Results of the 2013 SRI Index review

Presenter
Date

Corli le Roux, Head of SRI Index and Sustainability

Makhiba Mollo, SRI Index Associate

Overview of timeline
Initial public research commenced during June 2013

Company preliminary profiles sent out in three tranches between July and
September
Companies given two weeks to respond to profiles
USB responsible for researching most companies

Engagement with controversial issues and borderline cases during September

and November 2013
Results approved by Advisory Committee on 19 November 2013
Individual results distributed on 26 November 2013

Research methodology criteria overview

Covers four areas of measurement
Environment
Society
Governance and related sustainability concerns
Climate change

Entry level threshold for each of the four areas of measurement

Environmental impact classification
Aligned to sectors overall environmental impacts relative to economic contribution of the relevant
activity to company revenue
Currently no impact classification for social, governance or climate change

Research methodology criteria overview (2)

No new indicators this year

However, two significant moves in evolution of index
Only publicly available information considered

Entire FTSE/JSE All Share Index automatically assessed

Experience of the process

157 companies assessed in 2013 (108 in 2012)
105 of these submitted detailed profile/survey responses 66.9% of total (84% in 2012)

Represents high level of engagement increases robustness of data collection process

Small caps with few employees find difficulty in responding

Top 40 best responders 92.5% of Top 40 companies responded with additional information
(83% in 2012)

Overview of results
46% of total assessed universe has qualified (70% in 2012)
5 companies qualifying for the first time
3 of these assessed for the first time
2 previously assessed but first time to qualify

Number of constituents in 2013:

72
6

Performance by size

* Source: Report by the Data Provider, EIRIS, November 2013

Performance by size (2)

40

35

34

32

31

36

34

36

34

36
33

36
31

30

35

33

31

Number of companies

30

23

25

20

17

18

17
13

15

10

7
4

7
5

Mid Cap
Small Cap

2004

Top 40

2005

2006

2007

2008
2009
Year of assessment

2010

2011

2012

2013

Sector performance

100% qualification by companies in life insurance sector (again)

Other strong sectors

Mining
15 out of 19 qualified
Makes up 20.8% of total number of constituents

General Industrials
83% qualified

Banks
71.4% qualified

Individual research areas: Environment

65.6%

of

all

assessed

met

environmental

requirements

in

2013

(79.6% in 2012)

Full disclosure requirement a challenge, particularly for high impact and first timers

Medium impact companies do best in policy, need to improve management

and reporting
Low impact category still strong in reporting

Lower threshold

High impact companies did best in environmental reporting this year, but
need to address disclosure of management systems

1
0

Individual research areas: Society

65% of all assessed met social requirements in 2013 (81.5% in 2012)

Decline due to larger universe and public requirement

Strong themes

Stakeholder engagement, Community relations

Demonstrates awareness of external / societal expectations and willingness to engage

Disclosures around health & safety, BEE and equal opportunities also sufficient

Challenging themes

Decline in performance across training & development, employee relations, HIV/Aids

Attributable to public requirement areas generally addressed, but not sufficiently

available in public domain

1
1

Still room for increased transparency

Individual research areas:

Governance & related sustainability concerns
90.4% of all assessed met governance requirements in 2013 (98% in 2012)

Strongest performance area

Attributed to influence of King III and integrated reporting focus

Improvement in Board practice

Decline in other areas

o Again due to public requirement areas being addressed but not sufficiently disclosed

Strong areas

Business value & risk management remains strong

Broader economic issues

Governance reporting remains challenging area

1
2

Especially for companies being assessed for the first time

Individual research areas: Climate Change

56.7% of all assessed met climate change entry level requirements in 2013
(75.9% in 2012)

