S&P Dow Jones Indices (S&P DJI), one of the world’s leading index providers, together with SAM, the business unit within RobecoSAM, which specializes in providing Environmental, Social, and Governance (ESG) data, ratings, and benchmarking, has announced the results of the annual Dow Jones Sustainability Indices (DJSI) review.
At the same time, this year marks the 20th anniversary of the DJSI World as the global standard for measuring and advancing corporate ESG practices.
The three largest (by free-float market capitalization) additions to and deletions from the DJSI World this year are:
Additions: Alphabet Inc, CVS Health Corp, Reckitt Benckiser Group PLC
Deletions: Citigroup Inc, Royal Dutch Shell PLC, 3M Co
The review results in new components for all the DJSI, with all changes effective September 23 2019.
The DJSI World is celebrating a two-decade milestone this year. Since its pioneering launch in 1999, the DJSI World has achieved iconic status as the global standard for measuring and advancing corporate ESG practices. It was the first global index to track the largest and leading sustainability-driven publicly listed companies.
The SAM Corporate Sustainability Assessment (CSA) results, derived from analysis of financially material ESG factors, alongside S&P DJI’s robust index methodology, form the basis of the construction and maintenance of the entire DJSI series. The CSA follows a strict rules-based methodology. After applying a range of financially relevant and industry specific ESG criteria, a Total Sustainability Score is assigned to each company. Based on this Total Sustainability Score, those companies that rank within the top 10% of their industries are included in the DJSI World, following a best-in-class approach.
Raising the bar each year, the CSA is continuously enhanced to identify and measure under-researched or under-reported financially material ESG factors. This process helps better detect those companies that are well-positioned to address future sustainability-driven challenges and opportunities. The CSA now produces approximately 1,000 data points per company, and is the basis for the determination of DJSI inclusion.
Through its evolution, the CSA encourages consistent disclosure practices around both currently relevant sustainability themes and emerging forward-looking sustainability issues that may have a financially material impact on companies.
For example, this year the existing CSA criteria of Information Security, Cybersecurity & System Availability, Privacy Protection, and the Living Wage were further enhanced based on the need for greater management controls and disclosures around these issues of importance for investors.
The CSA’s recognized quality and robustness has once again attracted record interest from companies seeking to measure and improve their sustainability performance. This underscores the fact that corporate ESG performance disclosures have become a necessity in meeting mainstream investors’ expectations. In recent years, the investment community has increasingly placed more emphasis on integrating ESG factors into their investment decisions, just as the DJSI pioneers envisioned.
