Information Briefing: Annual Index Review Corli le Roux, Head of SRI Index April 2011

1. Information Briefing: Annual Index Review Corli le Roux, Head of SRI IndexApril 2011

2. Highlights of Index evolution • Established May 2004 • Fundamental principles • Enable SRI • Aspirational Benchmark • Facilitate Debate • Broad sustainability assessment • Triple bottom line • Governance • Deliberately developmental • Focus areas • Incremental thresholds

3. Current statistics

4. Performance by market cap

5. Value proposition • Highlights imperatives of sustainability • Encourages best practice beyond compliance • Places local companies on par with international counterparts • Enhanced reputation • Enhanced stakeholder engagement • Framework for – • Risk management • Comprehensive reporting and disclosure • Engagement with investors

6. Recent developments • 2007 – New model, international data provider, automatic universe • 2008 – GEPF collaboration • 2009 – Index moves to real time, Swix Index launched • 2010 – Climate change introduced, local research partner, data sales launched • 2011 – Higher threshold, environmental best performer level introduced

7. Eligibility • Base universe: FTSE/JSE All Share Index as at March 2011 • Automatic assessment • 2010 SRI Index constituents • Top 40 • Mid Cap • Voluntary assessment • Small Cap • Ineligible if excluded from All Share at any time during process or after review

8. Eligibility (cont.) • Companies with structural complexities: • Holding and investment holding companies with no staff • Policies and governance at holding level • Subsidiary contributing most to revenue • Property funds • Basic full assessment • Where no employees, similar to investment holding companies

9. Criteria 2011: Outline • Structured along environment, society and governance (ESG) • Four areas of measurement • Broad areas: environment, society, governance & related sustainability concerns • Focus area: climate change • Within each area: Policy, Management and Reporting • Policy statements and documents, strategies, undertakings, commitments – ideally publicly available • Management and performance: systems, implementation of systems, programs, targets, objectives, monitoring and measuring of performance • Reporting and disclosure: content – publicly available from 2012

10. Criteria 2011: Environment • Impact classification • High, medium, low • Activity-based, assessed relative to five key areas: climate change, air pollution, water pollution, waste and water consumption • Minor amendments to clarify reporting criteria • Ensure cumulative nature of indicators • Supporting consistency of research

11. Criteria 2011: Environment (cont.) • High impact: reporting • Removing optional coverage criteria • Text of environmental policy specified • Medium impact: no change • Low impact: reporting • Text of environmental policy specified rather than description of impacts • Policy and Reporting: Definition of “whole group” wrt coverage: >95%

12. Criteria 2011: Society • No changes from 2010 criteria • Thematic approach • Core and desirable indicators • BEE • Only companies with South African operations • HIV/Aids • Only companies operating in high risk countries (including South Africa)

13. Criteria 2011: Governance • No changes from 2010 criteria • Thematic approach • Core and desirable indicators

14. Criteria 2011: Climate Change • Principles • Incremental • Risk assessment and management • No impact classification • Minor changes from 2010 criteria • Policy: Senior responsibility and Public commitment, Policy context (new) • Management: Any targets / goals • Reporting: Emissions disclosure, Scope, Methodology, Trend data (new)

15. Entry level threshold: Environment • Varies according to impact level, coverage and number of indicators met • Policy statement required to be public • Addressing all key areas • Distinguish between quantified and documented targets

16. Entry level threshold: Society • Majority of all indicators – half plus one • 1/3 of indicators met must be core • One core from each of BEE and HIV/Aids (where applicable)

17. Entry level threshold: Governance • Majority of all indicators – half plus one • 1/3 of indicators met must be core

18. Entry level threshold: Climate Change • Three indicators • Senior responsibility (portfolio specifically includes climate change mandate) • Public commitment to manage climate change impacts • Emissions disclosure (absolute or normalised) – public CDP submissions accepted

19. Best performer (BP) level • Meets • BP level in Environment • All core indicators in • Society • Governance and related sustainability concerns, including independent chair • All climate change indicators, except for trend data

20. BP level: Environment • Meet one or more of policy, management or reporting

21. Process: Timeline overview • Review comprises second half of the year • Phase 1: EIRIS/USB review of public information – commences on 16 May • Profile mailing to companies between July and August • Phase 2: companies have three weeks to respond (EIRIS considers extensions on merit) • JSE conducts controversial engagements during September • EIRIS/USB incorporates feedback and perform QA during October • JSE conducts borderline engagements early November • Advisory Committee meets mid-November • Results announced end November

22. Process: Phase 1 • Review of public information • Most recently available • Web sites, annual reports, etc. • Preliminary company profile compiled • General overview of business • Environmental impact classification • Assessment of public data against criteria • Profiles mailed to companies • Tranche 1: Monday 4 July • Tranche 2: Monday 25 July • Tranche 3: Monday 15 August

23. Process: Phase 2 • Company response to preliminary profile • Respond directly on profile • Where reporting advanced, most indicators met • Mark up changes • Provide evidence • Complete survey questionnaire in full or in part • Where unsure of which information required to meet • To extent necessary to meet ‘not met’ areas, or to improve ‘met’ areas by providing detail / context

24. Process: Phase 2 (cont.) • Attach evidence • Return to original researcher • Final profiles sent with company results shortly before announcement

25. Borderline companies (BL) • Companies meeting most areas, failing marginally in one • Process: • JSE engages with BL company on specific area • Three working days to respond • JSE considers with Advisory Subcommittee • JSE decides whether in / out • Repeat borderline issues • Number of times for BL limited by Ground Rules • Must show commitment to improve after second BL status • If not improvement by third BL status, excluded until additional criteria met

26. Controversial stories • Covers two elements • EIRIS news search covering specific areas • Environmental violations, health & safety issues, major competition incidents, human rights violations, etc. • Stakeholder complaints • JSE filters for engagement • Engages with company on particular issue • Engagement will happen during course of review • Company has seven working days to respond • If excluded, re-entry criteria set

27. Final results to companies • Cover letter • Indicates individual company result and salient matters, e.g. relevant controversial stories that were considered • Summary sheet • Indicates overall performance in relation to each area of measurement • Final profile

28. Publication of results • Public announcement • Media pack • Press release • Constituents • Best performers and consistent Best Performers

29. Data sales approach for 2011 • Companies will be asked to opt in • Opt in companies to comment during Phase 2 on publication of confidential information

30. Developments for 2012 • Finalise approach to holding, investment holding and property investment companies • May require engagement with relevant companies • Reporting criteria • From 2012, all reporting criteria must be found in public domain

31. Contact details • JSE • sri@jse.co.za • Corli le Roux +27 11 520 7104 • Makhiba Mollo +27 11 520 7022 • EIRIS • jse@eiris.org • Charlotte Hine – Project Leader