Banks top overall latest JSE sector disclosure ratings
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Banks top overall latest JSE sector disclosure ratings
…Risk Insights and Instinctif Partners release JSE Sector ESG Disclosure Ratings...
21 April 2021, Johannesburg: ESG (environmental, social and governance) data analytics company,
Risk Insights, and ESG business communications firm, Instinctif Partners, today released the latest JSE
Sector ESG disclosure ranking and scores for all sectors. The ranking evaluates every company on the
JSE, but for the purposes of this report, discloses ESG performance of each of the 18 JSE super sectors
as a whole.
Anashrin Pillay, CEO of Risk Insights says, “Our research using unstructured data has established,
through statistical methods, a strong correlation between company disclosure and sustainability.
Therefore, we believe that it is important for South Africa’s economy - and the national agenda - that
companies continue improving their disclosure to take into account the requirements of all their
respective stakeholders. This will ensure that transparency is driving accountability and sustainability,
enabling corporates to attract capital and lower the cost of funds. Sustainability disclosure and ESG
strategies will result in deeper capital markets through impact investing thereby building resilience into
the South African economy.”
The ratings are based on TF-IDF* scores that are completely independent and can be used by
investors, corporates and other stakeholders to identify key ESG risks and opportunities for listed JSE
counters. The Risk Insights ESG database and platform is enriched with data for all listed companies
on the JSE from 2016 to date, rated by sector for a particular financial year. As companies integrated
reports are published together with other voluntary and mandatory reports, ESG GPS uses algorithm
to gather and rate institutions. The retrospective rating provides a forward view of the companies’
sustainability. ESG rating and disclosure reporting are embedded into strategy and not a point in time
statistic.
Kim Polley, Managing Partner, Instinctif Partners comments, “In my 20+ year career I don’t think I’ve
ever seen or felt disruption quite like 2021. Before the pandemic, we were already seeing segments of
society taking action – led by characters such as Wangari Maathai and Greta Thunberg – but the
awakening to the inter-connection of all the worlds systems was highlighted starkly by Covid-19.
Investors took notice, and expectations have shifted from ticking the right boxes to having a clear and
authentic purpose. Stakeholders are expecting to see measurable impact, driven by meaningful action.
Words are no longer enough.”
The JSE is in the top 20 listed exchanges globally, with its own market capitalisation of approximately
R9.9bn. The research was conducted across the 18 super JSE sectors shares which were specifically
rated according to total ESG (environmental, social and governance) disclosure.Environment
In terms of the environmental factors the basic resources sector comes out on top followed by chemicals
and the banking sector. The laggards are the technology, media and investment instruments sectors.
Kim Polley adds, “Over the past decade, the resources sector – most especially mining - has been
under increasing scrutiny regarding transparency around ESG responsibilities. This is particularly
important as both stakeholder pressure and the ability to attract investment have become key
commercial drivers for miners to implement stronger ESG measures. However, for many in the mining
sector, especially for junior companies, slow or inadequate progress may threaten their ability to access
capital in an increasingly tight market. The good news is, it’s never too late to do better!”
Environmental
Company Name Average ESG - TF- Ranking
IDF*score
Basic Resources 8 442 1
Chemicals 5 424 2
Banks 4 996 3
Healthcare 2 902 4
Food & Beverage 2 224 5
Personal & Household Goods 1 950 6
Travel & Leisure 1 713 7
Insurance 1 626 8
Retail 1 320 9
Oil & Gas 1 282 10
Telecommunications 1 278 11
Industrial Goods & Services 1 190 12
Real Estate 1 071 13
Construction & Materials 990 14
Financial Services 633 15
Technology 257 16
Media 191 17
Investment Instruments 85 18Social
Sectors that perform well in terms of social disclosure are the basic resources, chemicals and banks.
Employee diversity and inclusiveness, wellness, training, health and safety protocols and community
development are some of the key metrics under the “S”, that the top performing companies are paying
attention to. Social factors in ESG management are a risk mitigation variable to create inclusive
societies in the capital markets.
“Companies in the top performing sectors are recognising the importance of brand and reputation
management in their pursuit of operating resilience. However, at the core, it is important to remember
that ESG is no longer just about reputation, it is about the bottom line and effective risk management
too. In today's rapidly changing business climate, attention to ESG issues is becoming critical to long-
term competitive success,” notes Polley.
