Dow Jones Sustainability Index
The Dow Jones Sustainability Indexes ( DJSI for short , German: Dow Jones Sustainability Indices) are a family of stock indices that take into account not only economic but also ecological and social criteria. This means that the DJSI stand out from both classic stock indices and purely ecological indices. The Dow Jones Sustainability Indexes are a cooperation project between the Dow Jones publishing house and the Zurich-based company Sustainable Asset Management (SAM). The DJSI are divided into global ( DJSI-World ), European ( DJSI Europe ) and North American ( DJSI North America ) index groups. From the existing indices, SAM tries to include the most sustainable companies in the index by selecting them on the basis of positive criteria. Licenses must be acquired for commercial use of the DJS indexes. Since its introduction in 1999, over 70 licenses have been sold to financial companies in 18 different countries. These offer financial products such as B. Investment portfolios, certificates and funds of all kinds in connection with the DJSI with a total value of approximately 6 billion US dollars.
history
Due to the growing interest on the part of investors to include ecological and social aspects in their investment decisions, Dow Jones Indexes and SAM decided to introduce sustainability-oriented stock indices. Particular attention was paid to the development of an index that can be compared well with traditional stock indices such as the Dow Jones Global Index. This differentiates the DJSI from existing eco-indices, such as the NAI or the DOMINI 400 Social Index . The DJSI family has grown continuously over the past few years and now comprises over 40 indices, which are differentiated according to geographic and economic aspects. The dates of the introduction of the main DJS indices are given below:
- September 8, 1999: DJSI World founded by the cooperation partner Dow Jones publishing house, SAM
- October 15, 2001: Cooperation with STOXX Ltd. , DJSI STOXX, DJSI EURO STOXX ( Eurozone only )
- February 17, 2005: AuSSI (Australian SAM Sustainability Index) - based on DJSI World
- September 23, 2005: DJSI North America, DJSI United States
- January 23, 2006: Dow Jones Islamic Market Sustainability Index
- January 31, 2006: Blue-chip indices DJSI STOXX 40 and DJSI EURO STOXX 40
- August 26, 2008: Blue chip indices DJSI World 80 and DJSI World ex US 80
- August 26, 2008: Blue-chip indices DJSI North America 40 and DJSI United States 40
- in August 2008: STOXX Ltd. retires as a cooperation partner
Companies included
The so-called investment universe (i.e. all companies that are eligible for inclusion) includes the 2500 largest companies in the Dow Jones Global Total Stock Market Index (DJGTSM), depending on the index considered. The 600 largest North American companies on the Dow Jones Global Index are taken into account for the DJSI North America. This close alignment with existing stock indices allows a good comparison of economic and sustainable development of companies. The companies are then divided into 58 sectors. The top 10% of each industry, measured by sustainability performance, are ultimately included in the DJSI. This method is also known as the best-in-class approach. All sectors in which the best company reaches less than a fifth of the absolute maximum value are excluded.
criteria
The criteria examined are subdivided into economic, ecological and social criteria on the one hand and general and sector-specific criteria on the other. Further sub-categories are assigned to each criterion, which are evaluated by corresponding questions. Each possible answer is assigned a point value. The point value achieved by a company is multiplied by the weighting of the question and criterion. The total number of points is then calculated from the sum of these products. The same criteria, questions, weightings and methods apply to all companies worldwide. So there is no geographical distinction. However, the criteria and their weightings are changed over time and adapted to new circumstances.
General criteria
Overall, the cross-industry criteria make up 43% of the entire questionnaire, the rest is made up of the industry-specific criteria. 18% of this is based on economic, 3% on ecological and 22% on social criteria.
