Dow Jones Sustainability Index
Ethical consumerism – also referred to as green consumerism or moral purchasing – along with fair-trade practices and a focus on sustainable development, spurred on by a growing concern for the environment, is resulting in an increasing number of investors taking into account a company’s commitment to upholding ethical and green principals in their day to day business when making investment decisions. A useful tool in determining which companies fit the bill in this regard is the range of Dow Jones Sustainability Indexes (DJSI) which closely track the performance of top sustainability-driven companies on a worldwide scale.
The DJSI was launched in 1999 and operates through more than 70 license holders based in 16 countries at present, managing over US$ 8 billion and spanning a variety of financial products. The leaders in sustainability management are determined through a Corporate Sustainability Assessment carried out by SAM Research with an annual review generally resulting in a number of additions and deletions. This annual review includes a comprehensive analysis of corporate economic, social and environmental performance, taking into account important issues such as risk management, corporate governance, supply chain standards, environmental impact policies and labor practices. In addition to these general criteria, the review covers criteria specific to each of the 57 industry sectors as defined by the Industry Classification Benchmark (ICB). The process is audited by Deloitte to ensure that the assessments on sustainability are completed in line with predefined rules.
The results of the 2010 review – the largest global analysis of corporate sustainability carried out to date – revealed that 48 new companies are to join the DJSI World components, while 46 companies will be deleted. This means that the current number of DJSI World components stands at 318. The most noteworthy of the new additions include Morgan Stanley, Arcelor Mittal and Standard Chartered, while the most notable of the deletions include Royal Dutch Shell, UniCredit and Toyota Motor.
With consumer activity being a driving force behind any economy, and with consumers becoming more aware of their social responsibility, as well as their power to influence the market, investors no doubt appreciate the value of investment tools such as the Dow Jones Sustainability Indexes.