Social
Company Name S- average TF-IDF Ranking
score
Basic Resources 7 534 1
Chemicals 6 848 2
Banks 5 375 3
Healthcare 5 192 4
Personal & Household Goods 4 107 5
Construction & Materials 3 957 6
Telecommunications 3 239 7
Real Estate 2 855 8
Industrial Goods & Services 2 769 9
Insurance 2 730 10
Food & Beverage 2 425 11
Travel & Leisure 2 344 12
Retail 2 119 13
Technology 1 947 14
Financial Services 1 845 15
Media 1 768 16
Oil & Gas 1 682 17
Investment Instruments 706 18Governance
Governance dominates disclosure in all sectors, with board governance in terms of gender diversity
and inclusivity bearing more significance. The sectors that have the best disclosure in terms of
governance are the banking, basic resources and insurance sectors. The financial services and
investment instrument sectors are the laggards in this regard.
Anashrin Pillay remarks, “Governance is not a standalone factor, when companies report well on
governance it should be natural that other ESG factors such as Social and Environmental would be
given significant attention as well. These risks have risen drastically globally. South African companies
need to invest in their social and environmental reporting disclosure.”
Governance
Company Name G – average TF-IDF* Ranking
score
Banks 52 157 1
Basic Resources 25 368 2
Insurance 23 279 3
Chemicals 22 301 4
Personal & Household Goods 18 529 5
Telecommunications 13 490 6
Construction & Materials 13 028 7
Industrial Goods & Services 12 829 8
Food & Beverage 11 608 9
Healthcare 11 515 10
Real Estate 11 423 11
Retail 11 263 12
Travel & Leisure 10 688 13
Oil & Gas 10 016 14
Technology 9 999 15
Media 8 543 16
Financial Services 8 224 17
Investment Instruments 3 467 18Overall Ranking
Based on relativity, the banking and resources sectors have the best disclosure in terms of overall
disclosure ranking, with media and investment instruments being the laggards.
“While it is not surprising that banks and resources come out tops, it is concerning that the media sector
fares so poorly. It should be acknowledged that the media landscape is changing rapidly, and that a
lack of homogeneity across the board means that it is difficult to define material issues that are relevant
to all companies in the sector. However, there is some opportunity to rally around key tenets of media
accountability, social impact, governance and investment in people,” Pillay concludes.
Total ESG
Company Name ESG – average TF- Ranking
IDF score
Banks 62 528 1
Basic Resources 41 345 2
Chemicals 34 572 3
Insurance 27 635 4
Personal & Household Goods 24 586 5
Healthcare 19 609 6
Telecommunications 18 007 7
Construction & Materials 17 975 8
Industrial Goods & Services 16 788 9
Food & Beverage 16 257 10
Real Estate 15 349 11
Travel & Leisure 14 744 12
Retail 14 702 13
Oil & Gas 12 981 14
Technology 12 203 15
Financial Services 10 702 16
Media 10 502 17
Investment Instruments 4 257 18
-ends-1
Findings for this report are derived from Risk Insights’ proprietary ESG GPS rating tool that uses AI and machine
learning algorithms to transform disclosure reporting both voluntary and mandatory reporting into ratings for
environmental, social and governance metrics. The ESG GPS Rating Tool uses disclosure as part of its rating
methodology.
2
Term-Frequency Inverse-Document-Frequency. This represents the relevance of each B’word 3
as a numerical value.
3
A variable generated from the laws of the land and the policies that govern a particular sector. These are used to measure the
relevance of the disclosure on ESG factors by searching for the term in the company reports
About the Risk Insights ESG GPS Rating Model
The Risk Insights ESG GPS rating model uses publicly available data to produce an ESG Rating for
each company listed on the JSE. Sustainability frameworks (CDP, GRI etc) together with the laws of
South Africa are considered when curating the list of B’words 2 which forms the basis of the ESG-GPS
rating model. Artificial intelligence and machine learning algorithms are applied to transform the data
collected into a TF-IDF score which represents the level of company disclosure on Environmental,
Social and Governance factors. For more information regarding disclosure ratings of listed companies
please visit us as www.riskinsights.co.za
About Risk Insights
Risk Insights is a professional data analytics company that delivers sustainable solutions and products
to its clients that is part of the World Economic Forum (WEF) New Champions Community. In November
2020, the company was awarded Excellence in Agile Business Governance award by the World
Economic Forum. The singular focus of Risk Insights is to serve its clients with distinction and to support
organizational transformation in order to unlock sustainable value creation for an organization. Risk
Insights was founded in 2009 with the primary goal to assist in the improvement of risk management
practices in South Africa and on the African continent. Risk Insights is an accredited Level 1 BEE
Company.
About Instinctif Partners
Instinctif Partners is an international business communications consultancy, partnering with its clients
to build reputation, combat risk and deliver value. Instinctif works with clients to engage multiple and
complex audiences through deep insight, expert storytelling and creative delivery. For 25 years the
company has used its local and global knowledge to address specific market issues across public
relations, investor relations, ESG communications, reputation management and digital. Instinctif
connects audiences, insights and creative to drive impact through real and measurable commercial
value. It is an accredited Level 1 BEE Company.You can also read
