Dow Jones Sustainability World Index – A Guide to Socially-Conscious Investments
Each September since 1999 the well-respected market index company, Dow Jones & Company, has released its Dow Jones Sustainability World Index, being the top ten percent of the largest of the more than 2,500 companies represented in the Dow Jones Global Indexes, based on their sustainability and environmental practices and principles. Dow Jones works together with Zurich-based research firm, SAM Group, which conducts research on thousands of market cap leaders on a world-wide scale each year.
Using a complex free-float market capitalization weighting system that takes into account industry specific criteria, as well as economic, social and environmental metrics, each company represented in the Dow Jones Sustainability World Index is assessed with respect to its corporate sustainability. With members in more than 20 nations, the index includes dozens of industry sectors. Thanks to the increased awareness of social and corporate responsibility, there has been a corresponding increase in interest from investors for socially-conscious investments. This has resulted in the Dow Jones Sustainability World Index being licensed by a significant number of private wealth managers to be used as a benchmark. Consequently, billions of assets under management have been pegged to the index.
Many companies that have been included in the Dow Jones Sustainability World Index are quick to make use of the opportunity to highlight their position in environmental sustainability by drawing attention to their index membership. Currently the news is full of press releases in this regard, each with a write-up stating in some way that they are proud to have been chosen, and stating some of the criteria on which the decision was based, following up with the assurance of the company’s commitment to continue to uphold the standards of environmental sustainability they have thus far achieved.
In a global economic climate that has taken a serious battering of late, this type of continuity is likely to go a long way to instilling investor confidence in companies that have made the grade, especially if they have done so repeatedly. Some of the Dow Jones Sustainability World Index champions in the news include Electrolux (tenth time), Praxair (seventh time), Whirlpool (fifth time), Neste Oil (third time), Abbott Laboratories (fifth time), Barrick Gold Corporation (second time), and Citigroup (ninth time). Notable newcomers include Johnson & Johnson, Coca-Cola, Samsung Electronics, Scotiabank, Teijin Limited, Telefónica, GCI Group, Henkel, and Weyerhaeuser Co.