JSE becomes a signatory to the United Nations principles of responsible investment

JSE becomes a signatory to the United Nations principles of responsible investment

Johannesburg, 3 November 2009 – The Johannesburg Stock Exchange (JSE) has moved a step forward in its already strong support of corporate and investor decision-making which includes environmental, social and corporate governance factors as well as traditional business issues. Today, the exchange announced it has become a signatory to the United Nations Principles of Responsible Investment (UN PRI), an initiative which aims to help the global financial services industry towards responsible investment. The JSE is one of the first stock exchanges worldwide to sign the agreement.   

“For several years, the JSE has worked on ways to prompt businesses and business analysts to increase their focus on environmental, social and governance factors. Our listing requirements include elements of the King Code of Corporate Governance, for example. Signing the UN PRI further demonstrates our commitment. It also highlights our role as a pioneer in the sustainability field globally, particularly and amongst stock exchanges,” says Nicky Newton-King, Deputy CEO of the JSE. “We believe that stock exchanges have a role to play in stimulating debate between listed entities and investors about these issues.”

The JSE has contributed to the cause of responsible investment through developing the Socially Responsible Investment Index (SRI Index), which was launched in 2004 as the first of its kind in an emerging economy. An index whose constituents are companies who attain required levels in an annual review of their policies, practices and reporting, it is becoming a widely accepted gauge for good corporate citizenship for listed entities.

Founded in 2005, the UN PRI is a set of principles developed to guide investment professionals to consider environmental, social and corporate government (ESG) issues in the selection of investment opportunities and to align investors with broader societal objectives.  “Responsible investing is coming of age in South Africa as evidenced the burgeoning support and growing numbers of signatories to the UN PRI. In South Africa, there are currently 25 signatories to the principles, a significant number considering the size of our financial sector compared to other developed countries. Signatories include large asset owners such as the Government Employees Pension Fund and recent signatory Eskom Pension & Provident Fund. Besides benefiting society in general, there is a link between the cognizance of ESG issues and stronger long-term financial performance,” adds Newton-King.

In South Africa, apart from greater adoption of the UN PRI, there are other factors raising awareness of responsible investing. “In South Africa, no business can operate divorced from our past. In this respect, issues of sustainability and social responsibility are entrenched and companies have had to address labour, affirmative action and health related issues with much more urgency and vigour than elsewhere,” comments Newton-King. “To add to this, there is no fund manager who can deny the existence of great inequality in South Africa and we don’t needs to educate people about the importance of socially responsible investment as much as may be needed in more developed countries.”