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December 10, 2012

ESG reporting increases among South African companies in 2012

The number of South African companies increasing their sustainability reporting practices has improved in 2012, according to annual Johannesburg Stock Exchange (JSE) SRI Index review.

The 2012 review found 76 out of 108 South African companies assessed by responsible investment firm EIRIS met the sustainability criteria for inclusion in the JSE SRI Index which comprises of listed companies that meet criteria related to their environmental, social and governance (ESG) policies. It is designed to encourage companies to operate responsibly and transparently, and to consider ESG factors when evaluating investments.

The largest sector in the index is the mining sector, accounting for 18% of all companies included in it. However, there was been a fall in the best performer number from 22 in 2011 to 10 2012 across the mining sector, which was blamed on "more demanding reporting criteria and recent labour issues in the mining sector."

Other noticeable trends include:

– An overall improvement in companies reporting ESG information;– Top 40 largest companies listed on the JSE SRI demonstrated the strongest sustainability performance with more than 90% of them meeting requirements for inclusion on the JSE SRI Index;– The majority (80%) of South African companies met JSE SRI Index criteria on Black Economic Empowerment up 1.3% from 2011; and,– Three companies entered the JSE SRI Index for the first time.

A parallel study by EIRIS also assessed the standards of public disclosure of ESG issues amongst South African companies and found that 20 of the companies that qualified for the 2012 SRI Index would not have made it onto the JSE SRI index had assessments been based purely on publicly-disclosed ESG information.

"We’re really impressed by the progress South African companies are making on sustainability, but levels of disclosure on ESG issues do need to improve," EIRIS executive director Peter Webster said.

"Many companies have done the work; they just need to make public what they have done."

Related links

Johannesburg Stock Exchange

EIRIS

 

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