Now more than ever the debate and concerns around sustainability affect us very closely. They’ve become relevant to everyone as they impact on society as a whole and integrate into our daily lives.

We continue to have a sharp focus on climate change and food security. The glaring reality is that weather patterns are changing. We’ve seen that recently with floods in Japan and fires in California, following crippling drought. Sustainability in the broader sense has also been brought home by the challenges of war and the plight of displaced people, shown by the recent tragic exodus of people from Syria.

It’s become clear that we need to look at sustainability on a deeper level – in the way it relates to poverty, inequality and hunger, and stretching as wide as the need for better healthcare and education. Increasingly, corporates are realising that in order to be successful, they need to have elements of sustainability built into their business propositions. Investing in sustainability can no longer be handled only as CSI. It has to be embedded into the business model.

We’ve adopted this approach at the JSE by taking the lead in global collaboration with the Sustainable Stock Exchanges Initiative. As a founding member, the JSE has been able to explore how exchanges, in collaboration with companies, regulators and investors, can encourage sustainable investment and boost corporate transparency and performance on environmental, social and corporate governance (ESG) issues.

On 25 September, the UN adopted the Sustainable Development Goals, a proposed set of targets relating to future international development. They’ll replace the Millennium Development Goals, which expire at the end of 2015.

Companies could dovetail their business strategies with these goals. Governments are realising the value of partnerships on sustainability with businesses and organisations, while investors are increasingly looking at investing their funds in companies that are transparent around issues of sustainability. It’s a question of collaboration, where countries work together, stock exchanges work together and companies work together.

Related to this is the JSE’s move from its Socially Responsible Investment (SRI) Index to a globally rated ESG index. The strategy is closer to the needs of investors as they will have more access to ESG data. It’ll also prompt more synergies and create enhanced value for investors.

The SRI Index has been an excellent springboard for this. From a reputation and brand perspective, companies have been very enthusiastic about being part of the SRI Index. But this will be stepped up a notch with the new index, as companies will have the opportunity to be assessed as part of a global process alongside their international peers.

For the JSE, corporate governance has been our main strong point in terms of broad sustainability. If you look at governance from a business perspective, we rank extremely highly in terms of WEF data on regulating securities exchanges, accounting standards, efficacy of our boards of directors and the protection of the rights of minority shareholders. We are very proud of this. It’s been evolving as well. What’s becoming more and more important is a clear set of standards where sustainability can be evaluated, and where there will be an increasing level of transparency on how companies report.

Different industries obviously have very different ways of dealing with sustainability issues, whether it be job creation, labour rights or their impact on the environment. Take a printing company and a coal mine, for example. Both are very different, yet what’s important is that they can both have clear standards on their impact on the environment and how they can improve in terms of transparency, disclosure and actions.

There are also tremendous opportunities in boosting sustainability, including recycling, renewable energy and more efficient use of public transport.

Companies can prepare for the new requirements around disclosure by getting to know what the standards are and what will be measured. One of the best ways is to embed sustainable business practices into companies. This way, sustainability can be dealt with through the value chain instead of through crisis management.

We are very committed to our role in the sustainability journey and look forward to working with listed companies, the investment community and all constituents in achieving our goals.

Donna Oosthuyse
Director: Capital Markets, JSE

October 2015
Image: Cindy Fourie