Coca-Cola, Hewlett-Packard, Fed-Ex and Microsoft are among the companies being dropped this year from the Dow Jones Sustainability Indexes (DJSI) following its annual review.
High profile additions this year include Medtronic, Schneider Electric, Goldman Sachs, Sprint, Kohl’s and Xerox.
DJSI is dropping 23 firms and adding 41 to its influential index, which analyzes the world’s largest companies on economic, environmental and social factors. This year 342 companies are listed.
The indices were the first in the world to provide investors with a benchmark to help them back sustainability leaders.
"In spite of the current economic turmoil, it’s clear that sustainability remains a high priority on corporate and investor agendas, notes Michael Baldinger, CEO of SAM, which analyzes the companies.
The DJSI analyzes companies using a best-in-class approach, comparing them to their industry peers. Companies that score in the top 10% of their industry are accepted into the index based on numerous sustainability metrics.
If companies are dropped or added, it means they either under-performed or out-performed relative to their industry peers on sustainability. It doesn’t indicate a company’s absolute performance.
Coke rival Pepsi was rated the top performer in Food & Beverages this year, which is why Coke was dropped. Samsung leads Technology, Westpac (based in Australia) leads in Banking and BMW leads in Automotive.
The indices have been evaluated as the best judge of sustainable businesses by the Rate the Raters project managed by SustainAbility, a company founded in 1987 with the aim of "steering global markets towards a more sustainable future".
Switzerland-based Sustainable Asset Management (SAM) is the research arm for the index. It reviews all the companies annually and determines which companies will be included.
SAM invites the world’s 2,500 largest companies (measured by free-float market capitalization) from the 57 market sectors to report on their sustainability performance through an online questionnaire, submitted documentation, policies and reports. It combs through publicly available information to cross-check company-provided information.
PricewaterhouseCoopers and Deloitte verify the information as independent third parties.
The result of the Corporate Sustainability Assessment provides an analysis of economic, environmental and social criteria, such as corporate governance, water-related risks and stakeholder relations, with a special focus on industry-specific risks and opportunities.
DJSI doesn’t publicly disclose the reasons for companies being dropped or added because those results are shared only with the companies. They give companies feedback to help them improve – if it were made public, fewer companies would be willing to participate.
The 2011-2012 Industry Leaders are:
- Air France-KLM (Travel & Leisure)
- BMW AG (Automobiles & Parts)
- Enagas S.A.(Utilities)
- Hyundai Engineering & Construction Co. Ltd. (Construction & Materials)
- Itausa-Investimentos Itau S/A (Financial Services)
- Koninklijke DSM N.V. (Chemicals)
- Koninklijke Philips Electronics N.V. (Personal & Household Goods)
- KT Corp. (Telecommunications)
- Lotte Shopping Co. Ltd. (Retail)
- Pearson PLC (Media)
- PepsiCo Inc. (Food & Beverage)
- PostNL N.V. (Industrial Goods & Services)
- Repsol YPF S.A. (Oil & Gas)
- Roche Holding AG (Healthcare)
- Samsung Electronics Co. Ltd. (Technology)
- Stockland (Real Estate)
- Swiss Re Limited (Insurance)
- Westpac Banking Corp. (Banks)
- Xstrata PLC (Basic Resources)
Here’s the review:
Loading...
If SAM does not disclose why firms have been dropped from the index then how can consumers assess which companies they are happy to do business with?
Adding Xerox????? The only sustainability the little X has is a downward trend.