JSE’s Sustainability and Climate Disclosure Guidance
The awareness of sustainability issues has grown rapidly in the global landscape given the impact on climate change and economies. In light of the continuously evolving space in global sustainability standards and initiatives, as well as the significant recent increase in investor interest in sustainability and climate-related issues, the JSE is developing Sustainability Disclosure Guidance, along with a Climate Change Disclosure Guidance specifically tailored to the South African context.
We have noted the challenges being faced by listed companies as they attempt to evolve their business practices in more sustainable ways, and this guidance is intended to assist companies navigate the areas of sustainability thinking and disclosure more confidently and meaningfully. This Sustainability Disclosure Guidance is intended to serve as an umbrella for topic-related guidance as needed, with the first such guidance on Climate Disclosure, to be released at the same time.
We are committed to providing guidance on topics that are essential to the proper functioning of capital markets. Climate change is a mega-trend impacting all sectors of the economy. Therefore, we, aim to guide our issuers and investors on understanding the climate crisis and how disclosure can be used not only to anticipate risk, but also to identify opportunities.
Who is this Guidance for?
While intended primarily to assist JSE-listed companies, this guidance will also be of value to institutional investors and the different entities that they invest in (including non-listed companies and debt issuers), as well as a range of stakeholder groups interested in sustainability/ESG disclosure and performance.
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, listed or unlisted, across all sectors. The JSE believes that 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 track 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 guidance aims to clarify current global best practices in climate-related disclosure and provides a step-by-step guide to get issuers started on this journey. This guidance can be a starting point for report preparers that wish to integrate climate-related information for the first time, while also providing additional resources that can help deepen the journey into climate-related disclosure for those that are more advanced. The need for clear, consistent and decision-useful information from issuers on climate-related information is widely recognised. We, therefore, provide this guidance to support our market in understanding this demand and to help build consistency within our market on how to report on climate-related information.
The JSE Sustainability Disclosure Guidance is aligned with, and draws on, the most influential global initiatives on sustainability and climate change disclosure – including the GRI Sustainability Reporting Standards, the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations, and the IIRC’s International <IR> Framework – as well as an extensive range of other frameworks and standards (Annex 1), and the Sustainability/ESG guidance of various peer exchanges. This Disclosure Guidance is not intended to replace any of these global initiatives but rather seeks to help companies navigate the landscape of reporting standards, and to provide explicitly for the South African context.
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- Assist in contributing to the achievement of national and international sustainable development commitments and priorities, such as the UN SDGs (United Nation Sustainable Development Goals)
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- Help issuers to navigate the rapidly evolving landscape of Sustainability reporting.
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- Link sustainability disclosures to the fundamental drivers of value creation.
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- Outline the business case for disclosing sustainability data
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- Stimulate interest in the innovation opportunities in sustainability challenges.
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- Support the convergence of global reporting standards.
Benefits of the Disclosure
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About Sustainability at the JSE
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The JSE has long been recognised for its pioneering role in promoting strong governance and sustainability disclosure globally, through such initiatives as its progressive listings requirements incorporating the King Codes, its 2004 SRI Index (the first such “ESG” index owned by an exchange and the first of its kind in emerging markets), and its activities as a founding partner of the Sustainable Stock Exchanges (SSE) initiative, a signatory to the UN-backed PRI, the co-chair of the Global Investors for Sustainable Development (GISD) Alliance, and a member of the World Federation of Exchanges’ (WFE) Sustainability Working Group. It was also one of the first emerging market exchanges to create a segment for green, social and sustainability bonds and also offers derivative contracts off its FTSE/JSE Responsible Investment Index.
The SSE (2015) and WFE (2018) have both produced “model” ESG Guidance for exchanges to adapt to their context. Currently 60 stock exchanges have issued their own ESG Disclosure Guidance, informed by these guidance documents and adapted to local context, to help local issuers improve their disclosure. While the JSE is considered as having existing requirements for sustainability/ESG disclosure through its links to the King Codes on corporate governance, no detailed guidance to assist listed companies on sustainability/ESG reporting has been issued until now.
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