Global Sustainabilty Index – The Winners and Losers
The annual review of the Dow Jones Sustainability Indexes has welcomed 48 new companies and deleted 46. The biggest deletions by market capitalisation are Toyota Motor, Royal Dutch Shell and UniCredit. BP had previously been cut. SAM, the investment boutique focused exclusively on Sustainability Investing, together with Dow Jones Indexes, a leading global index provider, earlier this month announced the results of the 2010 annual review for the Dow Jones Sustainability Indexes.
Giles Parkinson in Climate Spectator (19 September 2010):
The $US200 million spent by BP on its “Beyond Petroleum” marketing campaign seems to have come to nothing. Although the campaign was responsible for its inclusion in a slew of environmental, ethical and sustainable stock indices, BP is now firmly on the outer, courtesy of the gulf oil disaster and attention focused on a litany of environmental disaster across its portfolio.
Its latest exclusion comes from the FTSE4Good index for ethical companies which, in its semi-annual review last week, cited the company’s poor response to the oil spill, as well as “the environmental and social impact and its history of similar incidents.”
BP had previously been cut from the Dow Jones’ sustainability index and from Calvert Investments ethical SAGE fund, which said in June that the oil spill and its “almost unfathomable environmental and economic impacts are due first and foremost to the irresponsibility of BP, but also to critical lapses by key agencies of the US government.”
Ins and outs
Meanwhile, the annual review of the Dow Jones Sustainability Indexes has welcomed 48 new companies and deleted 46. Among those included are Standard Chartered, Morgan Stanley and ArcelorMittal, while the biggest deletions by market capitalisaton are Toyota Motor, Royal Dutch Shell and UniCredit.
The annual review of the DJSI family is based on an analysis of corporate economic, environmental and social performance, assessing issues such as corporate governance, risk management, branding, climate change mitigation, supply chain standards and labour practices. Australian companies cited as sector leaders include ANZ Banking Group (banks) and GPT Group (real estate). AGL & Origin Energy are the only Australian companies to be included among the 13 companies in the electricity sector. There are a total of 18 Australian firms on the Index for 2010/11.
Professor Ruyin Hu, the head of research at the Shanghai Stock Exchange – the world’s sixth largest stock m
arket by market capitalisation and the largest outside the US by turnover – gave some interesting insights into environmental and governance issues during a presentation at the Responsible Investment Association of Australian conference in Sydney last week.
Hu says the exchange has introduced new rules to make it harder for polluters to access capital markets, requiring any company conducting an IPO or a secondary market offering to undergo a full environmental assessment by the Ministry of Environmental Protection. He said stiff penalties, trade suspension and plant closures were being applied to companies that failed to promptly disclose environmental incidents, and one third of companies – mostly those with dual listings overseas and those on the SSE corporate governance index – had issued separate CSR (corporate social responsibility) reports.
One of the problems, though, was a lack of uniform CSR reporting standards, and the need for standard guidelines on environmental disclosure for companies in extractive industries. “The challenge for us is how to make disclosure practical and effective, because if we require too much information, some of the information might be useless.,” Hu says. “We need to make sure it is useful.” Hu says that socially responsible investment in China accounts for about 1 per cent of the total by mutual funds, which is not far off the global average. He says the SSE is to launch a sustainable development index of 40 companies, in conjunction with sustainability research company ECPI.
SAM and Dow Jones Indexes announce results of the Dow Jones Sustainability Indexes Review 2010
SAM, the investment boutique focused exclusively on Sustainability Investing, together with Dow Jones Indexes, a leading global index provider, earlier this month announced the results of the 2010 annual review for the Dow Jones Sustainability Indexes.
Following SAM’s largest global analysis of corporate sustainability leadership, 48 companies will join the Dow Jones Sustainability World Index (DJSI World), while 46 firms will be deleted – resulting in a total of 318 index components. The largest additions (by free-float market capitalization) to the DJSI World include Standard Chartered, Morgan Stanley and ArcelorMittal while the biggest deletions (by free-float market capitalization) from this index are Toyota Motor, Royal Dutch Shell and UniCredit.
The review also results in 27 additions to and 19 deletions from the European Dow Jones Sustainability Europe Index, 19 additions to and 22 deletions from the Dow Jones Sustainability North America Index, as well as 36 additions to and 25 deletions from the Dow Jones Sustainability Asia Pacific Index. All changes will become effective with the opening of equity markets on September 20, 2010.
The DJSI follow a best-in-class approach and include sustainability leaders from each industry on a global and regional level respectively. The annual review of the DJSI family is based on a thorough analysis of corporate economic, environmental and social performance, assessing issues such as corporate governance, risk management, branding, climate change mitigation, supply chain standards and labor practices. It accounts for general as well as industry specific sustainability criteria for each of the 57 sectors defined according to the Industry Classification Benchmark (ICB).
In addition, SAM also identified the top company for each of the 19 Supersectors that the 57 sectors roll up to. The new 2010/2011 Supersector leaders are Air France-KLM (Travel & Leisure), AkzoNobel (Chemicals), ANZ Banking Group (Banks), BMW (Automobiles & Parts), EDP Energias de Portugal (Utilities), GPT Group (Real Estate), Investimentos Itaú (Financial Services), Lotte Shopping (Retail), Nokia (Technology), Pearson (Media), Philips Electronics (Personal & Household Goods), Roche (Health Care), Sasol (Oil & Gas), Siam Cement (Construction & Materials), Swiss Re (Insurance), Telefónica (Telecommunications), TNT (Industrial Goods & Services), Unilever (Food & Beverage) and Xstrata (Basic Resources).
For more information on the Dow Jones Sustainability Indexes and the changes resulting from this year’s review, see the website source.