Early this month, Dow Jones and Sustainable Asset Management (SAM) launched
The Dow Jones Sustainability Group Index (DJSGI). According to a number of
research studies, many reported here, environmentally and socially proactive
companies outperform the market average. In a “backcasting” exercise looking
at the past five years, the DJSGI outperformed conventional indices by 5.5
percent with an added risk of one percent. Now it (we) will get an empirical
test.
SAM, a Zurich-based firm, is focused on integrating corporate sustainability
into financial services through sustainability assessment and advisory services.
The company’s Sustainability Rating method was used to select the 200+ companies
that comprise the index. The rating method puts companies through an annual
review, equally weighting economic, social and environmental criteria. SAM draws
on the expertise of many people in our field through, for example, the United
Nations Environment Programme core reporting guidelines, SustainAbility standards
for environmental reports, and SA8000 standards on the social side.
Companies in the index represent a cross section of 73 industry groups in 33
countries. Three regional indexes cover Europe, America and Asia-Pacific; a
separate index covers U.S. companies. All companies are automatically screened
for alcohol, gambling, and/or tobacco.
It’s not a surprise that European companies lead the index, topping half of the
economic sectors. According to Reto Ringger of SAM, Europe has a two or three-year
lead in corporate sustainability and, if the index performs well, this should
“quickly spill over” to the USA and elsewhere. Leading European firms are in paper products (Finland’s StoraEnso), automobiles (Germany’s Bayerische Motorenwerke –
BMW), food (Netherlands-based Unilever), banks (Credit Suisse of Switzerland),
insurance (Sweden’s Skandia Forsakrings), conglomerates (Norsk Hydro, Norway),
pollution control and waste management (Tomra Systems, Norway) and semiconductors
and telephone systems (Germany’s Deutsche Telekom).
“The concept is better understood by European firms, and consumers here are more
focused, Ringer added. “Several countries already have successful ethical funds
at a national level, and our research indicates that a number of very large
investment companies would like to take a bigger step in placing funds.” Five
financial institutions from Germany, the Netherlands and Switzerland are setting
up investment funds based on the index and there is strong interest from Scandinavia
and the UK.
SAM: [sorry this link is no longer available]
DJSGI website is rather thin at the moment: [sorry this link is no longer available]
Published in cooperation with Environment News Service
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