The green cor­po­rates

The Dow Jones Sus­tain­abil­ity In­dex is a good barom­e­ter of global cor­po­rate prac­tice.

Element - - Finance - By Adam Gif­ford

If you want peo­ple to think you’re sus­tain­able, don’t throw plu­to­nium around the coun­try­side. That’s the sort of be­hav­iour that got the Tokyo Elec­tric Power Com­pany tossed off the Dow Jones Sus­tain­abil­ity In­dex’s Asia Pa­cific sub-list in the wake of the Fukushima earthquake.

Tepco was dropped from the world in­dex back in 2001 af­ter it was ac­cused of fal­si­fy­ing se­cu­rity checks at its nu­clear fa­cil­i­ties.

Which may lead one to ask what Coca Cola did to get dropped from the lat­est Dow Jones Sus­tain­abil­ity In­dex, along with Hewlett Packard, gi­ant Amer­i­can util­ity PG & E and Ja­panese tech­nol­ogy com­pany Fu­jitsu.

In all 41 com­pa­nies were added and 23 deleted.

The in­dexes are put to­gether by Sus­tain­able As­set Man­age­ment (SAM), a global in­vest­ment com­pany fo­cused exclusively on sus­tain­abil­ity in­vest­ing, in col­lab­o­ra­tion with Dow Jones In­dexes.

They’ve been com­piled since 1999, mak­ing them the long­est-run­ning such bench­mark, and the most cred­i­ble, ac­cord­ing to a sur­vey run by re­search firm Sus­tain­abil­ity.

SAM asks the world’s 2500 largest com­pa­nies to par­tic­i­pate in its eval­u­a­tions, which look at their long term eco­nomic, so­cial and en­vi­ron­men­tal as­set man­age­ment plans.

If they join the 300 or so com­pa­nies on the main or re­gional in­dexes, they are mon­i­tored daily to see they are keep­ing up the stan­dard.

Dow Jones says the list is used by 60 ma­jor as­set- man­age­ment firms in 16 coun­tries to guide their in­vest­ment of over US$8 bil­lion in funds.

There are no New Zealand firms on the list, but many list mem­bers do busi­ness here.

This year Aus­tralian re­tailer Wool­worths was added to the world list. Newcrest Min­ing was added to the Asia Pa­cific list, but Tel­stra and Sun­corp dropped off.

Sec­tor lead­ers in­clude Air France-klm in travel and leisure and BMW in au­to­mo­tive. BMW is the only firm in its sec­tor to have been on the in­dex since 1999.

Pep­sico topped the food and bev­er­age sec­tor, which will make Coca Cola’s de­mo­tion more sweet (or per­haps Clas­sic).

Roche topped health­care and Sam­sung the elec­tron­ics sec­tor, with its eco-prod­ucts de­vel­op­ment, re­duc­tion in green­house gas emis­sions, water qual­ity con­trol and waste man­age­ment strate­gies earn­ing gree­nie points.

DJSI says cor­po­rate sus­tain­abil­ity cre­ates long-term share­holder value by em­brac­ing op­por­tu­ni­ties and man­ag­ing the risks that come from eco­nomic, en­vi­ron­men­tal and so­cial change.

On a fi­nan­cial level, sus­tain­able com­pa­nies will com­bine good re­turns and long-term growth, and they will foster cus­tomer and prod­uct loy­alty.

It’s likely a sus­tain­able com­pany is a happy com­pany, which man­ages its hu­man re­sources to main­tain work­force ca­pa­bil­i­ties and em­ployee sat­is­fac­tion.

DJSI says the con­cept of cor­po­rate sus­tain­abil­ity is at­trac­tive to in­vestors.

“A grow­ing num­ber of in­vestors are con­vinced sus­tain­abil­ity is a cat­a­lyst for en­light­ened and dis­ci­plined man­age­ment, and thus a cru­cial suc­cess fac­tor,” it says.

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