Dow Jones measures whether good companies do wellOctober 1999
The decision by Dow Jones and SAM Sustainability Group to create a global index which tracks the share price of ‘sustainability companies’ is an important one. It means the world’s best known financial index provider thinks the fund management market is now mature enough to launch the index – Dow Jones says it had five interested clients prior to the launch – and also that there are enough large companies developing sustainability policies to make such an index viable.
The Dow Jones Sustainability Group Index (DJSGI) will raise the profile of sustainability on corporate agendas and help to dissipate the air of mild scepticism that still hangs around ethical investment. It is likely to become an important global benchmark for assessing whether sustainability companies really do increase shareholder value in the long term. No UK company is in the top 18 companies made public so far, but this is not particularly significant; as Dow Jones points out, UK companies could dominate the next 100 places on the list. Furthermore, companies will be able to cite their inclusion in the index as a way of answering criticisms of their activities.
Dow Jones, of course, is not breaking new ground. Other specialist indexes, such as the Domini 400 Social Index in the US, track companies selected on the basis of their non-financial performance – but the DJSGI is the first to do so on a global scale.
The creation of the DJSGI is further evidence that corporate ethical performance is now becoming a mainstream issue. It is also part of a wider trend: a general shift to the middle ground. As this issue reveals, the UK’s largest life insurer feels the time has come to offer an ethical option in the pension market, while the policy director of Friends of the Earth now recognises the value of dialogue with companies. Issues of corporate ethical performance are sounding less radical than they once were. Slowly but surely, they are becoming part of mainstream thinking.
Already a member? click here to login