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Exchange in Focus: JSE consultation papers Awarded by Environmental Finance

The Johannesburg Stock Exchange (JSE) last year launched its Sustainability and Climate Change Disclosure Guidance consultation papers to assist companies navigating the sustainability disclosure landscape, bringing together global best practice and local context relevance. The consultation papers have won the “Thought leadership paper on sustainable investing”, in the Africa category awarded by Environmental Finance. 

Aiming to help companies navigate the reporting standards of global initiatives without being too onerous for South African operators, the JSE Sustainability and Climate Disclosure Guidance takes into account the environmental, social governance (ESG) metrics that are well-established, universal, industry-agnostic and that it believes are material to South Africa.

“The JSE recognises the importance of integrating long-term perspectives in financial markets to reduce socio-economic and physical risks necessary to enhance financial stability and a low carbon economy,” said Leila Fourie, CEO of the JSE.

Though the guidance is not mandatory for JSE-listed companies it aims to promote transparency, good governance and guide listed companies on best practices in sustainability disclosure. The Climate Disclosure Guidance is based on the Task Force on Climate-related Financial Disclosures (TCFD) framework and the Sustainable Stock Exchange Initiative’s (SSE) Climate Disclosure Model Guidance.


SSE Climate Disclosure Guidance

The SSE Model Guidance on Climate Disclosure, gives a template that exchanges can use to develop issuer oriented guidance for their markets on climate-related disclosure. The template is structured around the Financial Stability Board’s (FSB) Task Force for Climate-Related Disclosures (TCFD) recommendations, the current best practice for climate-related disclosure.

In order to provide the best tools for stock exchanges to guide their issuers on climate-related disclosure, this guidance document was made in two parts. First, an introduction on how and why to use the guidance; and secondly, a template guide and diagnostic checklist that stock exchanges can utilize to develop guidance on climate-related disclosure for issuers. To know more about the SSE Climate Action workstream here.

Who are these Guidelines for?

While intended primarily to assist JSE-listed companies, the guidelines 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 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 benefits of the guidance include:

- Help issuers to navigate the rapidly evolving landscape of sustainability reporting

- Link sustainability disclosures to the fundamental drivers of value creation

- Outline the business case for disclosing sustainability data

- Stimulate interest in the innovation opportunities in sustainability challenges

- Support the convergence of global reporting standards

- 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)

Sustainability Disclosure Guidance

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. Download: JSE Sustainability Disclosure Guidance June 2022

Climate Change Disclosure Guidance

This 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 and 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. Therefore, providing guidance to support market participants in understanding this demand and to help build consistency on how to report on climate-related information. Download: JSE Sustainability Recommended Disclosures and Metrics_FA