIS submits results to JSE mid-October for JSE QA and borderline engagements • Advisory Committee meeting mid-November • Results announced end November

13. 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 against criteria • Profiles mailed to companies in three tranches: • No longer by year-end date, but intending to allow longer time for assessment of new or extensive data • Tranche 1 – mostly companies failing in 2008 • Tranche 2 – best performers, unsuccessful companies with more progress • Tranche 3 – established constituents and companies not publishing large amounts of data

14. 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 still have to be met, to improve on met areas or update with new information • Refer to surveys for guidance on type of information requested

15. 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 met areas • Useful where reporting is limited, to provide detail • Attach additional information that is relevant • Return to original researcher • EIRIS incorporates new information in analysis and updates profiles • Final profiles only sent to companies after results announced

16. What information?* • For policies – • Send the document • If no text, proof of commitment/undertaking (e.g. Board resolution/minutes) • For management systems – • Adequate supporting evidence and information indicating that all relevant aspects of system exist • E.g. training, managerial responsibility, identified targets/goals, monitoring against performance indicators, regular review, extent of coverage, feedback/correction mechanisms • Reporting – • Public document with evidence of publication • Evidence of consideration by relevant internal reporting mechanism • Confidentiality? • Any document can be provided for consideration by EIRIS • If confidential, mark clearly as such • Only analysis included in profile, not raw data * Source: EIRIS FAQs

17. Borderline companies (BLs) • 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 companies • Deadline of a few days provided • JSE decides whether to include or not • Repeat borderline issues: • Ground Rules (to be approved by Advisory Committee) will limit number of times company can be considered for BL inclusion • Must show commitment to improve after second BL status • If no actual improvement, excluded from Index

18. Best performers (BPs) • Companies that meet • Relevant environmental threshold • All core indicators in social • All core indicators in governance and related concerns • Disclosed by environmental impact

19. Controversial issues / major news stories • EIRIS conducts news search flagging specific issues • Environmental violations, health & safety issues, major competition incidents, human rights violations • First comprehensive search completed by end July, subsequent spot search end September • JSE considers which issues warrant further engagement • Severity of issue, local impact • Engagement with company regarding handling of issue • Will take place during course of review • JSE may exclude company if deemed sufficient impact on broader sustainability • Ground Rules (to be approved by Advisory Committee) will deal with process for re-entry by excluded company • E.g. must show improvement or commitment to avoid • Ground Rules already provide for exclusion in between reviews

20. Results correspondence • 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 pillar • Environment overall met/not met • Social and governance indicates number of indicators met relative to possible number • Final profile

21. Salient issues • Publication of results • Press release • Names of successful constituents and best performers • Quotes by constituent companies • No naming and shaming • Value of research data • Profile – guidance for companies on areas of improvement • 2008 saw milestone collaboration with GEPF for data based on JSE criteria • Further opportunities for research distribution – under discussion with EIRIS • Creation of further products currently under development

22. Contact information • JSE • sri@jse.co.za • Corli le Roux +27 11 520 7104 • Makhiba Mollo +27 11 520 7022 • EIRIS • jse@eiris.org • Shelley McCluskey – Project Leader