FTSE ESG Ratings & climate change: Enhancements affecting JSE-listed companies

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Presented by

Shameela Soobramoney (Johannesburg Stock Exchange); Sarah Williams (FTSE Russell)

About this talk

Understanding enhancements to the assessment of climate change management in FTSE’s ESG Ratings. Investor focus on climate and transition risk has grown significantly in recent years. In response to this, FTSE Russell has developed a number of data and index tools to better measure and manage these risks. As part of these efforts, FTSE Russell enhanced the way climate change is addressed as part of its ESG Ratings, and this affects JSE-listed companies being assessed as part of the FTSE/JSE Responsible Investment Index series. This enhancement was the result of two years of intensive collaboration between FTSE Russell and the Grantham Institute of the London School of Economics in the context of the Transition Pathway Initiative. Adoption of the proposed enhancements has aligned the Climate Change theme with the Transition Pathway Initiative’s Management Quality (MQ) score, which itself uses data inputs from FTSE Russell’s ESG assessment to assess companies’ readiness for transition to a low carbon economy. The enhancement was centred around three key changes in the way the Climate Change theme is scored: 1. Focus on a distilled set of indicators drawn from the existing theme to calculate a Management Quality score. 2. Assessing companies on a “staircase”, rather than as a percentage of indicators met. 3. Importance of carbon intensity relative to peers. This enhancement is the latest in a series of changes to the way FTSE Russell assesses climate change management in the ESG model, keeping pace with evolving global standards and investor expectations. Join a conversation between experts from FTSE Russell and the Johannesburg Stock Exchange (JSE) as they discuss: • The climate disclosure landscape • FTSE Russell’s ESG Ratings and data model, with particular focus on the changes to the climate change theme • The performance of South African companies on the basis of their ESG scores • The performance of the FTSE/JSE Responsible Investment Indexes
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