Companies listed on the Johannesburg Stock Exchange (JSE) must navigate evolving sustainability reporting requirements to ensure compliance, credibility and investor confidence.

Prof Neels Kilian of the North-West University’s (NWU’s) Faculty of Law outlined the complexities of this shift in his inaugural lecture – titled “The legal background to integrated financial reporting” – on 5 March 2025 at the Potchefstroom Campus.

“The JSE has taken steps to standardise sustainability reporting,” Prof Kilian said. “But ensuring consistent compliance remains a challenge.”

The JSE introduced sustainability metrics in 2022, requiring companies to report on about 60 factors related to environmental, social and governance practices. This framework builds on the World Federation of Exchanges model, which outlines 30 key indicators. Unlike the New York Stock Exchange, which views these guidelines as recommendations, the JSE integrates them into its reporting rules.

“Companies are adjusting to the new framework, but full compliance is still developing,” said Prof Kilian.

Asset managers such as BlackRock and Old Mutual use independent rating agencies to assess sustainability performance. The JSE also collaborates with the London Stock Exchange for the FTSE/JSE Top 30 Index, which is rated for sustainability compliance by FTSE Russell. However, Prof Kilian pointed to a lack of publicly available ratings for companies in the index.

“There’s a transparency gap in how companies are rated for sustainability. Investors need access to clear and reliable data.”

Other exchanges, such as the Paris Stock Exchange, employ rating systems like Morningstar and Equitics® to evaluate sustainability compliance. Prof Kilian suggested that the JSE may need to adopt similar independent assessment models to strengthen investor confidence.

“The future of financial reporting is tied to sustainability. Stock exchanges must adapt to ensure compliance and credibility.”

Prof Neels Kilian