Every September, the Dow Jones Sustainability Indexes (DJSI) are updated, following a review by sustainable investment research firm RobecoSAM. Launched in 1999, the DJSI are one of the earliest sustainability indexes. The indexes include the top 10 percent of the largest 2,500 companies in the Dow Jones Global Total Stock Market Index, ranked according to their economic, environmental and social performance.
S&P Dow Jones Indices announced this week that Bank of America, UBS and United Parcel Service will be added to the DJSI this year. Johnson & Johnson, HSBC and Vodafone have been deleted.
Bank of America's inclusion in sustainability indexes is generating a fair amount of controversy among nongovernmental organizations (NGOs) tracking the bank's ongoing financial support of the coal industry. Last week, SocialFunds.com reported on an investor guide prepared by Greenpeace which documents the poor environmental, social and corporate governance (ESG) record of Coal India, whose majority shareowner is the Indian government. The government has decided to sell a stake in the company worth about $1 billion and has selected several foreign banks -- including Bank of America and Goldman Sachs -- to sell the shares.
The investor guide documents the company's long history of corruption by senior management figures and workplace accidents that led to 95 deaths in 2010. A human rights group documented the exploitation of child labor at one of the company's subsidiaries. And Coal India relies on the environmentally destructive open-pit extraction method for 90 percent of its production, threatening the habitats of tigers and elephants and leading to fierce opposition from local communities.
"We have pointed out these issues to Bank of America on several occasions over the past year and been assured that the bank is looking into them," Ashish Fernandes of Greenpeace stated. "To have the bank persist with its partnership with Coal India leaves one with the impression that 'sustainability' is just a fancy word to CEO Brian Moynihan and his team."
The Rainforest Action Network (RAN) has pointed out that notwithstanding its claims of sustainable business operations, Bank of America has provided $6.4 billion in funding for the coal industry during the past two years alone.
"While Bank of America claims to support environmental responsibility, it continues to lead investments in coal, one of the biggest threats to public health and climate stability," RAN stated.
And BankTrack, a Netherlands-based NGO that monitors the environmental performance of the financial industry, asserted that the inclusion of Bank of America in its sustainability indexes challenges the credibility of the DJSI.
"The decision to place Bank of America in a Sustainability Index at this time is shocking, and shows DJSI's claim to represent 'the gold standard for corporate sustainability' to be a mockery," said Yann Louvel, climate and energy campaign coordinator at BankTrack. "While financial institutions like the World Bank are waking up to the reality that coal is yesterday's fuel, Bank of America is America's leading financier of this dirty industry in the U.S. Its current plans to underwrite Coal India's share offering are deepening its involvement, and show a worrying disregard for biodiversity and basic workers' rights."
Chosen as the new Industry Group Leader in the indexes' banking sector was the Australia & New Zealand Banking Group, which also has financed environmentally destructive projects, including coal and gas export terminals that threaten to destroy the Great Barrier Reef.
This article originally appeared at Social Funds.