new index pushes sustainabilityOctober 1999
Multinationals have been given a further incentive to adopt sustainability policies with the unveiling of the first global index that tracks their ethical performance.
The Dow Jones Sustainability Group Index (DJSGI) identifies the top 200 companies worldwide that it believes are leaders in sustainability.
Using what it claims is the ‘first systematic methodology for identifying leading sustainability companies’, it subjects the world’s 2,000 largest businesses by market capitalisation to a ‘corporate sustainability assessment’ that produces a maximum score of 74 points.
Up to 36 of these are awarded for the ‘pursuit of sustainability opportunities’, another 36 for the reduction or avoidance of ‘sustainability risks and costs’, and a further two for the quality of information made available.
Using information gleaned from specially designed questionnaires, environment and social reports, plus media scanning of stakeholder relations, each company is ranked within its own industry group, with the top 10 per cent in each group automatically included in the index.
Among those that have come out top are the Dutch company Unilever, the Japanese computer group Fujitsu and the German telecommunications firm Deutsche Telekom.
No UK-based companies are in the top 18 made public so far.
The creators of the index, the international index provider Dow Jones and SAM Sustainability Group, a sustainability assessment company, claim it will push the world’s leading companies into further improving their non-financial performance.
David Moran, president of Dow Jones Indexes, said it aimed to ‘drive interest and investments in sustainability to a win-win situation for investors and companies’. SAM Sustainability Group chief executive Reto Ringger claimed it would provide ‘a bridge between companies implementing sustainability principles and investors wishing to profit from their superior performance.’
He added that the index would push companies ‘to increase long term shareholder value by integrating economic, environmental and social factors into their business strategies’.
Dow Jones and SAM intend to license the index to financial service companies which can use it to launch ethical funds.
They have already lined up five licencees, including Germany’s largest private bank, Oppenheim. It plans to launch a fund based on the index later this year. If tracked retrospectively to 1994, the index would have outperformed the ordinary Dow Jones Global Index.
The list of companies in the index will be reviewed annually, with the next review on 12 June 2000.
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