Environmental groups that complained to the JSE this month about nine companies on the 2010 Socially Responsible Investment (SRI) index have kept up the pressure with a call to the bourse to beef up the criteria for membership and find independent ways of identifying environmental offences.

Centre for Environmental rights executive director Melissa Fourie said the purpose of the complaint was to highlight the paucity of the SRI criteria rather than berate individual companies.

They are Evraz Highveld Steel and Vanadium, Exxaro Resources, ArcelorMittal South Africa, Pretoria Portland Cement, DRDGold, Gold Fields, Mondi, Sappi and Sasol.

The environmental NGOs, among them the Endangered Wildlife Trust and the Environmental Monitoring Group, first lodged their concerns two weeks ago, in which they detailed a list of transgressions by the nine SRI members gleaned from the Department of Environmental Affairs’ National Environmental Compliance and Enforcement Reports, as well as parliamentary answers.

SRI index head Corli le Roux said in a written response to the groups that the JSE might request further information from the nine companies, as well as its data provider and the advisory subcommittee that considers “controversial issues”. It was not the JSE’s role to enforce or verify legal compliance, but where lack of compliance “seems evident… we do need to consider the impact on a company’s inclusion on the index”.

Le Roux did not foresee reaching a conclusion on the issues raised before early next year.

She emphasised that the SRI index criteria were “dynamic and intended to evolve over time”, promising to consider the environmental groups’ input for future reviews.

In a follow-up letter to the JSE last week, the environmental groups said it was important for the exchange to “support, or at least not undermine” the environmental regulatory system. The SRI index had “long been a thorn in the flesh of NGOs in our sector, many of whom see the very companies that we engage on issues of environmental non-compliance held up as model corporate citizens”, they said.

The organisations called for the SRI to strengthen its criteria by requiring:

n All constituent companies to be in compliance with environmental law;

n An independent method of identifying non-compliance with environmental laws and enforcement action by authorities; and

n Companies themselves to declare detailed information on environmental compliance and enforcement action to the SRI.

“One wonders why it is that the companies in question do not already provide this information to shareholders, when it is clearly price-sensitive information,” the organisations said.

“For many years… information on compliance and enforcement was simply not available. This is no longer the case, and there is now publicly available information about the compliance status of many facilities and companies.”

Not taking this into account made a mockery of the index and created no incentive for companies to comply with environmental law, they added.

Department of Environmental Affairs spokeswoman Roopa Singh said the Green Scorpions were starting to see improvements and companies were spending resources to ensure environmental compliance, but in general it remained necessary “to exert pressure on these facilities” to take short-term action. - Business Report