In its annual review, S&P Dow Jones Indices deleted 46 companies from the 2014 Dow Jones Sustainability World Index, and the largest deletions — by free-float market capitalization — included Bank of America, General Electric and Schlumberger. Other large companies cut from list were McDonald’s, Starbucks and Nike.
The three largest companies added (among 32 total) to the list were: Amgen Inc., Commonwealth Bank of Australia and GlaxoSmithKline PLC.
S&P Dow Jones Indices and RobecoSAM, an investment specialist that focuses exclusively on Sustainability Investing, have been compiling the index for 15 years. DJSI was the first global index to track the financial performance of the leading sustainability-driven companies worldwide, based on an “analysis of financially material economic, environmental and social factors.”
“Both the importance and the understanding of sustainability has grown dramatically over the past decade and a half,” said David Blitzer, managing director and chairman of the S&P Dow Jones Index Committee, in a press release. Over that span the indices have become “the leading benchmark in the field,” he continued.
The DJSI follow a best-in-class approach, including companies across all industries that outperform their peers in numerous sustainability metrics. Each year more than 3,000 companies, including 800 companies from emerging markets, are invited to participate in RobecoSAM’s Corporate Sustainability Assessment, which provides the financial analysis.
Out of thousands, only 16 companies have been on the list every year since 1999: Baxter, Bayer, BMW, BT, Credit Suisse, Deutsche Bank, Diageo, Intel, J Sainsbury, Novo Nordisk, RWE, SAP, Siemens, Storebrand, Unilever and UnitedHealth.
What’s the takeaway? The list can fluctuate fairly dramatically from year to year, as company sustainability investments and strategies change, depending on where they are with their sustainability programs. Ongoing and more mature company programs may help explain certain deletions, but they do not say very much regarding actual sustainability commitment and future investments. However, the index is useful as companies drill deeper into the components of sustainability, especially from a financial and transparency perspective.
Image: Cover extracted from the 2014 Dow Jones Sustainability Index Review