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