Dow Jones sustainability indices family reaches 15-year milestoneOctober 2014
S&P Dow Jones Indices, part of McGraw Hill Financial and the world’s largest global resource for index-based concepts and data, and RobecoSAM, the investment specialist focused exclusively on Sustainability Investing, this September announced the results of the annual Dow Jones Sustainability Indices (‘DJSI’) review. 2014 also marks DJSI’s fifteen-year anniversary since the first global indices tracking the financial performance of leading sustainability driven companies were launched.
The DJSI review, which provides an integrated assessment of economic, environmental and social criteria with a strong focus on long-term shareholder value among ‘best-in-class’ companies, applies a rules-based methodology and uses primary research.
Guido Giese, Head of Indices, RobecoSAM, commenting in the wake of this year’s review said: “In fifteen years, the total number of companies we assess has more than quadrupled. We have also developed new sustainability benchmarks for investors such as country and regional indices.” David Blitzer, Chairman of the S&P Dow Jones Index Committee, noted: “Both the importance and the understanding of sustainability has grown dramatically over the past decade and a half.”
For 2014 a total of 3,395 companies were invited to participate in RobecoSAM’s Corporate Sustainability Assessment, which provides an in-depth analysis of financially material economic, environmental, and social practices. The total number of assessed companies analysed was 1,813 - comprising 830 completed questionnaires and 983 completed assessments based exclusively on public information.
The three largest additions by free-float market capitalisation to the DJSI World index, which comprises 319 constituents and is one of seven indices in the DJSI family, were Amgen Inc., Commonwealth Bank of Australia and GlaxoSmithKline Plc, while Bank of America Corp, General Electric Co, Schlumberger were the three biggest deletions.
Effective 22 September 2014 DJSI World saw 32 additions versus 46 deletions, while Dow Jones Sustainability Europe - the second largest index in the family of seven with 154 components - saw 11 additions and 35 deletions.
A total sixteen companies were recognised for having been DJSI World members for all of the past fifteen years including Bayer AG, BT Group Plc, Deutsche Bank AG, Diageo Plc, Diageo Plc, J Sainsbury Plc and Unilever NV.
The latter is Robecco SAM’s 2014-2015 industry group leader in the food, beverage and tobacco sector (according to GICS developed by MSCI).
Among key changes to the current year’s assessment over 2013, the social and environmental reporting criteria were opened up allowing companies to fill in information on their public reporting on the environmental and social issues most material to them.
A 28-page DJSI 2014 Review Results document explained: “The ‘Materiality’ question was updated to focus on whether or not companies clearly define their most material sustainability issues and how these link to their business objectives.”
The ‘Quantitative Indicators’ question was also updated to assess “what indicators companies are using to report on these material issues, whether or not targets exist and whether companies are reporting on the progress towards these targets.”
A new criterion, Tax Strategy, was created by RobecoSAM with three new questions that “assess whether or not companies have clearly defined tax policies that guide their approach to taxation, how detailed companies report on taxes in the countries and regions in which they operate and whether or not companies are aware of potential business and financial risks related to taxes.”
Assurance of the review’s assessment process was undertaken by Deloitte.
Already a member? click here to login