Dow Jones Indexes picks sustainability winners and losers

When Dow Jones Indexes and SAM, an investment firm specializing on sustainability investing, rejigger their benchmark index, companies either cheer or duck.

The Dow Jones Sustainability Index follows a series of criteria such as economic, environmental and social performance to include companies in its index. The real kicker: A company can be booted from the index at any time as developments warrant. For instance, BP got the heave-ho following the Gulf of Mexico oil spill.

The Dow Jones Sustainability Index (DJSI) announced its new lineup on Sept. 9 and a bevy of press releases followed. AT&T trumpeted its inclusion to the index. SAP did the same and noted that for the fourth year in a row, it was the leader of the software sector. Companies that were booted from the index declined to issue statements, but there were some big names including Daimler AG, ITT Corp. and Walt Disney Co. that were deleted.

What makes this Dow Jones index so interesting is its annual review where sustainability winners and losers are picked. To wit:

• The DJSI World Index deleted 46 companies and added 48. Standard Chartered, Campbell Soup, Alcoa, Whirlpool, Morgan Stanley and ArcelorMittal were the largest companies added. Toyota, Royal Dutch Shell and UniCredit were booted.
• In the tech sector, Tata, Wipro, Hynix Semiconductor, AU Optronics and Teradata were added to the world index.
• The Europe DSJI had 27 additions and 19 companies deleted.
• North America had 19 additions and 22 deletions.
• Asia Pacific had 36 additions and 26 deletions.
• The changes go into effect on Sept. 20.
• Registration is required for the full list of additions and deletions by region.

In some respects, the DJSI serves as a sustainability reality check. When BP was tossed from the index, DJSI said:

As a component of the DJSI World Index, BP was subject to index rules that allow for elimination from the DJSI following extraordinary events. The extent of the oil-spill catastrophe in the Gulf of Mexico and its foreseeable long-term effects on the environment and the local population – in addition to the economic effects and the long-term damage to the reputation of the company – were included in the analysis leading up to BP’s removal.

Here's a look at the criteria used:

Overall that's pretty solid criteria. Meanwhile, the DJSI also picks leaders by sector:

This post was originally published on Smartplanet.com