GM, Goldman Sachs, Coca-Cola Enterprises make DJSI

GM, Goldman Sachs, Coca-Cola Enterprises make DJSI


What does it mean when the leading U.S. investment bank makes an effort to be added to the Dow Jones Sustainability Indices? And several big automobile companies? And the largest U.S. beverage company?

Maybe Goldman Sachs, General Motors, Coca-Cola Enterprises and the other U.S. companies on the list view sustainability as good for their business and their reputation among investors. These three were all added to the DJSI for the first time this year, as were 11 others.  

U.S. companies made a relatively poor showing overall on the DJSI, however, compared to their counterparts elsewhere in that they're outnumbered by European and Asian companies. The DJSI includes 54 companies from South Korea alone and about 140 from the United States.

The list is generated by S&P Dow Jones Indices and RobecoSAM, who define the DJSI as tracking the leading publicly traded companies for sustainability and social responsibility through analyses of their financially material environmental, social and governance factors.

Graphic Source: S&P Dow Jones and RobecoSAM

Abbott Laboratories was the only U.S. company to be cited as leading its industry — the health care equipment and services — among 24 industries tracked. South Korea and France each led three industries. 

From South Korea, LG Electronics led consumer durables, Lotte Shopping led retailing and KT Corp. led telecommunications.  

But those distinctions raise an eyebrow: The DJSI does not include companies widely considered in the sustainability vanguard such as Apple or Google. It could be that these companies — notoriously protective of the trade secrets of their operations — did not ask to undergo the assessment of their operations by the DJSI rating agencies. Google did not respond to an email asking if it had undergone the assessment.

S&P Dow Jones and Robeco said they invited the world’s largest 3,400 companies from both developed and emerging markets to undergo their corporate sustainability assessments.

They do this, they said, because investors want to know.

“More and more investors look at companies’ environmental policies and track records in making their investment decisions,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, in a statement.

“The Dow Jones Sustainability Indices are comprehensive benchmarks that allow investors to gauge the collective performance of those companies that meet the RobecoSAM standard for corporate sustainability and to formulate global allocations consistent with sustainable investment standards and practices.”

According to studies by Stanford Business School, there is a very small but growing bump to investor interest in a company's stock if the company operates in sustainably and socially responsible way. 

Robeco and S&P Dow Jones said they saw certain trends emerge in the assessments this year. They saw improvements by the electronics industry, transportation and homebuilding, while some other industries fell behind in their attention to sustainability and social responsibility, citing life sciences, personal products and oil and gas.

The DJSI raters said this despite that Unilever, a personal products maker, is the world’s most sustainable company according to several other rating processes. It repeatedly comes out on top of CDP studies.

The DJSI also includes Chevron Corp., Exxon Mobil and ConocoPhilips, even though these companies declined to sign a pledge to support the COP 21 process for national governments to come to a global agreement to prevent global warming from climbing.

It even includes Canadian Oil Sands Ltd., although extracting oil from sandy terrain of northern Canada has been targeted by environmentalists as one of the most intensive GHG producing practices.

But DJSI purposely includes companies from each of 24 industries, oil and gas among them, to benchmark companies within their industries.

S&P Dow Jones and Reboco said another trend they observed is that companies performed better in ethics, gaining ground in codes of conduct, less corruption and more accountable corporate governance, but they lost ground in running operations in an eco-efficient way and human development.

They said DJSI companies were better at reporting on their environmental and social responsibility measures but pretty weak at measuring risk and managing risk.

Positive PR

In recent days, companies that were added to the Dow Jones Sustainability Indices made sure to let their workers, or the world, know.

“We were just named to the Dow Jones Sustainability Index, the leading global benchmark for corporate sustainability,” General Motors told its employees on the company blog.

General Motors noted that in July it joined a dozen other U.S. companies in pledging to the White House to make a collective $140 billion in investments to reduce carbon emissions and support installation of 1,600 megawatts of renewable energy. It said it reduced its own carbon emissions by 28 percent the last five years.

General Motors also agreed to the Ceres Climate Declaration for Business for Innovative Climate & Energy Policy agreeing there is economic opportunity in tackling climate change.

Goldman Sachs, meanwhile, noted that it committed to use 100 percent renewable power for its global electricity needs by 2020 and has a goal of carbon neutrality.

The investment firm is also one of the companies to join the White House American Business Act on Climate pledge and be part of the $140 billion investments.

“This inclusion demonstrates the firm’s long-standing commitment to harnessing markets and deploying capital to help address some of the most pressing environmental and societal issues,” said Kyung-Ah Park, head of Environmental Markets Group.

And Coca-Cola Enterprises said, “This listing is the result of placing sustainability at the heart of our business. We consider the sustainability impacts of every decision we make and work hard to take a leadership position in the soft drinks industry.”

Coca-Cola said it has reduced its carbon footprint by 29 percent in its operations and a 17 percent reduction in water use: “The insight gained from DJSI's analysis of CCE will prove invaluable, helping us to better understand the business value of our sustainability initiatives.”