Local and international companies assessed on same platform

By Staff Writer
The Johannesburg Stock Exchange (JSE), together with FTSE Russell (a global index), has launched the FTSE/JSE Responsible Investment Index Series. The aim of the series is to generate more transparency by corporates with regards to environmental, social and governance (ESG) considerations. This should enable investors to make use of these considerations when investing.
 
“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,” highlighted the JSE.
 
However, the assessment process only takes into consideration publically available information. 
 
What does this mean?
 
“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,” said Corli Le Roux, head of sustainability at the JSE.
 
David Harris, head of ESG at FTSE Russell, noted: “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.”
 
“The new index series replaces the JSE’s SRI Index and reflects the JSE’s commitment to advancing corporate sustainability practices,” revealed the JSE.
 
According to the JSE, companies that are listed on the FTSE/JSE Shareholder Weighted All Share Index, as well as the FTSE All World Index, are eligible to be on the FTSE/JSE Responsible Investment Indices.
 
“Inclusion in the FTSE/JSE Responsible Investment Indices is determined in accordance with the FTSE/JSE Responsible Investment Index Series Ground Rules,” said the JSE.
 
What is the FTSE/JSE Responsible Investment Index Series?
 
The series is made up of two indices. These are the FTSE/JSE Responsible Investment Index and the FTSE/JSE Responsible Investment Top 30 Index.
 
  • The FTSE/JSE Responsible Investment Index is “a market-cap weighted index,” which is calculated on an end-of-day basis. It comprises of all eligible companies that achieve an FTSE ESG rating of 2.0 or over. “61 listed entities have qualified for the first iteration of the Index,” revealed the JSE.
 
  • The FTSE/JSE Responsible Investment Top 30 Index “is an equally weighted index calculated on a real-time basis. It comprises the Top 30 companies ranked by FTSE ESG Rating.”
 
The FTSE/JSE Responsible Investment Index Series will be reviewed twice a year (June and December), based on the ESG rating from the last day of trading from the prior month (May and November). The JSE pointed out that ESG rating occurs annually.

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