Climate Essentials

What are the Dow Jones Sustainability Indices (DJSI)?

Raphael GüllerCofounder and CPO
Climate Essentials
05 June 2023

The DJSI have emerged as a prominent benchmark for assessing the sustainability performance of companies across various industries. Here's what you need to know about them. 

The DJSI are a set of global sustainability benchmarks that assess and measure the sustainability performance of companies. Developed collaboratively by S&P Dow Jones Indices and RobecoSAM, the DJSI evaluate a wide range of environmental, social, and governance (ESG) factors to identify companies that demonstrate strong sustainability practices and leadership within their industries. The indices provide investors, companies, and stakeholders with a comprehensive framework for understanding and comparing sustainability performance. Companies included in the DJSI are considered global sustainability leaders, representing the top performers in their respective sectors. The DJSI serve as a guiding tool, encouraging companies to improve their sustainability efforts and fostering transparency and accountability in the pursuit of a more sustainable future.

How can companies be admitted into the Dow Jones Indices? 

Companies cannot directly apply for admission into the Dow Jones Sustainability Indices. Instead, the selection process is based on an annual assessment conducted by S&P Dow Jones Indices and RobecoSAM. The assessment evaluates a wide range of criteria, including environmental performance, social practices, corporate governance, and economic indicators. Note that the Dow Jones Sustainability Index family comprises global, regional and country benchmarks.

Companies are assessed within their respective industries and are compared to their peers to determine their sustainability performance. The assessment process involves collecting data from publicly available sources, company disclosures, and direct engagement with companies. Companies are evaluated on various dimensions, such as climate strategy, environmental reporting, labor practices, corporate governance, and risk management. Based on their overall sustainability performance, top-ranking companies within each industry are then included in the DJSI. The rigorous and objective selection process ensures that companies admitted into the DJSI are recognized as sustainability leaders in their respective sectors.

What is covered by the DJSI Global Corporate Sustainability Assessment? 

While the specific criteria may evolve over time, typical areas covered by the corporate sustainability assessment include:

  1. Economic Dimension: This encompasses corporate governance, risk management, financial performance, and innovation-related indicators. It evaluates factors such as corporate governance practices, transparency, business ethics, risk management systems, and financial stability.

  2. Environmental Dimension: This focuses on a company's environmental impact and management practices. It assesses areas such as climate strategy, energy consumption, greenhouse gas emissions, water usage and management, waste management, and environmental reporting.

  3. Social Dimension: This evaluates a company's performance in social criteria such as labor practices, human rights, talent attraction and retention, occupational health and safety, supply chain management, community engagement, diversity and inclusion, and social reporting.

The DJSI World Index is typically updated and announced once a year, usually in September.

What are the benefits of being included in the DJSI? 

Being included in the Dow Jones Sustainability World Index can offer several benefits to a company. Here are some of the key advantages.

Enhanced Reputation

The DJSI is widely recognized as a leading benchmark of top corporate sustainability performance. Being included in the index can enhance a company's reputation and brand image, signaling to stakeholders, investors, and consumers that the organization is committed to sustainable practices.

Access to Sustainable Investors

Inclusion in the Dow Jones Indices can attract sustainable investors who prioritize environmental, social, and governance (ESG) factors in their investment decisions. This can broaden a company's investor base and increase its access to capital from socially responsible funds.

Improved Investor Relations

The DJSI inclusion provides a platform for companies to communicate their sustainability efforts and performance to investors and the financial community. It demonstrates a company's commitment to transparency and accountability in ESG matters, which can foster stronger investor relations.

Competitive Advantage

The Dow Jones Sustainability Index assesses various ESG dimensions, including environmental management, social impact, corporate governance, and more. By participating in the evaluation process and achieving inclusion, companies can benchmark their sustainability performance against industry peers and gain insights to drive continuous improvement. This can provide a competitive advantage in attracting customers, talent, and business partners.

Risk Mitigation

By addressing ESG issues and aligning with DJSI criteria, companies can proactively manage risks related to climate change, resource scarcity, regulatory compliance, reputation damage, and other sustainability-related challenges. This can help protect the long-term viability and resilience of the business.

It's important to note that the specific benefits and impact may vary depending on the industry, company size, and individual circumstances. However, DJSI inclusion is generally regarded as a valuable recognition of a company's sustainability efforts and can yield multiple advantages.

Ready to get started with the DJSI? Find out how Sweep can help.

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