Jse Limited · JSE:JSE
Jse — ESG Presentation (September 2018)
27 slides from Jse's sustainability presentation, September 2018
Slide 1: Update on the FTSE ESG data model - RC5 (2018/2019)
Update on the FTSE ESG data model - RC5 (2018/2019) By: Shameela Soobramoney Senior Manager: Group Strategy and Sustainability
Slide 2: 'Trending' in Sustainability
‘Trending’ in Sustainability The trust deficit (Edelman Trust Barometer) – trust of civil society in business, governments and NGO’s continues to deteriorate The ‘divest’ movement – move to divest from fossil fuel-related assets Millennials and ethical investing – millennials are prizing “doing good
Slide 3: What is informing investor decision-making in ESG
What is informing investor decision-making in ESG • Greater awareness of the magnitude of ESG risks • Climate change (TCFD) • Corporate failures • BP, VW etc. • Increasing ability to quantify ESG factors • ESG rating frameworks, laws on disclosure, reporting requirements • Social media • Millennials
Slide 4: What investors are looking for from corporates locally
What investors are looking for from corporates locally • Good governance first and foremost • Robust processes • PEP’s • Conflicts of interest • Integrated thinking • Meaningful data • Comparability • Balanced reporting • Quantification of risks as well as opportunities • Investible products
Slide 5: JSE's hybrid approach to sustainability
JSE’s hybrid approach to sustainability Regulatory Framework Investment tools • Mandatory governance requirements • SRI Index since 2004 • King III apply or explain (integrated reporting) • FTSE/JSE Responsible Investment Index Series and • King IV (apply and explain, required from late 2017) FTSE E
Slide 6: FTSE/JSE Responsible Investment Indices
FTSE/JSE Responsible Investment Indices Index Series launched October 2015 Aspirational benchmark Evolution of SRI index to meet investor demands and expand value proposition Broad sustainability assessment ESG foundation – based on adoption of FTSE Russell ESG Ratings Focus on investor
Slide 7: Eligibility for FTSE/JSE RI Indices
Eligibility for FTSE/JSE RI Indices Base universes: FTSE All World Index AND FTSE/JSE Shareholder Weighted (Swix) All Share Index Ineligible if excluded from either index at any time during process or after quarterly reviews If eligible, assessment against the FTSE ESG Ratings methodology
Slide 8: FTSE ESG Ratings Model: snapshot
FTSE ESG Ratings Model: snapshot
Slide 9: Score and exposure levels
Score and exposure levels • Scoring: theme, pillar and overall Covers six levels from 0 to 5 A score of 3 is considered good practice • Theme exposure Measures the relevance / risk exposure of the company relative to the theme Considers factors such as industrial sector, geographic presence
Slide 10: Model updates
MODEL UPDATES
Slide 11: Why update the model?
Why update the model? • Sustainability imperatives are evolving • Gives companies a robust and helpful framework for ESG disclosure on an on-going basis • Help alleviate “framework fatigue” • Align with emerging best practice and global trends • Considers other more widely-used frameworks • CDP • GR
Slide 12: ESG methodology enhancements 2018
ESG methodology enhancements 2018 For 2018 — 2019 Research Cycle Environmental Pillar Social Pillar Governance Pillar Biodiversity No changes Customer No changes Anti- No changes (EBD) Responsibility Corruption (SCR) (GAC) Health & Safety No changes Corporate 1 new indicator (SHS) Govemance N (GCG)
Slide 13: Water Security theme (EWT)
Water Security theme - re-named from Water Use (EWT) • Water increasingly considered a risk and investors need more information to be able to assess the risks • Key changes affect high and medium impact sectors • Changes relate to: • governance, strategy, risk management, metrics and targets • focus
Slide 14: Labour Standards Theme (SLS)
Labour Standards Theme (SLS)
Slide 15: Social Supply Chain theme (SSC)
Social Supply Chain theme (SSC)
Slide 16: Governance theme (GCG)
Governance theme (GCG) To reflect growing focus on equal opportunities the following indicator has been added to the Theme. Applicability: legend Indicator type —_ Indicator description Subsectors Exposure: GCG50 Quantitative Percentage of women on the Executive committee or ‘i equivalent.
Slide 17: Climate Change theme (ECC)
Climate Change theme (ECC) The following 3 indicators have been added to the Theme for high impact subsectors. Applicability: Indicator type Indicator description Subsectors Exposure: ECC73 Qualitative The company discloses: a. Its memberships of trade associations that engage Hy on climate-related
Slide 18: Key points
Key points • FTSE process of updating the model has changed • Cycle is June to June • Governance process enhanced to include advisory committee sign-off • Model shared with all assessed companies • Model updates already effective for the current research cycle • Companies being assessed for the Dec
Slide 19: New features on your FTSE QSD portal
NEW FEATURES ON YOUR FTSE QSD PORTAL
Slide 20: You can access details on the review process
You can access details on the review process via your company user access to the FTSE QSD portal in this way
Slide 21: New features on FTSE QSD portal - CPC
New features on FTSE QSD portal - CPC CPC refers to a new feature called Corporate Peer Comparison Your company name Your company ICB classification details
Slide 22: Company vs. sub-sector and industry averages (using dummy data)
Company vs. sub-sector and industry averages (using dummy data) Your company name Company Company This refers to the global average scores for your sub- sector and Industry globally (i.e. compared to your global peers as assessed by FTSE Russell) Data used here is sample data for illustration purpos
Slide 23: Company vs. top 5 global peers
Company vs. top 5 global peers Your company A comparative view of your company name vs. its top 5 peers in the same sub- sector globally. Each peer is named. Company Data used here is sample data for illustration purposes only
Slide 24: Parting shots
PARTING SHOTS
Slide 25: Index performance – SWIX All Share vs FTSE/JSE RI indices
Index performance – SWIX All Share vs FTSE/JSE RI Benchmark and FTSE/JSE RI Top 30 indices Debunking the notion that sustainability considerations (ESG factors) negatively impact returns?
Slide 26: Key messages
Key messages • Climate change risk is front and centre – pressure for disclosure and mitigation action growing exponentially • Water risk is an issue of rapidly growing concern • ESG integration in investments is here and is growing AND debunking the notion that it negatively impacts returns • ESG d
Slide 27: Contact
Contact: [email protected] or [email protected] www.jse.co.za