Browsing by Author "Taute, Delene Francis"
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- ItemInforming Responsible Investment Practices through Environmental, Social and Governance Analysis: A Perspective from South African Broad-Based Black Economic Empowerment and Transformation Disclosure(Stellenbosch : Stellenbosch University, 2016-03) Taute, Delene Francis; Van Zyl, Anria; Stellenbosch University. Faculty of Economic and Management Sciences. School of Public Leadership.ENGLISH SUMMARY: This research aims to provide greater insight into responsible investment (RI) practices in South Africa and abroad. Specifically, the research aims to contribute to the fields of sustainability and RI, explore best practices and frameworks informing RI practices, to highlight the obstacles to RI in South Africa, to explore the disclosure of a purposefully selected sample of Johannesburg Stock Exchange (JSE) listed companies, and to improve the disclosure of listed companies in South Africa in order to inform the process of environmental, social and governance (ESG) inclusion in investment decision-making. The need for this research stems from the limited body of literature which is available on RI practices in South Africa including good stakeholder engagement and the understanding or interpreting of ESG data. The need for the research is further driven by the fact that, other than publications dealing with levels of Broad-Based Black Economic Empowerment (B-BBEE) compliance, there is little deeper analysis on transformation towards improved ESG performance across listed companies that investors can draw on to inform engagement with these companies. In particular, this is the case for the Top 100 listed companies on the JSE. There is also little research that highlights financial, reputational and license to operate risks resulting from transformation towards improved ESG performance. The objectives are to increase RI awareness amongst institutional investors like the Government Employees Pension Fund (GEPF) to include ESG consideration in the decision-making process by selecting only those companies actively progressing in the ESG fields; and to prompt companies to focus efforts on ESG disclosure with the aim of improving their disclosure. A literature review was utilised to investigate the RI practices in South Africa, the obstacles to RI, and how these obstacles could contribute to a disconnect between ESG disclosure and ESG consideration in investment decisions. This study focuses on two of the most pertinent obstacles to RI as identified in the literature, that is the 1) qualitative nature, poor quality and inconsistency; and 2) incomplete and non-disclosure of ESG data available in the market. An evaluation matrix was utilised to provide greater insight into the ESG disclosure of South African companies (covering the top 40 JSE listed companies for 2013), with specific emphasis on key aspects of social performance, namely B-BBEE and transformation. The main findings of this research indicated that the analysis of the impact of ESG issues on company performance is problematic when companies are selective in their ESG disclosure; disclosure is a pre-requisite for quality performance analysis; and the approach to, and absence of, disclosure highlights investment risks that cannot be evaluated. An analysis of the top 40 JSE listed companies’ disclosure was completed to provide a view of the companies’ approach, disclosure and related risks around B-BBEE and transformation. Among the group of top-tier performing companies, forty-six per cent listed the topic of transformation and B-BBEE as material issues/strategic objectives and extensive information was provided addressing all B-BBEE elements. These companies expanded on plans to address transformation and B-BBEE within the company as responsible corporate citizens. Eighty-three per cent of companies produced integrated reports and seventy-one per cent produced sustainability reports. Verified B-BBEE certificates (eighty-eight per cent of companies) and scorecards (twelve per cent of companies) were publically available on a listed company level. GRI disclosure indexes were available for fifty-four per cent of companies and the companies reported, in addition to other GRI indicators, on all of the LA and HR GRI indicators selected for this study. All of the bottom-tier performing companies briefly mentioned the topic of transformation and/or B-BBEE in their company reports or websites while providing little or no context. Seventy-five per cent of these companies publically disclosed their B-BBEE certificates, however no scorecards were available. No GRI disclosure indexes were available; however, the companies reported on some of the LA or HR GRI indicators. The companies in the B-BBEE non-disclosure group did not mention the topic of transformation and/or B-BBEE in their reports or on their websites. Thirty-three per cent of companies produce integrated reports and sixty-six per cent produced sustainability reports. No B-BBEE certificates or scorecards were publically available; however, one company disclosed its verified detailed ownership scorecard on its website. Only eight per cent of companies disclosed a GRI disclosure indexes and reported on the LA or HR GRI indicators selected for this study.