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Dow Jones Sustainability Index: Determining Your Game Plan for 2014 and Beyond

Company results as key resource to improve your sustainability performance
Dow Jones Sustainability Index: Determining Your Game Plan for 2014 and Beyond
Publ. date 7 Apr 2014
In April 2014, RobecoSAM released its new Sustainability Assessment questionnaire for the Dow Jones Sustainability Index (DJSI), kickstarting the data collection and reporting process for companies eager to be included in the global leading sustainability benchmark. But also after 11 September 2014, when the results are published, you can learn valuable lessons from the benchmark to improve your company's CSR performance.

 

Update: DJSI methodology changes for 2018 available now

Every year, RobecoSAM revises its questionnaire to adapt to evolving investor interests and market shifts. In this article, an overview of the main methodology changes and added questions is provided. This year’s main changes include:

  • Weighting distribution more industry specific: the distribution of weightings reflecting the relative impact of each criterion has been adapted with more focus on industry-specific material issues. The new weightings were announced along with the launch of the new questionnaire and can be found in the download section at the bottom of this article.
  • Increased focus on materiality and performance scoring: elements that previously were judged on individual performance and development will be rated in comparison to its industry as of 2014. This applies for example to Occupational Health and Safety indicators and the employee turnover rate question within the Talent Attraction and Retention criterion.
  • Environmental and Social Reporting criteria: coverage, assurance and quantitative data (KPIs, targets) of the company’s environmental and social reporting were formerly entered by RobecoSAM’s analyst. Now it can be answered by the company itself, providing more room for commentary and elaboration. Furthermore, questions about the top 3 environmental and social materialities are added.
  • Corporate Governance: within the Corporate Governance criterion, a new question is added regarding the nomination process for new board members. It asks whether a policy is in place and if diversity factors are taken into account. In addition, the question on transparency of senior management remuneration is expanded, now expecting more public details on performance-based remuneration for senior management.
  • Human Capital Development: a more prominent link is made between economic and business output by allowing companies to provide more detail on how they are measuring the qualitative and quantitative benefits of their investments in human capital programs. Value-based indicators have become more prominent and a number of new questions has been added on training and development, employee development programs, human capital return metrics and human capital return on investment, with some indicators aligned with GRI G4 requirements.
  • Selection of DJSI World: An important change was made in the selection criteria for companies to be included in the DJSI World. The selection has been tightened from the top 15% to the top 10% selection. However, current DJSI World members that score between 10% and 15% in the 2014 selection, will still be included in this year’s World Index.

New criterion: Tax Strategy

RobecoSAM introduced a new criterion for all industries pointing towards tax policy, its operating principles and transparency by reporting on the company’s taxed paid. As with all questions, its answer is perceived from the perspective of the investor: tax optimizing strategies may increase profitability in the short term, but what is the company doing about the attached risk and its mitigation? Since this criterion is introduced for the first time, RobecoSAM is accommodating participants by giving it a relatively low weighting.

Industry specific alterations

Finally, changes have been made to the assessment for companies within a number of industries. For instance, a criterion on principles for sustainable insurance has been added for the Insurance industry, and IT security & system availability questions were added for the IT services & Internet Software and Services and Software industries. For real estate, several questions have been aligned with selected questions from the 2014 Global Real Estate Sustainability Benchmark (GRESB) survey. A complete overview of all industry specific content changes can be found on page 5-7 of RobecoSAM’s 2014 Methodology Update.

Determining your game plan for this year’s assessment – and next year’s

In conclusion, it was important to take the above changes into account while filling out the 2014 questionnaire since it requires additional data. Besides, a survey result can only be as good as the sustainability strategy it is representing; strong DJSI performance is a long term approach – not a short term instrumental optimization.

On 11 September 2014, RobecoSAM published this year's DJSI results. All participating companies  have access to their individual scorecard that provides valuable information on their performance. This resource can be used for monitoring performance throughout the years, as well as a stepping stone for determining concrete areas for improvement.

If your company has participated in the 2014 Sustainability Assessment and is looking for a structured approach to learn from the scorecard, contact Nikkie Vinke, consultant, at nikkie@finchandbeak.com or +31 6 28 02 18 80.

Nikkie Vinke
About Nikkie Vinke

Seasoned advisor in ESG benchmarking, sustainability strategy and stakeholder engagement. | nikkie@finchandbeak.com

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