The Johannesburg Stock Exchange, Africa’s leading exchange, launched its new index series, the FTSE/JSE Responsible Investment Index Series, in partnership with FTSE Russell. The new index series replaces the JSE’s SRI Index and reflects the JSE’s commitment to advancing corporate sustainability practices.
The FTSE/JSE Responsible Investment Index Series offers an objective methodology that further promotes the aims of stimulating greater transparency by corporates on environmental, social and governance (ESG) considerations, and enabling investors to integrate these considerations into investment and stewardship. As part of the evolution of the JSE’s work through the SRI Index, the JSE has adopted the FTSE ESG Ratings methodology.
The companies eligible for the FTSE/JSE Responsible Investment Indices are those that are constituents of the FTSE/JSE Shareholder Weighted All Share Index and are also listed in the FTSE All World Index. Inclusion in the FTSE/JSE Responsible Investment Indices is determined in accordance with the FTSE/JSE Responsible Investment Index Series Ground Rules.
The new FTSE/JSE Responsible Investment Index Series comprises the following:
• The FTSE/JSE Responsible Investment Index
o Is a market-cap weighted index calculated on an end-of-day basis
o Comprises all eligible companies that achieve a FTSE ESG rating of 2.0 or above
o 61 listed entities have qualified for the first iteration of the Index
• The FTSE/JSE Responsible Investment Top 30 Index
o Is an equally weighted index calculated on a real-time basis
o Comprises the Top 30 companies ranked by FTSE ESG Rating
The index will be reviewed twice a year in June and December, using the ESG Rating as at the last trading day in May and November respectively. Research for the ESG Ratings occurs annually.
Corli Le Roux, Head of Sustainability at the JSE, says, “Today’s launch indicates a firm commitment by both the JSE and FTSE Russell to advance responsible investment and builds on the JSE’s decade-long experience in helping companies integrate the principles of the triple bottom line and good corporate governance into their business practices.”
Since launching the JSE Socially Responsible Investment Index and becoming the first emerging market and first stock exchange to form an SRI Index in 2004, the JSE has continued to assess developments locally and internationally to ensure that the evolution of its approach to sustainability meets the needs of its clients and the dynamics of the sustainability imperative. Following ongoing reviews of the SRI Index aims and strategy, the exchange decided to pursue an ESG collaboration with the FTSE Group, who already calculates the FTSE/JSE Africa Index Series and who is a world leader in the creation and management of index solutions. For the JSE, the partnership was a strategic decision to align its measurement of ESG factors with international best practice.
“Collaborating with FTSE Russell on expanding our efforts in sustainability offers a number of synergies and benefits for both organisations and our clients, and was thus a logical opportunity for us to pursue.”
With the new FTSE/JSE Responsible Investment Index Series, JSE listed companies have the opportunity to be assessed and rated alongside over 3,000 companies from across the globe against best practice ESG practices and performance metrics. The assessment process only considers publicly available information.
David Harris, Head of ESG, FTSE Russell, says “Investors in companies listed on JSE now have a suite of new indexes and supporting data, based on FTSE Russell’s new global ESG methodology, to integrate ESG into their investment and stewardship decisions. South African listed companies are ranked top for ESG performance in Emerging Markets due to their relatively high quality of ESG practices and reporting. JSE has championed and encouraged sustainability reporting for many years, making it the ideal partner for FTSE Russell to develop innovative ESG products for this market.”