Decrease attributable to large number of new Small Cap companies

Companies assessed last year show improvement

Strongest performance by Top 40 companies 92.5% meeting entry level

1
3

Successful constituents
(in alphabetical order)
Advtech

Barloworld

Growth Point
Properties

Liberty Holdings

Northam Platinum

Sanlam

AECI

BHP Billiton

Harmony Gold Mining

Company

Lonmin plc

Oceana Group

Santam

African Bank
Investments

The Bidvest Group

Limited

Intu Properties

Massmart Holdings

Old Mutual

Sappi Limited

African Oxygen

Business Connexion
Group

Illovo Sugar

Mediclinic
International

Pick n Pay

Sasol

African Rainbow
Minerals

British American
Tobacco

Impala Platinum
Holdings

Merafe Resources

PPC

Sibanye Gold

Allied Electronics
Corporation

Discovery Holdings

Imperial Holdings

MMI Holdings

Rainbow Chicken

Standard Bank Group

Anglo American

DRD Gold

Investec

Mondi

Redefine Properties

Steinhoff International

Anglo American
Platinum

Exxaro Resources

JD Group

Mpact

Remgro

Sun International

AngloGold Ashanti

FirstRand

JSE Limited

MTN Group

Reunert

Tongaat Hulett

ArcelorMittal South
Africa

The Foschini Group

Limited

KAP Industrial
Holdings

Nampak

RMB Holdings

Truworths
International

Aspen Pharmacare
Holdings

Gold Fields Limited

Kumba Iron Ore

Nedbank

Royal Bafokeng
Platinum

Vodacom Group

Barclays Africa Group

Grindrod

Lewis Group Ltd

Netcare Limited

SAB Miller plc

Woolworths
International Holdings

1
4

Best performers
Companies that meet additional levels of performance

All relevant core requirements in social and governance

Independent chair

Environmental best performer threshold

All climate change indicators (except for Trend data)

Number of best performers in 2013:

6
Contraction in BP numbers due to requirement for reporting in the public
domain

1
5

Mainly resulted from core indicators in social area not being disclosed

Best performers by size & impact

HEADLINE

1
6

2013

IMPACT

2013

Top 40

High

Mid Cap

Medium

Small Cap

Low

Total

Total

Best performers 2013

Anglo American Platinum

* In alphabetical order

1
7

Best performers 2013

Illovo Sugar

* In alphabetical order

1
8

Best performers 2013

Netcare Limited

* In alphabetical order

1
9

Best performers 2013

Standard Bank

* In alphabetical order

2
0

Best performers 2013

Steinhoff International

* In alphabetical order

2
1

Best performers 2013

Vodacom Group

* In alphabetical order

2
2

Quo vadis?

Strategy implementation begins in all earnest

2
3

Review of criteria

Addressing structural sector concerns

Expanding data availability

ESG Investor Briefing

Thank you

2
4

See you in 2014!

Advtech

Barloworld

Growth Point Properties

Liberty Holdings

Northam Platinum

Sanlam

AECI

BHP Billiton

Harmony Gold Mining

Company

Lonmin plc

Oceana Group

Santam

African Bank
Investments

The Bidvest Group

Limited

Intu Properties

Massmart Holdings

Old Mutual

Sappi Limited

African Oxygen

Business Connexion
Group

Illovo Sugar (BP)

Mediclinic International

Pick n Pay

Sasol

African Rainbow
Minerals

British American
Tobacco

Impala Platinum
Holdings

Merafe Resources

PPC

Sibanye Gold

Allied Electronics
Corporation

Discovery Holdings

Imperial Holdings

MMI Holdings

Rainbow Chicken

Standard Bank Group

(BP)

Anglo American

DRD Gold

Investec

Mondi

Redefine Properties

Steinhoff International
(BP)

Anglo American
Platinum (BP)

Exxaro Resources

JD Group

Mpact

Remgro

Sun International

AngloGold Ashanti

FirstRand

JSE Limited

MTN Group

Reunert

Tongaat Hulett

ArcelorMittal South
Africa

The Foschini Group

Limited

KAP Industrial Holdings

Nampak

RMB Holdings

Truworths International

Aspen Pharmacare
Holdings

Gold Fields Limited

Kumba Iron Ore

Nedbank

Royal Bafokeng
Platinum

Vodacom Group (BP)

Barclays Africa Group

Grindrod

Lewis Group Ltd

Netcare Limited (BP)

SAB Miller plc

Woolworths
International Holdings

2
5