Methodology Changes for the Dow Jones Sustainability Index 2016

RobecoSAM launched DJSI Sustainability Assessment on the 5th of April
Methodology Changes for the Dow Jones Sustainability Index 2016
Publ. date 23 Mar 2016
On April 5th, RobecoSAM opened its annual Corporate Sustainability Assessment: the base for selecting the best-performing companies for the Dow Jones Sustainability Indices. More than 3,000 eligible companies have received an invitation to participate in this year’s DJSI assessment. In order to prevent surprises, participating companies are well advised to take changes into account for this year’s methodology before diving into the questionnaire.

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Update: DJSI methodology changes for 2018 available now

RobecoSAM continuously develops the Corporate Sustainability Assessment (CSA) methodology in order to select the best-in-class performing companies that differentiate themselves by proving to be best prepared to seize the opportunities and manage the risks deriving from economic, environmental and social developments. In other words: RobecoSAM constantly raises the bar for performance. Standing still as a participating company will therefore unavoidably result in a decline of your total score and a potential deletion from the Index. 

Download our free overview of DJSI 2016 changes

Following a complete materiality review of criteria at industry level, RobecoSAM has reduced the overall number of criteria in each industry and focuses on the financial relevance of questions and criteria. This year’s most radical change is the emergence of a number of new questions on materiality, impact measurement & valuation, and cybersecurity, as well as a complete overhaul of the sections on Human Rights and Brand Management.

An overview of new and updated questions per criterion is available in the download section of this article (in the left-hand column). Please note that not all methodology changes apply to all industries.

Materiality: focus on process and link to business

This new criterion in the economic dimension applies to all industries and replaces the materiality-related questions in the Environmental Reporting and Social Reporting criteria. RobecoSAM asks companies to list their three most important material issues and describe their link to the business as well as a description of how it publicly reports on its materiality assessment process. Progress on materiality metrics and (long-term) targets is also asked.

Impact Measurement & Valuation: balancing act

RobecoSAM introduces this new criterion for selected industries in order to assess how companies understand social and environmental impacts and how they go about measuring them as a means to mitigate risks, enhance performance, reduce footprints, identify new opportunities, and increase returns on investments. Tools and metrics such as True Cost, True Price etc. are relevant here, as well as the Sustainable Development Goals.

Cybersecurity: effective strategy implementation

For selected consumer-oriented industries, this new criterion will assess how companies are equipped to deal with information security and cybersecurity. It focuses on governance, resources, strategy and implementation, as well as its effectiveness in terms of security breaches that have occurred over the past years and their related financial impact.

Human Rights: policy, due diligence, assessment & disclosure

The updated Human Rights questions align with the UN Guiding Principles on Business and Human Rights and ask whether companies have a human rights policy and related due diligence process in place, how it identifies potential areas of human rights risks, and whether the company publicly discloses on its commitments.

Brand Management: sustainability as differentiator

The new Brand Management methodology is designed to move beyond input and metrics towards a more comprehensive understanding of how companies use sustainability as a differentiating factor in their branding strategies. It asks for brand values, the alignment between brand strategy and sustainability, and how brand management metrics are linked to incentives for responsible managers.

Short-term optimization vs. long-term structural performance improvement

In conclusion, it is important to take the changes into account while approaching the 2016 questionnaire. However, a survey result can only be as good as the sustainability strategy it represents: strong DJSI performance is a long-term approach – not a short-term instrumental optimization. The company’s individual scorecard, which is available to all participating companies on 8 September 2016, when RobecoSAM will publish this year's DJSI results, provides valuable information on their performance and can reveal specific areas for improvement. 

Finch & Beak, the gold class DJSI expert

With more than 10 years of experience in Dow Jones Sustainability Index support and a long-term collaboration with RobecoSAM, Finch & Beak is one of Europe’s leading experts in assisting companies with their submission to ESG benchmarks.  Our work for (ex-) industry group leaders is characterized by a pragmatic approach that leverages existing assets in the short term, while identifying opportunities for strategic development in the future. This method proves its success by the fact that all our DJSI customers in 2015 were listed in the Dow Jones Sustainability World Index, and more than half of them ranked in the top 1% of their industry.

Striving for inclusion or industry leadership in the DJSI ?

Is your company participating in the 2016 Sustainability Assessment and are you looking for a structured approach towards improvement or a helping hand during the assessment process? Please contact Nikkie Vinke, senior consultant, at nikkie@finchandbeak.com or +31 6 28 02 18 80.

About Nikkie Vinke

Multidisciplinary advisor in ESG benchmarking, sustainability strategy development and execution. | nikkie@finchandbeak.com

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