Monday, September 21, 2015

Dow Jones Sustainability Index: Who Made the Cut for 2015

There have been some major players who have been removed from the Dow Jones Sustainability Index (DJSI) and some other large companies have earned a coveted spot this year. All changes to the DJSI go into effect on Monday September 21, 2015.

Inaugurated in 1999, the DJSI is the longest running sustainability index. To get on the DJSI companies are assessed by RobecoSAM based on their long term economic, social and environmental asset management plans. Selection criteria evolve each year and to stay on the list companies must continue to make improvements to their long term Sustainability Asset Management (SAM) plans.

Additions and subtractions are a function of ongoing monitoring and annual assessments that are both general and industry specific. These analyses include issues like corporate governance, risk management, branding, climate change mitigation, supply chain standards and labor practices.

Some major companies that were dropped from the index include Cisco Systems, PepsiCo and Royal Bank of Canada.
In 2015 Bank of America, Telefonica and BHP Billiton are the three largest additions to the DJSI.
Other corporations that were included in the list include Goldman Sachs, Coca-Cola Enterprises, Xerox, Staples, Nomura and EMC.

Overall the top three most improved industries compared to last year are Electronic Equipment, Instruments & Components which recorded a gain of +23.45 percent, Transportation and Transportation Infrastructure which saw an increase of 18.16 percent and Homebuilding which improved by 15.3 percent.

The group leaders by industry sector in 2015 are Volkswagen, Westpac, CNH, SGS SA, LG Electronics Inc, Sodexo, UBS Group AG, METRO AG, Unilever, Abbott Laboratories, Kao Corp, Swiss Re, Akzo Nobel, Telenet Group Holdings, Roche Holding, Stockland, Lotte Shopping Co Ltd, Taiwan Semiconductor Manufacturing Co Ltd, Fujitsu Ltd Software & Services, Alcatel-Lucent, KT Corp Telecommunication Services, Air France-KLM.

Some high performing longstanding sustainability companies stand out. This includes Unilever which has improved its already stellar sustainability performance compared to last year. Other sector leading companies that scored very well include Volkswagen, LG Electronics, AkzoNobel and Fujitsu.

There are always some questionable inclusions. In previous years Enbridge made the DJSI and in 2015 Gas Natural SDG SA led the utilities sector and Columbia Gas of Virginia parent company NiSource was recognized for its ongoing effort to help its customers conserve gas and reduce energy use through efficiency programs. The company also reduced leaks by replacing aging infrastructure.

Utilities that deal in fossil fuel or companies that extract hydrocarbons--like Thai Oil which came in first in the energy sector--are involved in core business activities which are at odds with sustainability. Overall the oil and gas sector were among the least improved industries relative to last year declining by 5.95 percent)

There are a few new indexes that address these concerns. One new S&P index is free from fossil fuels and two others focus are companies that have low carbon emissions. This includes the S&P Global 1200 Fossil Fuel Free Index Series and S&P Global 1200 Carbon Efficient Indexes. Companies included in the Fossil Fuel Free Index do not do not use fossil fuels for third party and in-house power generation. The Carbon Efficient Indexes only includes companies with low carbon emissions profiles.

Dow Jones Sustainability Index Leaders in 2014
Company Rankings from the Dow Jones Sustainability Indexes 2012 - 2013
How the Hell did Enbridge Get on the DJSI
What is the Dow Jones Sustainability Index (DJSI)

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