The JSE has released its sustainability and climate change disclosure guidance report for locally listed companies as businesses around the world come under increasing pressure to shift to a more socially-conscious form of stakeholder capitalism.
The exchange is optimistic that the report will create a transparent and comparable ESG reporting framework for locally listed companies as they deal with a plethora of disclosure and measurement methodologies that often differ between jurisdictions.
The online launch of the report included an address via webinar by former Bank of England governor Mark Carney, now UN Special Envoy on Climate Action and Finance, who commended SA for its pioneering role in integrated reporting and described the exchange’s guidance document as “very important.”
“In response to the rapidly evolving landscape of sustainability standards and frameworks, this guidance provides JSE-listed issuers with guidelines specifically tailored to the SA context, whilst being fully cognisant of global best practice,” said Leila Fourie, CEO of the JSE. “It is intended that this disclosure guidance will serve as an umbrella for subtopic guidance as needed, with the first such guidance on climate disclosure, to be released at the same time.”
The JSE’s sustainability guidance report comes at a time when companies, as well as the banks and investors that finance them, are coming under increasing scrutiny from climate lobbyists and shareholder activists who are demanding tangible evidence that corporate leaders are addressing ESG-related issues.
That pressure has resulted in banks and asset managers either announcing that they will begin phasing out funding for carbon-intensive projects such as thermal coal mines or saying they will charge a premium to finance such initiatives.
With companies facing the prospect of higher costs of capital as well as reputational damage for being associated with carbon-intensive projects, many are striving to improve their image by bolstering their ESG efforts. However, they also face an array of ESG reporting frameworks that often differ according to geography and make like-for-like comparisons difficult and administratively onerous.
The JSE’s report also aims to help locally listed companies align their ESG reporting frameworks with recent changes in global standards. To achieve that, the JSE considered established international ESG metrics that are industry-agnostic and have universal application.
These included the Global Reporting Initiative’s (GRI) sustainability standards; the Taskforce on Climate-related Financial Disclosures (TCFD); and the International Financial Reporting Standards’ (IFRS) new International Sustainability Standards Board (ISSB). The JSE also took the ESG guidance of eight peer stock exchanges into account.
“It makes sense for organisations in this country to be aligned with where global expectations are in terms of ESG disclosure and performance,” said Jonathon Hanks, a director at Incite, an ESG advisory firm that assisted the JSE with its report. “Many listed companies in SA operate in Europe so they must be aligned.”
While the JSE said its disclosure guidance isn’t intended to replace any of the well-established global ESG reporting frameworks, it wants to provide local companies with standards that are tailored to the SA context and take the country’s chronically high unemployment levels and poverty into account.
“It is our hope that this set of guidance documents will be a valuable resource and tool to all our listed companies, regardless of size or sector, and we look forward to receiving your comments and feedback as we refine this work in preparation for the final document to be published in 2022,” said Fourie.
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