Development of Index

Development of IndexThe eligible universe for the SRI Index is the FTSE/JSE All Share Index. Companies are therefore firstly subject to the ground rules of the FTSE/JSE Africa Index Series particularly in relation to technical construction of the Index (refer to the FTSE/JSE web site for details).

In terms of the Ground Rules Revised May 2009to the SRI Index, eligible companies are assessed against the Criteria on an annual basis. At each annual review, participating companies have to meet the requisite threshold as specified in the Criteria to qualify for inclusion in the SRI Index.

The Index is constructed in the same fashion as the All Share Index, namely according to free float market capitalisation.
Being a broad sustainability index, the JSE SRI Index has no exclusions or down weightings of specific industries or sectors.

Due to the developmental approach the JSE has taken toward the Index, and on advice from the Advisory Committee, the JSE does not release company specific results publicly, since the Index is intended to showcase all companies that have been included. The names of the companies that did not participate and those that did not qualify are also not published.
The JSE does not currently publish rankings or indicate how companies fare relative to each other. Over the years the JSE has made incremental disclosures of outstanding performers by companies, and published this information by environmental impact classification.

The Index has been reviewed annually since the launch round in May 2004 (2004/5, 2005/6, 2007 and 2008).

Up to and including the 2005/6 review, participation was voluntary. The JSE intends to move towards an automatic assessment of the full eligible universe. From the 2007 review this has been phased in with the 2007 review incorporating an automatic assessment of the constituents of the FTSE/JSE Top 40 Index and those from the preceding year’s SRI Index, all of which form part of the All Share Index. During 2008 the automatic universe was expanded to also include the Mid Cap companies. The remaining All Share constituents are invited anually to be assessed.

To date, the Index has had a significant run with an average of 75% of participants consistently making it in to the Index. A breakdown of participation figures in the Index to date is as follows:

While the Index constituency is still dominated by the Top 40, the increasing success rate by particularly medium-sized and smaller companies is remarkable.

After the 2005/6 review, the JSE did a strategic review of the Index to reassess perceptions around the Index and review its positioning and potential opportunities going forward. The process was consultative involving a range of stakeholders including listed and non-listed companies, representatives of the investor community and the 2009 Advisory Committee.

Outcomes of the review were constructive highlighting some challenges (such as a lack of understanding around sustainability issues particularly in the investment community), but a lot of support and opportunities going forward.
In response to findings of the strategic review, we have refined the Index model to become globally aligned while retaining local relevance. We have also simplified the data collection processes and established new criteria.