The Dow Jones Sustainability Indexes track and define industry leaders that effectively integrate economic, social, and environmental concerns into their business strategies. Corporate sustainability - including practices that are good for the climate - is becoming an important factor in investor decision-making.
 | Click on the logo to find out more about the Dow Jones Sustainability Indexes, founded in 1999 by Dow Jones Indexes and the Sustainable Asset Management Group (SAM). |
“An increasing number of investors are convinced that sustainability is a catalyst for enlightened and disciplined management, and thus an essential factor in corporate success,” says Alexander Barkawi.
He should know. Barkawi is managing director of SAM Indexes, a subsidiary of Zurich-based Sustainable Asset Management (SAM) Group. He tracks and assesses the market performance of leading sustainability-driven companies worldwide for the Dow Jones Sustainability Indexes (DJSI).
SAM and Dow Jones began the DJSI in 1999 to reflect corporate growth and the effective, sustainable, and long-term use of a company’s economic, social, and environmental resources. From an economic viewpoint, corporate sustainability aims to establish the highest possible standards of corporate governance, codes of conduct, and transparent reporting.
“We quantify the competitive position of a company as regards global sustainability trends and the company’s sustainability profile,” explains Barkawi.
Effective human resources management, for example, is crucial to ensuring a highly qualified and motivated staff, and thus plays an important role when it comes to social assessment criteria.
Companies that embrace sustainability issues will generate more long-term shareholder value because they do not ignore future risks resulting from technological developments, social inequalities, and growing environmental problems.
Barkawi suggests that good management can anticipate these developments “at an early stage and transform them into business opportunities and chances.” Similarly, actions taken to mitigate the risks of climate change can demonstrate to investors a company’s genuine commitment to the company’s long-term future.
Best-in-class
“The need for sustainability-driven management and innovation is obviously linked to general, as well as sector-specific factors. Following a best-in-class approach, we identify the sustainability leaders in every industry,” says Barkawi.
“Interestingly, top companies in highly exposed sectors, such as oil firms, auto manufacturers, and companies in the textile industry often lead in many areas of sustainability, and have mostly implemented standards and regulations earlier than companies operating in less-exposed sectors.”
German auto manufacturer BMW, for example, is a sustainability leader. Despite the obstacles of an emission-intensive and environmentally sensitive industry, BMW’s ability to mitigate sustainability challenges makes it one of the top-rated firms in the sector. This rating reflects BMW’s effective management, state-of-the-art production process, advanced employment culture, and its strong commitment to reducing the carbon dioxide emissions of its cars.
Corporate sustainability is no longer just an add-on feature. It has become an important component of business strategies and operations in recent years. Climate-concerned product initiatives, such as General Electric’s “ecomagination,” demonstrate just how advanced the integration of eco-design requirements is in the industrial sector. Utilization of environmental criteria in project financing and the wider use of life-cycle analysis in the chemical industry demonstrate other examples of sector-specific corporate sustainability practices.
“Overall, sustainability performance continues to advance across all sectors,” says Barkawi. “At the same time, there remains substantial room for progress on the corporate agenda.”
editor: Julia Leuffen
publishing date: April 4, 2006
