JSE RELEASES SUSTAINABILITY, CLIMATE CHANGE DISCLOSURE GUIDELINES

• Meaningful disclosure plays a key role in building resilient markets, which are subsequently supported by resilient companies, the JSE says
• By using the guidances, listed companies are able to easily navigate the rapidly evolving landscape of sustainability reporting
• The Climate Change Disclosure Guidance, meanwhile, aims to clarify current global best practices

Environmental, social and governance (ESG) issues have become central and are, more than ever, being factored into the development of sustainable and resilient markets and economies, both locally and globally.

The JSE acknowledges the challenges faced by listed companies in navigating the reporting landscape and integrating sustainability thinking into strategic decisions. Its Sustainability and Climate Change Disclosure Guidance papers, released on December 9, therefore, aim to assist listed companies in navigating this context. Meaningful disclosure plays a key role in building resilient markets, which are subsequently supported by resilient companies, the JSE says.

However, considering that the awareness of sustainability issues has grown rapidly across the global landscape given the impact on climate change and economies, the JSE developed the Sustainability Disclosure Guidance, along with a Climate Change Disclosure Guidance and specifically tailored them to the South African context.

The guidances are intended to assist companies to 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.

In a webinar on Thursday, the JSE reiterated its commitment to providing guidance on topics that are essential to the proper functioning of capital markets.

“Climate change is a megatrend 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,” it said.

HOW TO NAVIGATE THE EVOLVING ESG LANDSCAPE

By using the guidances, listed companies are able to easily navigate the rapidly evolving landscape of sustainability reporting, while also linking sustainability disclosures to the fundamental drivers of value creation and outline the business case for disclosing sustainability data.

In addition, the documents are intended to stimulate interest in the innovation opportunities in sustainability challenges, support the convergence of global reporting standards and assist in contributing to the achievement of national and international sustainable development commitments and priorities, such as the United Nations Sustainable Development Goals (UN SDGs).

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 and ESG disclosure and performance.

Considering that 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 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 record of reporting, a smaller company, a privately held business or a debt issuer.

All these different entities are encouraged to use these guidelines.

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 Framework.

The guidance also draws on an extensive range of other frameworks and standards, and the sustainability and 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, the JSE clarified.

CLIMATE CHANGE DISCLOSURE GUIDANCE

The Climate Change Disclosure Guidance, meanwhile, 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 JSE explained.

It added that “the need for clear, consistent and decision-useful information from issuers on climate-related information is widely recognised” and that it, therefore, provides the guidance to support its market in understanding this demand and to help build consistency within our market on how to report on climate-related information.

ESG IS ‘TOP OF MIND’ TODAY

JSE CEO Leila Fourie, meanwhile, highlighted the importance of the environment and noted that, alongside South Africa being responsible for about 89% of Africa’s coal-fired generation, the country is “faced with numerous other environmental challenges, including the ongoing quest to frack for shale gas, or the current bid for seismic surveys in the Wild Coast”.

As such, she noted that climate change is “often top of mind” when it comes to pressing non-financial issues.

“Businesses play a vital role in developing South Africa into a globally recognised economic hub. And once again, business will be vital in rebuilding this nation,” Fourie said.

She noted that, this time around, “the key driver will be sustainable development, which the JSE has actively sought to provide exchange-based mechanisms to improve [small business’] access to finance, which also drive radical economic transformation of this country and the creation of job opportunities, thereby enabling sustainable and inclusive economic growth and development”.

She added that the reporting guideline s are a “fundamental building block” to ensuring these goals.