Dow Jones Sustainability Indexes

Abstract

The relevance of sustainability for investors and companies alike is driven by a number of distinct trends such as rapid information exchange, increasing interconnectivity and convergence, heightened awareness for remote geographic regions, severe stress on ecosystems, regional demographic shifts and increasing transboundary interactions.In addition, the relevance of sustainability particularly for investors is driven by the relative financial outperformance of certain sustainability investments and by recent corporate scandals such as Enron, Parmalat and Ahold.Concurrent with these shifts is the relatively new development that it is not only possible to make macroeconomic policy decisions informed by socio-environmental issues (under the assumptions of imperfect information), but that these analyses can now be complemented by a new ability to make similarly well-informed microeconomic decisions.This is due to an increase in transparency and access to a wider range of different information sources which was previously not available.The net result of these changes is that sustainability-focused assessments are not only becoming increasingly relevant to both businesses and shareholders, but that these assessments are now also practicable and feasible while contributing to overall policy-making.Corporate sustainability is a business approach aiming to create long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.Corporate sustainability leaders harness the market's potential and demand for sustainability products and services while simultaneously successfully reducing and avoiding sustainability-related costs and risks.Increasingly, investors regard forward-looking non-financial metrics as important additional indicators to provide a more realistic and comprehensive view of a company's true value.These metrics provide a broader scope of business-relevant information and insight that goes above and beyond the traditional financial analysis of companies.