On 12 October 2015, the Johannesburg Stock Exchange (JSE) launched a new index series, the FTSE/JSE Responsible Investment Index Series (FTSE/JSE RI index series), in collaboration with FTSE Russell, the global index provider. The new index series replaces the JSE's Socially Responsible Investment index (SRI index) which was created in 2004 to promote good corporate citizenship and sustainable development.

The new index aims to move away from assessing a company in terms of what it does to assessing it by a set of standards on what it discloses to come up with a benchmark index. To this effect, the FTSE/JSE RI index series adopts the FTSE environmental, social and governance standards, referred to as FTSE ESG Ratings.

In addition, the new index gives South African listed companies the opportunity to be assessed as part of a global process alongside their international peers. It also affords companies exposure to a greater pool of international investors, and is a catalyst for best practice ESG reporting among corporates.

Qualifying companies

The FTSE/JSE RI index series is available to companies which are constituents of the FTSE/JSE Shareholder Weighted All Share Index and which are also listed in the FTSE All World Index.

Investment Trusts are excluded from the FSTE/JSE RI index series.

Assessment methodology

The FTSE/JSE RI index series will be reviewed twice a year (as opposed to the annual review under the SRI index) in June and in December, using the last trading day in May and November, respectively. As was the case for the SRI index, the review process only considers publically available information.

Two indices

The FTSE/JSE RI index series comprises of the following two indices:

- the FTSE/JSE Responsible Investment Index:

This index is a market-cap weighted index calculated on an end-of-day basis. It comprises all companies who achieve a FTSE ESG Rating of 2.0 or above. So far, 61 listed entities have qualified for the first iteration of this index.

- the FTSE/JSE Responsible Investment Top 30 Index:

This index is an equally weighted index calculated on a real-time basis. It contains the top 30 companies as ranked by the FTSE ESG Ratings.

Published by Webber Wentzel