Dow Jones Sustainability Indices Continue to Raise the Corporate Sustainability Bar

Today, S&P Dow Jones Indices and RobecoSAM announced the results of the annual rebalancing of the Dow Jones Sustainability Indices (DJSI). The DJSI World will be celebrating its 20th anniversary in 2019, making it one of the longest-running sustainability benchmarks in the world. Even after nearly 20 years, the index has lost none of its luster and has seen nearly 1,000 of the world’s largest corporations actively complete RobecoSAM’s Corporate Sustainability Assessment (CSA) in 2018—marking yet another record in participation.

Participation has grown steadily since the indices were first launched in 1999, at a time when the concept of sustainable investing was still very much in its infancy. The annual September rebalancing has since been penciled in as a key date in companies’ corporate sustainability calendars, and it continues to receive the attention of company boards, executive management, and media from around the world. Today, more than ever, recognition for corporate sustainability efforts serves as a key differentiator for companies vis-à-vis their employees and future talents, customers, and—increasingly—investors. The DJSI serve as an important external verification of companies’ efforts on pressing sustainability topics and validation that their approach is business-oriented and more than just greenwashing.

The CSA methodology, which forms the basis for assessing companies and creating the ratings that flow into the index selection, is updated every year to reflect current sustainability challenges and future sustainability trends. In 2018, RobecoSAM added topics to its Corporate Governance criterion—adding topics such as Family & Government Ownership and Dual Class Share Structures.

In 2014, the CSA was one of the first corporate sustainability methodologies to include questions about how companies approached the topic of taxation. Since then, corporate taxation and tax transparency have taken center stage in the sustainability arena, and many companies have a stance on the topic. This year, it was time to test and see whether companies are indeed following the policies they laid out. A new question on companies’ Effective Tax Rate was introduced to determine whether companies are paying significantly less taxes than expected, without any reasonable explanation, and consequently penalizing those that are paying up.

Furthermore, new questions on Biodiversity were also added this year, and the Climate Strategy criterion was revamped to align with major changes made by CDP, with whom RobecoSAM maintains a long-standing collaboration. Most importantly, the changes in the Climate Strategy criterion introduced important concepts recommended by the Task Force for Climate-related Financial Disclosures (TCFD)—a framework that is set to significantly influence company climate disclosures in the coming years and has drawn a lot of attention from investors.

We look forward to engaging with companies on these new topics over the coming months through dialogues, round tables, and a series of webinars explaining the major methodology and scoring changes. The percentile ranks of all assessed companies will be available free of charge to all users of the Bloomberg Professional platform—providing access to investors around the world who are interested in exploring RobecoSAM’s ESG ratings.

For more about the Dow Jones Sustainability Indices and the Corporate Sustainability Assessment, visit www.robecosam.com/csa

 

 

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