The JSE on June 14 launched its own set of Sustainability Disclosure and Climate Disclosure Guidance documents, which combine relevant global standards on sustainability and climate change to suit the South African context.
For example, JSE and consulting partner on the guidelines Incite referenced the Global Reporting Initiative’s Sustainability Reporting Standards, the Taskforce on Climate-related Financial Disclosures and the International Integrated Reporting Council’s Integrated Reporting Framework.
While the JSE’s disclosure guidance is not mandatory and not intended to replace any global initiatives, it does seek to help companies navigate the landscape of reporting standards, explicitly for the South African context.
The guidance also aims to improve the quality of sustainability information available, to enable more informed investment decisions, which will ultimately help drive improved sustainability performance and accountability for the country’s significant social and environmental challenges.
Incite founding partner Jonathon Hanks explains that the guidance adopts a “double materiality” perspective, which means all organisations impact the environment and society (inside-out) and, in turn, the environment and society affect the organisation and its performance (outside-in).
These impacts may be positive or negative and will vary over time.
Hanks believes organisations ought to report these interactions differently, depending on the intended audience and purpose of the report.
The Sustainability Disclosure Guidance unpacks aspects of governance, strategy and management, as well as metrics, targets and performance, as does the Climate Disclosure Guidance.
For example, all organisations ascribing to the guidance should be able to describe how an assessment of sustainability-related impacts, risks and opportunities has influenced the organisation’s strategy, and what impact that has had on the organisation’s overall performance, both positive and negative.
Hanks clarifies that sustainability aspects do not only encompass climate change mitigation, just as it does not only encompass environment, social and governance (ESG) factors, but all matters related to the longevity of an organisation and society.
The JSE underwent a rigorous stakeholder engagement process to draft the Sustainability and Climate Disclosure Guidance consultation papers, including a two-month period for public comment, which ended on February 28.
“There is a growing expectation of business to play a role in the shift towards stakeholder capitalism, coupled with a growth of investor interest in ESG issues. This shift in expectations creates the opportunity for stock exchanges to play a role,” says JSE group chief sustainability officer Shameela Soobramoney.
Investors are increasingly interested in sustainability issues as this pertains to all their investments, irrespective of whether they are large or small, equities or bonds and listed or unlisted, across all sectors.
The JSE believes the characteristics of high-quality disclosure and effective engagement with investors is broadly the same for all entities, whether a large publicly listed issuer with a long record of reporting, a smaller company, a privately held business or a debt issuer.
All these different entities are encouraged to use these guidelines.
The JSE has long been recognised for its pioneering role in promoting strong governance and sustainability disclosure globally, including through its progressing listing requirements incorporating the King Codes, its own 2004 Socially Responsible Investment index, and in helping to found the Sustainable Stock Exchanges initiative.
It was also one of the first emerging market exchanges to create a segment for green, social and sustainability bonds.