Exchanging views

Thu, 5 February 2009

GreaterGood SA is lucky to have Nicky Newton-King, Deputy Chief Executive of the Johannesburg Stock Exchange, on its board of trustees. A leading figure in the world of financial markets and a key driver behind the JSE’s Socially Responsible Investment (SRI) Index, Nicky has some refreshing views on corporate social investment and its impact on development.

As the world's 14th largest exchange, trading over R8billion a day, the JSE faces a constant challenge to develop strategies that ensure that it remains globally and locally relevant. And sitting on GreaterGood SA’s board of trustees has given Nicky Newton-King a different perspective on the world of social development.

“Running an exchange like the JSE,” says Nicky just before setting off for the World Economic Forum in Davos, “we’ve really tried to see how we can be a powerful voice in the sustainable development debate. Working with GreaterGood SA has helped to give me a perspective on the real grassroots issues. “

Stepping up

Not that Nicky needed any introduction to the issues around sustainability – she was closely involved in introducing the JSE's Socially Responsible Investment Index which measures environmental and social sustainability as well as governance and related sustainability concerns. Launched in 2004, just before the Earth Summit in Johannesburg, it was the first index of its kind in an emerging market.

“We have criteria which we use to measure a company’s performance on the triple bottom line.The number of companies which meet the criteria has increased dramatically since it was started. We are slowly moving away from voluntary towards mandatory participation, recognising that sustainability is an issue that affects all of us and we must step up to the plate, particularly at the moment.”

Sustainability a ‘must have’

Nicky agrees with predictions that it will be a difficult few years for development in South Africa. “Access to funding is going to be a major issue,” she says when asked about the outlook for the country’s socio-economic development. “The second big issue is that, of course, socio-economic challenges are going to increase rather than decrease as more and more people are living in dire circumstances and as businesses face increased pressures simply staying afloat which runs the risk of trumping any commitment to sustainability. The challenge for businesses is to balance innovating their business model with remaining committed to the triple bottom line.”

“So the nature of the debate around sustainability and business is moving away from being a ‘nice to have’ to a question of, ‘we have to do this, we have so much that needs to be done – let’s get going.’”

Corporate commitment

As one of Africa’s leading business people, Nicky is confident that South African companies will heed this call. “Business in South Africa already understands the need to be involved and is quite creative in how it goes about it,” she continues. “But we need to keep that going and also ensure that it is done as a core part of the business’s sustainable operations, rather than being separated out into charitable giving.”

“What we’ve tried to do at the JSE is to use our central voice in the capital markets, making companies and investors aware of sustainability best practices so that we celebrate and reward the companies that are the best performers.”

A social stock exchange

Joining the GreaterGood SA board in 2006 shortly before the launch of our SA Social Investment Exchange (SASIX), Nicky Newton-King was on hand to support the development of Africa’s first social ‘exchange’ which has raised over R13.5 million for social development projects in just two years.

Nicky’s experience of running an exchange like the JSE, as well as the SRI Index, will prove invaluable when she participates by video conference in the inaugural meeting to create a global federation of social investment exchanges, spearheaded by GreaterGood SA, in Italy this month.

The success of SASIX generated a great deal of excitement and has led to the development of GSIX – a Global Social Investment Exchange. This global exchange, regulated by a federation of social exchanges and supported by in-depth intelligence from country exchanges, aims to create a more efficient and dynamic social capital market.

Point of departure

“The point of departure has to be finding out how best to meet the needs of both the recipient of the investment as well as the investor (donor),” Nicky says when asked about her views of setting up social exchanges. “There is a critical need to connect social investment vehicles with funding that they wouldn’t normally have access to.”

“But,” she concludes, striking a note of caution, “running an exchange is an extremely expensive operation. While I think the category of social investment is critical and timeous, it would be a mistake to think one can only channel investment to social investment vehicles by operating separate social exchanges. More pragmatic, is to create a separate listed category of investment – social investment products – and use existing exchange infrastructures to mobilize the investment and trade in such social investment vehicles to minimize costs.”