| dimension | criteria | weighting | Sub-categories (ex.) |
|---|---|---|---|
| Economically | Corporate governance | 6.0% | Management compensation, transparency |
| Risk and Crisis Management | 6.0% | Risk definition, stress test | |
| Rules of conduct / anti-corruption rules | 6.0% | Business relations, reporting | |
| Ecologically | Environmental reporting 1 | 3.0% | Coverage, accuracy |
| Social | Personnel development | 5.5% | Learning processes, talent acquisition |
| Talent acquisition and retention | 5.5% | Share of performance-based pay, bonuses | |
| Work practice | 5.0% | Complaint management, public obligations (e.g. anti-discrimination) | |
| Corporate Citizenship | 3.0% | Charity, charity | |
| Social balance 1 | 3.0% | cover |
1 Assessment only on the basis of publicly available information
as of September 2008
Industry-specific criteria
Industry-specific criteria are determined separately for each industry. The particular opportunities and risks of each industry are taken into account individually. These differ greatly in some cases and also have an influence on the weighting of the economic, ecological and social dimensions. The division into branches and "supersectors" is based on the Industry Classification Benchmark . The currently best, measured in terms of sustainability performance, were the following "Industry Group Leaders" in September 2015:
| Surname | Branch | country |
|---|---|---|
| Bayerische Motoren Werke AG | automobile | Germany |
| Westpac Banking Corp. | Banks | Australia |
| CNH Industrial NV | Capital goods | Great Britain |
| SGS SA | Professional services | Switzerland |
| LG Electronics Inc | Consumer goods | South Korea |
| Sodexo | Consumer services | France |
| UBS Group AG | Financial services | Switzerland |
| Thai Oil PCL | energy | Thailand |
| METRO AG | Groceries and consumer goods | Germany |
| Unilever NV | Food, beverages and tobacco | Netherlands |
| Abbott Laboratories | health | United States |
| Kao Corp | Consumer and household goods | Japan |
| Swiss Re AG | Insurance | Switzerland |
| Akzo Nobel NV | materials | Netherlands |
| Telenet Group Holding NV | media | Belgium |
| Roche Holding AG | Pharma | Switzerland |
| Stockland | property | Australia |
| Lotte Shopping Co Ltd | retail trade | South Korea |
| Taiwan Semiconductor Manufacturing Co Ltd | semiconductor | Taiwan |
| Fujitsu Ltd | Software and services | Japan |
| Alcatel-Lucent | Technology hardware | France |
| KT Corp | telecommunications | South Korea |
| Air France-KLM | transport | France |
| Gas Natural SDG SA | Utilities | Spain |
Acquisition methodology / verification
RobecoSAM is responsible for collecting the relevant data. This has developed a questionnaire which is sent to the companies. The questionnaire completed by the companies themselves is the most important source of information for evaluating the company. Further sources of information are publicly accessible documents such as annual reports, sustainability reports or media reports as well as direct contact with companies. This media and stakeholder analysis (MSA) covers a number of topics such as corruption, illegal practices, human rights violations, or major environmental pollution. RobecoSAM monitors reporting on companies using a pre-sorted selection from RepRisk, a Swiss provider of risk data on environmental, social and governance issues. The information received is checked and validated both internally by SAM and externally. The internal audit primarily includes comparing the various sources of information. The external audit is carried out by the auditing company Deloitte .
Monitoring
A company can also be excluded from the index at any time through daily monitoring . However, this only happens in the event of incidents that have a particularly strong impact on the reputation or core business of a company. If such incidents occur, the crisis management of the company concerned is assessed and, if this is insufficient, the company is excluded from the index. Crisis management is monitored by evaluating media reports, stakeholder information and other publicly available information. Examples of such incidents are:
- Business practices
- tax evasion
- Money laundering
- corruption
- Human rights violations
- Discrimination
- Forced relocations
- Child labor
- Conflicts with the workforce
- Mass layoffs
- Strikes
- Disasters / accidents
- Environmental disasters
- Product recalls
- Breakdowns
criticism
Criticism of the DJSI is mainly directed against the selection of companies and the weighting of the three dimensions of sustainability and the methodology of recording. By being limited to the largest companies in the relevant stock indices, small and medium-sized companies are severely disadvantaged. For example, Fowler and Hope found that the proportion of companies in the DJSI with a market capitalization of more than 50 billion euros is almost 50%, while this proportion in the Dow Jones Global Index is just under 30%. As a result of this approach, many companies that may operate more sustainably are disregarded from the start. Another criticism is that no sectors are generally excluded. This applies in particular to companies that generate their profits to a large extent from the exploitation of nature or from arms production. However, this can be countered by the fact that the best-in-class principle also provides incentives for improvement in these industries.
Another strong point of criticism is the weighting of the criteria. Although the SAM states that the weighting of the dimensions corresponds to one third each, the weight of the ecological criteria is only 3% after all cross-industry questions have been answered. Furthermore, the methodology has already been fundamentally changed several times, which meant that exemplary corporations disappeared from the index.
literature
- Chris Hope, Stephen J. Fowler: A critical review of Sustainable Business Indices and their Impact; In: Journal of Business Ethics Vol. 76 (2007), pp. 243-252.
- Edeltraud Günther, Gabriel Weber: Dow Jones Sustainability Index. In: Das Wirtschaftsstudium Ed. 8–9 / 08 (2008), pp. 1136–1137.
- Frank Figge, Stefan Schaltegger: Successfully disappointing. In: political ecology ed. 67/68 (2000), pp. 98-100. CSM Lueneburg. (PDF; 122 kB) .
Web links
- Website of the DJSI
- Susanne Bergius: The Dow Jones Sustainability Index. In: Zeit-Online. June 5, 2009, accessed October 22, 2013 .
Individual evidence
- ↑ a b SAM intensifies cooperation with Dow Jones Indexes. SAM Group Holding AG, August 18, 2010, accessed October 22, 2013 .
- ↑ a b c SAM Indexes, Dow Jones Indexes, STOXX Limited (Ed.): Dow Jones Sustainability Indexes . The First Decade: 1999-2009. ( PDF ).
- ↑ RobecoSAM Corporate Sustainability Assessment | RobecoSAM. In: www.robecosam.com. Retrieved May 3, 2016 .
- ↑ CSA Guide - RobecoSAM's Corporate Sustainability Assessment Methodology. (PDF) Retrieved May 3, 2016 .
- ↑ Chris Hope, Stephen J. Fowler: A critical review of Sustainable Business Indices and their Impact . In: Journal of Business Ethics . tape 76 , 2007, p. 248 , doi : 10.1007 / s10551-007-9590-2 .