Results of the 2013 SRI Index review Corli le Roux, Head of SRI Index and Sustainability Presenter Date 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 2
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 sector’s overall environmental impacts relative to economic contribution of the relevant activity to company revenue • Currently no impact classification for social, governance or climate change 3
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 4
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) 5
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 7
Performance by size (2) 40 36 36 36 36 35 34 34 34 33 33 35 32 31 31 31 30 30 Number of companies 23 25 18 20 17 17 13 15 10 7 7 7 6 Top 40 5 5 4 4 4 5 3 Mid Cap Small Cap 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year of assessment 8
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 9
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 – Still room for increased transparency 1 1
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 – Again due to public requirement – areas being addressed but not sufficiently disclosed o Strong areas • Business value & risk management remains strong • Broader economic issues Governance reporting remains challenging area • Especially for companies being assessed for the first time 1 2
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) Growth Point Advtech Barloworld Liberty Holdings Northam Platinum Sanlam Properties Harmony Gold Mining AECI BHP Billiton Lonmin plc Oceana Group Santam Company African Bank The Bidvest Group Intu Properties Massmart Holdings Old Mutual Sappi Limited Investments Limited Business Connexion Mediclinic African Oxygen Illovo Sugar Pick n Pay Sasol Group International African Rainbow British American Impala Platinum Merafe Resources PPC Sibanye Gold Minerals Tobacco Holdings Allied Electronics Discovery Holdings Imperial Holdings MMI Holdings Rainbow Chicken Standard Bank Group Corporation Anglo American DRD Gold Investec Mondi Redefine Properties Steinhoff International Anglo American Exxaro Resources JD Group Mpact Remgro Sun International Platinum AngloGold Ashanti FirstRand JSE Limited MTN Group Reunert Tongaat Hulett ArcelorMittal South The Foschini Group KAP Industrial Truworths Nampak RMB Holdings Africa Limited Holdings International Aspen Pharmacare Royal Bafokeng Gold Fields Limited Kumba Iron Ore Nedbank Vodacom Group Holdings Platinum Woolworths Barclays Africa Group Grindrod Lewis Group Ltd Netcare Limited SAB Miller plc 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 • Mainly resulted from core indicators in social area not being disclosed 1 5
Best performers by size & impact HEADLINE 2013 IMPACT 2013 Top 40 4 High 2 Mid Cap 2 Medium 1 Small Cap 0 Low 3 Total 6 Total 6 1 6
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 • Review of criteria • Addressing structural sector concerns • Expanding data availability • ESG Investor Briefing 2 3
Thank you 2 4
See you in 2014! Advtech Barloworld Growth Point Properties Liberty Holdings Northam Platinum Sanlam Harmony Gold Mining AECI BHP Billiton Lonmin plc Oceana Group Santam Company African Bank The Bidvest Group Intu Properties Massmart Holdings Old Mutual Sappi Limited Investments Limited Business Connexion African Oxygen Illovo Sugar (BP) Mediclinic International Pick n Pay Sasol Group African Rainbow British American Impala Platinum Merafe Resources PPC Sibanye Gold Minerals Tobacco Holdings Allied Electronics Standard Bank Group Discovery Holdings Imperial Holdings MMI Holdings Rainbow Chicken Corporation (BP) Steinhoff International Anglo American DRD Gold Investec Mondi Redefine Properties (BP) Anglo American Exxaro Resources JD Group Mpact Remgro Sun International Platinum (BP) AngloGold Ashanti FirstRand JSE Limited MTN Group Reunert Tongaat Hulett ArcelorMittal South The Foschini Group KAP Industrial Holdings Nampak RMB Holdings Truworths International Africa Limited Aspen Pharmacare Royal Bafokeng Gold Fields Limited Kumba Iron Ore Nedbank Vodacom Group (BP) Holdings Platinum Woolworths Barclays Africa Group Grindrod Lewis Group Ltd Netcare Limited (BP) SAB Miller plc International Holdings 2 5
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