BUSINESS: JSE Recieves Corporate Backing for SRI
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The continued strong performance of Top 40 companies in the Johannesburg Stock Exchange’s Socially Responsible Investment (SRI) Index, coupled with a notable increase in the number of Mid-Cap companies that qualified for inclusion in the Index this year, indicates that South African companies regard sustainability concerns as an increasingly important issue.
“This year we have the highest number of constituents in the Index’s history,” says Corli le Roux, Head of the SRI Index.
“We believe the improvement in the Mid-Cap companies’ performance is due to our greater engagement with these companies over the last two years to assist them in thinking through sustainability issues.”
In the review of the 2009 Socially Responsible Investment Index, which assesses the environmental, social and economic sustainability practices and corporate governance of listed companies –
67 of the 109 companies reviewed succeeded in becoming constituents of the Index
11 companies made it onto the Index for the first time
30 companies were identified as best performers. That is, they meet all relevant core requirements in the social, governance and environmental areas, relative to their impact. Ten of these are best performers for the first time.
Mining companies continue to be the largest represented sector within the Index. This year for the first time all 14 mining companies that were assessed, qualified. The financial sector also did well, as did general industrials.
The SRI Index – which in 2009 includes 34 Top 40 companies, 30 Mid-Caps and 3 Small Cap companies – recognises companies with good sustainability policies and practices, demonstrating a high standard of reporting. The ‘automatic universe’ for 2009 – that is, the companies whose assessment is compulsory – consisted of the FTSE/JSE Top 40 Index, 60 Mid Cap companies and the four Small Cap companies from the 2008 SRI Index.
The Government Employees Pension Fund (GEPF), plans to use the data as a basis for engaging with listed companies in which the fund is invested.
“Our goal is for companies to use the index criteria as the accepted mainstream benchmark in South Africa, against which good triple bottom line practices are measured and for investors to use the Index as a practical investment tool backed by robust research that is aligned to global standards and that will constantly evolve as the needs of responsible investment mature,” says Le Roux.
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