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FTSE unveils ethical South African index

December 2002

Plans for a socially responsible investment index in South Africa have been unveiled by FTSE Group and the Johannesburg Securities Exchange.

The two companies have issued a draft document on the ‘philosophy and criteria’ of the index, which would become part of the existing FTSE/JSE Africa Index Series. They have also set up an advisory committee.

Nicky Newton-King, JSE director of new business, said interest was growing in Africa. ‘In South Africa in particular, it is becoming difficult for companies to account for profitability alone without taking in a CSR perspective,’ he claimed.

She said the index would ‘identify best practice in CSR and highlight those companies with good records’, as with other indexes in the FTSE4Good series. However, there will be differences in the way firms are assessed, to take account of cultural factors.

Mark Makepeace, chief executive of FTSE Group, said the draft was based on FTSE4Good’s philosophy and criteria, but reflected ‘the complex nature of social responsibility in South Africa.’

The index will be constituted from companies in the FTSE/JSE All Share Index. It will focus mainly on identifying businesses that can demonstrate ‘environmental sustainability’, ‘positive relationships with stakeholders’ and support for ‘universal human rights’.

The draft criteria suggest the index should exclude companies that produce or sell tobacco, weapons systems, nuclear weapons or blue asbestos, which is mined in South Africa.

The JSE is the world’s 15th largest by market capitalization and lists 160 companies.




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