Dow Jones Sustainability Index

The Dow Jones Sustainability Indexes ( DJSI short, German: Dow Jones sustainability indexes ) are a family of equity indices, which take into account not only economic but also environmental and social criteria. Thus, the DJSI lift on both traditional equity indexes as well as of pure ecology -oriented indices. The Dow Jones Sustainability Indexes are a cooperation of Dow Jones and publisher of the Zurich company Sustainable Asset Management (SAM). Divides are the DJSI in global ( DJSI World), European ( DJSI Europe ) and North American (DJSI North America) Index groups. From the indices existing SAM tries to take on the basis of positive criteria, the most sustainable companies in the index by selecting it. For the commercial use of DJS index licenses must be purchased. Since its introduction in 1999, over 70 licenses were sold to financial firms from 18 different countries. This offer financial products such as investment portfolios, certificates and funds of any kind in connection with the DJSI a total value of about 6 billion U.S. dollars.

History

Because of growing interest to incorporate into their investment decisions on the part of investors, environmental and social aspects, Dow Jones Indexes and SAM decided to introduce sustainability-oriented equity indices. Special attention was paid to the development of an index, which is well comparable to traditional equity indices such as the Dow Jones Global Index. Thus, the DJSI different from existing eco - indices, such as the NAI or DOMINI 400 Social Index. Over the past years, the DJSI family grew steadily and now comprises more than 40 according to geographical and economic point of distinct indices. Subsequently, the data of the introduction of the most important DJs indices are given:

  • September 8, 1999: DJSI World founded by the cooperation partners Dow Jones publishing house, SAM
  • October 15, 2001. Collaboration with STOXX Ltd., DJSI STOXX DJSI EURO STOXX (Euro zone)
  • February 17, 2005: Aussie (Australian SAM Sustainability Index ) - is based on the 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 and DJSI World ex U.S. 80 80
  • August 26, 2008: Blue- chip indices DJSI North America 40 and DJSI United States 40
  • In August 2008: STOXX Ltd.. ruled out as a cooperation partner

Considered Company

The so-called investment universe ( ie all companies are eligible for inclusion in question ) shall, subject to the considered index the 2500 largest represented in the Dow Jones Global Total Stock Market Index ( DJGTSM ) companies. The 600 largest North American companies in the Dow Jones Global Index to be considered for inclusion in the DJSI North America. This close analogy with equity indices allows a good comparability of economic and sustainable development of enterprises. Then the company will be divided into 58 sectors. The top 10 % of each sector, based on the sustainability performance are finally included in the DJSI. This method is referred to as best-in -class approach. Excluded are all industries in which the best company less than one- fifth of the maximum absolute value.

Criteria

The criteria examined are divided on the one hand in economic, environmental and social criteria and the other in general and sector-specific criteria. Each criterion is assigned further subcategories, which are measured by appropriate questions. Each response option is assigned a point value. The achieved from a company point value is multiplied by the weights of question and criterion. The total score is then calculated from the sum of these products. There are global for all companies the same criteria, questions, weightings and methods. This means there is no geographical distinction. However, the criteria and their weights are changed over time and adapted to new circumstances.

General

Overall, the cross-industry criteria account for 43 % of the total questionnaire, the rest is made up of industry-specific criteria. Of this amount, 18% to economic, environmental, and 3% to 22 % on social criteria.

1 assessment only on the basis of publicly available information Of September 2008

Industry-specific

Industry-specific criteria are determined separately for each industry. This special opportunities and risks are considered each industry separately. These differ, sometimes dramatically, and also have an influence on the weighting of the dimensions of economy, ecology and society. The division into sectors and " Super Sectors, " product is based on the Industry Classification Benchmark. Here, each of the 58 industries is associated with one of 19 " Super Sectors ". The currently best measured in terms of sustainability performance, are " Super Sectors, " following " Super Sector Leaders":

Of September 2008

Detection methodology / verification

For the collection of the relevant data, the SAM is responsible. This has developed a questionnaire, which is sent to the company. The self- completed questionnaire by the company is the most important source of information to evaluate the Company. Other sources of information are public documents such as annual reports, sustainability reports or media reports and direct contact with companies. The information obtained will be verified and validated both internally by SAM, as well as externally. The internal audit includes mainly the comparison of different sources of information. The external audit is conducted by the accounting firm Deloitte.

Monitoring

Through daily monitoring a company can also be excluded at any time again from the index. However, this only happens in incidents which have a particularly strong impact on the reputation or the core business of a company. When such incidents occur, the crisis management of the entity is evaluated and, if this is insufficient, the company excluded from the index. The monitoring of crisis management is carried out by analysis of media reports, stakeholder information and other publicly available information. Examples of such events are:

  • Business practices tax evasion
  • Money laundering
  • Corruption
  • Discrimination
  • Forced relocation
  • Child labor
  • Mass layoffs
  • Strikes
  • Environmental disasters
  • Recalls
  • Malfunctions

Criticism

Criticism of the DJSI is directed mainly against the selection of the company as well as the weighting of the three dimensions of sustainability and the methodology of detection. The restriction to the largest companies in the relevant stock indexes small and medium enterprises are greatly disadvantaged. So found out, for example, Fowler and Hope, that the proportion of companies in the DJSI with a market capitalization of more than 50 billion euros is almost 50 %, while the proportion in the Dow Jones Global Index is only about 30 %. By doing this fall, many companies that may even more sustainable, from the outset from consideration. Furthermore, it is criticized that no branches are generally excluded. This refers in particular to companies that generate their profits in particularly from the exploitation of nature or from the weapons production. That interpretation can be challenged on the however, that incentives to improve are given by the Best -in-class principle in these industries.

Another strong point of criticism is the weighting of the criteria. While there, the SAM on the weighting of the dimensions correspond to one third each, however, the weight of the ecological criteria is only 3% after answering all cross-industry issues. Furthermore, the methodology has been repeatedly changed fundamentally, which until then best companies disappeared from the index.

Blue chip (stock market) Corporate Citizenship Digital Object Identifier
242994
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