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JSE Limited

Service Providers Framework 2019

You are in Strategy and Governance » Policy on ESG beliefs

Policy on ESG beliefs

SG 01. Responsible investment policy

01.1. Describe how your organisation’s philosophy incorporates environmental, social and governance factors, and the link to your business offerings.

The JSE understands that a sustainable business is one that operates with a long-term perspective and the recognition that it both impacts on, and is impacted by the context within which the business operates (including the stakeholder, environmental, political, legal, and economic context).

As a leader in emerging markets, the JSE recognises the importance of integrating the long-term perspective into financial markets to reduce socio-economic and physical risks and to contribute to enhanced financial stability and a low-carbon economy.

The business is operated according to a philosophy that tries to balance the interests of all stakeholders, particularly in relation to the following three pressures:

• optimising shareholder value;

• reinvesting internally in people and technology; and

• driving down cost to clients.

As far as possible, the JSE business is operated and positioned in a manner that not only provides thought leadership impacting or influencing stakeholders, but also sets an example in achieving excellence. The JSE actively promotes sustainable, transparent business and responsible investment across a range of areas including the following:

- as a global thought leader in the field of governance and sustainability and the related standards and disclosure;

- evolving and expanding its responsible investment product offering;

- ensuring operational excellence through considering the ESG risks, impacts and opportunities of the JSE's activities and disclosures.

Recent progress has entrenched and improved the JSE Ltd's inclusion in both the FTSE/JSE Responsible Investment benchmark index as well as the FTSE/JSE Responsible Investment Top 30 Index. The JSE's ESG rating improved as at last rating in June 2018.

Please see pages 21 to 23 of our 2018 Social Value Report for more dertail (availble at http://ir.jse.co.za/static-files/1aeacff1-32e1-4aaa-b4e0-9eb2cd54e9fa)

In 2018, our Sustainability Position Statement was approved by our Board and is as follows:

"The JSE, as a leader in emerging markets, recognises the importance of integrating the long-term perspective into financial markets to reduce socio-economic and physical risks and to contribute to enhanced financial stability and a low carbon economy. We undertake to:

-Guide our markets on the importance of incorporating ESG into investment considerations

-Provide the tools and services that facilitate responsible investing and the re-orientation of capital flows to more sustainable development

-Use our central role as connector to facilitate engagement and advocacy in relation to sustainability

-Ourselves behave in a manner that explicitly considers sustainability across our value chain as an exchange and as a central player in the South African economy"

 

 

01.2. Indicate whether you have policies that formalise the incorporation of your ESG beliefs in your business offerings.

01.3. Indicate the components/types of your internal policy and provide the URL and/or an attachment of the document/s if they are publicly available.

Policy components/types

Public availability

Public availability

Public availability

          Overview of organisational strategy and corporate scorecard performance is set out annually in our Integrated Annual Report
        

Public availability

          Sustainability strategy
        

Public availability

01.4. Indicate how these are put into practice internally across the organisation.

          Monitoring of progress against strategic objectives through corporate scorecard and reporting at executive and Board level
        

01.5. Additional information [OPTIONAL]


SG 02. Norms used to develop policies

02.1. Indicate what frameworks and guidelines you have used to develop your organisation’s policies. Tick all that apply.

          King Code on Corporate Governance for South Africa
        
          National legislation including the Constitution of South Africa; Companies Act; Labour Relations, Employment Equity and Broad-Based Black Economic Empowerment legislation; Financial Sector transformation codes
        
          WFE Sustainability Principles
Sustainable Stock Exchanges Initiative guidelines
The CDP (Carbon Disclosure Project)
FTSE Russell ESG ratings data model
        

02.2. Additional information. [OPTIONAL]


SG 03. Policy offerings to clients

03.1. Indicate whether you offer standard, off the shelf, policies to clients as part of your product offerings, and/or whether you create tailored versions for individual clients.

Off the shelf
Tailored
Asset class-specific RI guidelines
Sector-specific RI guidelines
Screening/exclusions policy
Engagement policy
(Proxy) voting policy
RI guidelines set out within the Investment Policy Statement (IPS)
RI guidelines set out in a freestanding RI policy
Multi-year RI implementation project plan
Conflict of interest management policy
Stockbroker allocation policy
Securities lending policy
Other, please specify (1)
Other, please specify (2)
Other, please specify (3)
None of the above

03.3. Additional information. [OPTIONAL]


SG 04. ESG/RI in business offerings (Not Applicable)


SG 05. Outsourcing of services (Private)


SG 06. Providing training/education

06.1. Indicate whether you provide training/educational services on ESG/RI. Tick all that apply.

          Training for listed companies
        

06.2. Describe the main components of your training/educational services on ESG/RI and any variations depending on the group you provide training/education to.

