IS JSE DOING ENOUGH TO STIMULATE CSR?

The Johannesburg Stock Exchange (JSE): A Gateway to South Africa’s Economic Growth

The Johannesburg Stock Exchange (JSE) plays a central role in South Africa’s financial market. It’s the place where companies list shares to raise capital, and investors engage in trading stocks, bonds, and other financial products like derivatives. More than just a platform for trading, the JSE supports business growth, helps allocate capital efficiently, and contributes significantly to shaping market prices and fostering economic stability.

A Brief History of the JSE

• 1887: Established during South Africa's gold rush, marking the start of South Africa’s financial markets.
• 1947: Financial market regulations were introduced, setting the groundwork for formalized trading.
• 1963: The JSE became a member of the World Federation of Exchanges.
• Early 1990s: Transitioned to electronic trading, leading to greater efficiency.
• 2001 & 2009: Acquired the South African Futures Exchange (SAFEX) and the Bond Exchange of South Africa (BESA), expanding into futures and bonds.
• 2005: Listed itself as a company on its own exchange, reinforcing transparency.
• 2003: Launched AltX (for SMEs) and Yield X (for interest rate and currency instruments), broadening access to financial markets.

Today, the JSE manages five key financial markets: Equities, Bonds, and Financial, Commodity, and Interest Rate Derivatives, making it a diverse marketplace for all types of investors and businesses.

How the JSE Broadens Access to Capital

In its ongoing mission to provide broader access to capital, the JSE introduced the AltX platform to help small and medium-sized enterprises (SMEs) list publicly, enabling these businesses to grow, raise capital, and create jobs. This initiative is essential for promoting economic inclusion and social mobility, particularly for businesses that might struggle to compete in markets dominated by large corporations. Through programs like the JSE Enterprise Accelerator, small businesses receive access to mentorship and capital-readiness training, empowering them to thrive in a competitive economy.

Advancing Sustainability and Impact

The JSE is also committed to embedding sustainability into its core strategy. Through innovative offerings like sustainability bonds and ESG-focused products, it supports funding for projects that benefit both society and the environment. By driving investments toward a low-carbon economy—such as the Green Bond Segment—the JSE plays a pivotal role in funding initiatives that tackle climate change and promote environmental stewardship.

Further strengthening its commitment, the JSE has developed an internal sustainability dashboard to track its own environmental footprint, showcasing efforts to improve energy and water management. These steps are part of the larger vision of supporting South Africa’s transition to a sustainable and resilient economy.

BEE Transformation and Community Engagement

The JSE actively contributes to Broad-Based Black Economic Empowerment (BEE) and social impact. It has earned a Level 2 BBBEE rating, reflecting its dedication to transformation. Key initiatives include the Black Stockbroker Programme, which provides financial assistance to black-owned stockbrokers, and a supplier development program focused on black-female-owned businesses. These programs demonstrate the JSE’s commitment to fostering diversity and creating economic opportunities for historically disadvantaged communities.

In addition, the JSE Empowerment Fund offers bursaries to black students pursuing careers in financial services, creating pathways for future leaders in the industry.

Tackling Climate Change and Conserving Natural Resources

The JSE actively supports climate-related disclosures through its alignment with the Task Force on Climate-related Financial Disclosures (TCFD). By improving climate risk reporting and encouraging sustainable investments, the JSE contributes to a more resilient economic system. Its efforts to reduce energy consumption and carbon emissions align with its mission to combat climate change.

The Green Bond Segment, launched in 2017 and expanded in 2020, provides a crucial funding platform for projects that directly address environmental challenges. These bonds are instrumental in supporting clean energy initiatives, water conservation, and other sustainability efforts that benefit both the economy and the planet.

Corporate Social Responsibility (CSR) and Investment in Education

The JSE’s Corporate Social Investment (CSI) initiatives are particularly focused on education. Through the JSE Investment Challenge, which engages thousands of students annually, and bursaries for black students, the JSE invests in shaping South Africa’s future leaders. The goal is not only to educate but also to create a socially conscious, financially literate generation.

Additionally, the JSE's enterprise and supplier development efforts are designed to uplift black-owned businesses, making a direct contribution to economic transformation and long-term sustainability.

The Challenge of Measuring CSR Performance

In 2014, the JSE launched its Social Responsibility Index (SRI) to recognize companies that uphold high standards in environmental, social, and governance (ESG) practices. However, a major challenge lies in the lack of transparency and detailed reporting on how these companies are performing in CSR. The index provides a quarterly listing of companies, but more in-depth metrics and impact reports would enhance the value of the index and allow for a clearer assessment of how these CSR initiatives are making a difference in communities.

Conclusion: The JSE as a Catalyst for Change

Through initiatives like AltX, sustainability bonds, and BEE transformation programs, the JSE is playing a critical role in broadening access to capital, promoting sustainability, and fostering economic inclusion. While challenges remain—particularly in measuring the real impact of CSR—its efforts in areas such as climate change, education, and community development underscore its importance as a catalyst for economic and social change.

As South Africa continues to face issues such as inequality and environmental degradation, the JSE’s role in addressing these challenges is more significant than ever. By empowering businesses, communities, and individuals, the JSE is shaping a more sustainable and inclusive future for all.

"In your view, how can the JSE further improve access to capital and enhance its role in driving sustainability and social equity? Share your thoughts and ideas!"

What do you think are the next steps for businesses listed and those aspiring to be listed on the JSE should do to strengthen their CSR efforts? Comment below or reach out to us at [email protected] to collaborate!

By: Mandisi Mrwebi, M.Sc. (Univ. Stell.)