“We believe that these listing requirements for companies to disclose their transformation positions will compel them to take transformation more seriously.”
JSE listed companies are set to be compelled to disclose their race based transformation (Black Economic Empowerment) records at the end of each financial year in what can develop into a major transformation coup if the extent and quality of disclosures are policed to be respectable.
In a statement released yesterday the JSE said it “wishes to add a disclosure item under the corporate governance as it relates to race diversity at board level.”
The disclosure, said the JSE, should clearly identify the race diversity policy at board level and require annual reporting on how the policy has been applied.
The JSE’s requirements on transformation are twofold. One part is focused on “racial diversity disclosure at board level” and the other part speaks to mandatory publication of verified BBBEE scorecard on companies’ website.
These come alongside the proposition that will see the adoption of the King IV Report on Corporate Governance into the JSE listing requirements.
The JSE suggested that it was doing all this to spur the pace of economic transformation. “More than 20 years into our democracy, our economy has still not completed its transformation,” said the JSE statement.
The Black Management Forum (BMF) has welcomed the JSE’s proposal. “We would firstly like to thank the JSE CEO, Nicky Newton-King, and her team for the engagements that we had with them which ultimately resulted in including race and gender as part of the listing requirements. These new requirements will create much needed transparency around transformation and will expose those companies that disregard and make a mockery of transformation” said BMF President, Mncane Mthunzi.
The BMF said it seeks to elevate and locate transformation at the core of how organisations execute their business responsibilities. The BMF recently announced that the JSE must make transformation targets to be part of its listing requirements. Targets on race and gender need to be set to ensure fair representation. The JSE needs to insist on disclosure from all the listed companies. The gender parity policy of the JSE is working and must be commended and supported. Disclosure alone, will hopefully, embolden companies to improve their performance as this will be put in a public domain.
“The BMF is extremely excited about these developments, this is a great victory for transformation. We believe that these listing requirements for companies to disclose their transformation positions will compel them to take transformation more seriously. Transformation has been in reverse gear for years and this announcement by the JSE is a significant step in making it a business imperative. We are now working on our submission to the JSE which will include targets on race and gender at Board and Executive Committee levels for all companies”, said Mthunzi.
The JSE said it introduced in November last year disclosure around gender transformation at board level. “The amendments are proposing a similar policy of disclosure around racial transformation at board level. The proposal regarding disclosure around gender transformation was well received by listed companies. We hope that this new requirement regarding disclosure around racial transformation will also be well received.”
King IV adoption comes with particular proposals. These include the proposal that the JSE expand the mandatory board committees (audit committee and remuneration committee), to include the social and ethics committee. “The aim is that the social and ethics committee will place focus on oversight and reporting on organisational ethics, responsible corporate citizenship, sustainable development and stakeholder relationships.”