CAPE TOWN - S&P DOW JONES Indices yesterday announced the launch of S&P South Africa Domestic Shareholder Weighted ESG Index, the newest addition to its global Environmental, Social and Governance index family and one of 22 new ESG country and regional indices.
With an increasing number of investors requiring indices that are aligned not only with investment goals but also their individual and institutional values, S&P said yesterday in a statement that the new index was expected to be a core benchmark for the region, helping to transition to a more sustainable South Africa.
The index integrates sustainability criteria by targeting a selection of 75 percent of market capitalisation of each GICS (Global Industry Classification Standard) industry group, and excludes tobacco, controversial weapons and companies not in compliance with UN Global Compact.
The result was an ESG index version whose risk and return profile was closely in line with that of S&P South Africa Domestic Shareholder Weighted Capped Index, despite the various exclusions the methodology requires, S&P said.
The top 10 companies currently in the index are Naspers, Standard Bank, FirstRand, Sasol, Anglo American, MTN, Sanlam, Absa, BHP and Nedbank.
“We're excited to introduce this new series of ESG indices following the debut of the S&P 500 ESG Index and ESG Scores in April,” said Alex Matturrit chief executive of S&P Dow Jones Indices. “Across the company, we are developing a portfolio of products that provide an ESG lens on investments, adding layers of insights for clients.
"These new indices provide market participants an investment tool that is aligned with their values and has a return profile that is consistent with mainstream benchmarks that have been widely followed for years.”
Reid Steadman, S&P DJI’s global head of ESG Indices, said: “While ESG has long been of great interest to investors, mMarket participants were becoming increasingly sophisticated in integrating ESG factors into their investments… we've developed an enhanced ESG scoring methodology that is purposely built for integration in our indices.”
South Africa pioneered sustainability indices in developing countries with the introduction of the JSE Social Responsible Index (SRI) in 2004, which was replaced with the FTSE/JSE Responsible Investment index series in 2015.
ALEX Matturri, chief executive officer of S&P Dow Jones Indices LLC, says they're excited by the new indexposes for a photograph after a Bloomberg Television interview in Tokyo, Japan, on Friday, April 13, 2018.