Various training offerings are in place and correspond with the JSE view that sustainabiliy and good governance are inseparable. Topics currently include director induction and training, listing requirements training, governance, specifically the King Code, integrated reporting and ethics.  Our ESG specific training is bespoke (tailored to each client) , and covers how the FTSE ESG data model works and how companies are faring and what their weak and strong areas of performance are.

06.3. Describe whether these training/educational services include any commercial elements.

          Basic training is free of cost. Beyond that, costs vary with the needs of the client.
        

06.4. Additional information. [OPTIONAL]


SG 07. Applying, advancing and promoting the PRI principles

07.1. Describe how your organisation applies, advances and promotes the PRI Principles.

Please refer to previous questions regarding business activities as well as SSE fact sheet and Communication to Stakeholders at http://www.sseinitiative.org/fact-sheet/jse/

07.2. Highlight whether there are any ways that your organisation would like to engage further with the PRI. [OPTIONAL]

We'd like to work on further promoting the SDG's and promoting better understanding and integration of the SDG's into investment decision making, as well as on working to promote better alignment on ESG reporting frameworks in order to promote meaningful, comparabele and decison-useful information.


SG 08. Actions taken to promote responsible investment

8.1. Indicate which of the following actions your organisation has taken to promote responsible investments during the reporting year, independently of collaborative initiatives.

          Offering responsible investment products
Promoting and encouraging greater ESG transparency
        

8.2. Additional information. [OPTIONAL]


SG 09. Long term trends

09.1. Indicate which of the following long-term trends are addressed in your product outputs.

09.2. Explain how this long-term trend affects your product outputs.

Product and service offerings need to take account of the particular context of South Africa and the need to enable broader economic participation

09.2. Explain how this long-term trend affects your product outputs.

Certain listed sectors and asset classes such as commodities may be directly affected by climate change, having a range of potential impacts on the market including price volatility.

The need to address climate change through mitigation and adaptation creates opportunity for new products / markets, but also strengthens the imperitive for offering risk management tools.

09.2. Explain how this long-term trend affects your product outputs.

Certain listed sectors and asset classes may be directly affected by resource scarcity, which could either negatively or positively affect thier long term prospects and attractivness to investors.

09.2. Explain how this long-term trend affects your product outputs.

Capital markets are highly dependent on technology and must remain rapidly responsive to and even take the lead technological advancements.

          Socio-economic transformation
        

09.2. Explain how this long-term trend affects your product outputs.

Product and service offerings need to take account of the particular context of South Africa and the need to enable broader economic participation, and ensure that offerings are relevant and progressive.


SG 10. Interaction with asset owners (Not Applicable)


SG 11. Aligning approach with investor goals

11.1. Describe how you typically align your organisation’s philosophy and approach to ESG/RI with your investor clients’ goals.

Services and products are developed and evolved with client needs in mind as far as possible. Customised offerings aim to meet particular needs or goals.

11.2. Additional information. [OPTIONAL]


SG 12. ESG recommendations not aligned with investor goals

12.1. Describe what steps you take, if any, when your ESG recommendations are not in line with your investor clients’ goals.

Customised offerings can be explored where broad market offerings don't align with specific investor's goals. Services and products are intended to ensure market stability and investor protection, however aim to be flexible and adaptable to client needs as well.

12.2. Additional information. [OPTIONAL]


SG 13. Seeking feedback from clients

13.1. Indicate whether you seek feedback from clients on your RI/ESG services and product offerings

13.2. Describe how you use this feedback in your RI/ESG services and product offerings.

Feedback is used to continue to evolve existing offerings and to explore new offerings.


SG 14. Managing conflicts of interest

14.1. Indicate whether your organisation has a policy for managing potential conflicts of interest.

14.2. Describe how you manage potential conflicts of interest.

Strict policies are in place around disclosure and management of conflicts. In particular, since the organisation has both a regulatory function (as a self-regulatory organisation) and a commercial objective, perceived conflicts may arise. The organisation has detailed and well-defined policies covering this, particulalry in relation to the Issuer Regulation and Market Surveillance functions.

 

14.3. Describe how you ensure that company employees do not derive any personal gain from the use of information collected during your work process.

Strict employment policies apply with serious consequences for contraventions (including potential criminal action in the case of e.g. insider trading or market manipulation).

Issuer Regulation and Market Surveillance functionality is physically and practically isolated and ring-fenced from commercial and other business functionality.

14.4. Additional information. [OPTIONAL]


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