CSR indices worldwide
Since the end of 1990s of 20th century we have observed a significant growth in the number of indices (commonly dubbed “benchmarks”), with the overriding objective to describe economic situation of the companies meeting certain CSR requirements.
The launch of above instruments by financial institutions is usually driven by two motives. Firstly the CSR indices are developed to establish benchmark for the companies involved in the CSR activities. Secondly the CSR indices are supposed to represent real reference for investors considering in their investment decisions the ESG aspects (Environment, Social, Governance).
The first CSR indices were developed in the United States. The pioneer in this field was Dow Jones that in September 1999 started to publish SI (Sustainability Index). One year later Calvert fund started to publish CSR index, whereas in July 2001 the first index (FTSE4Good) was published by an English company FTSE.
On the top of its fundamental role, which is the provision of information about current economic situation of companies in a certain segment the CSR indices more and more become a basis for designing composition of mutual fund portfolios.
The establishing of various funds investing into CSR portfolios results in growing interest in the underlying companies of such indices. On the other hand this phenomenon leads to the situation where individual companies are more and more interested in belonging to such indices. Thus it can be stated that not only CSR growth led to origin of indices and dedicated investment funds, but at present CSR indices motivate companies to apply individual ESG criteria to business activities run by them.
CSR indices worldwide:
- Dow Jones Sustainability Index series (DJSI)
Launched in September 1999 by Dow Jones, STOXX Limited and SAM Group – Sustainable Asset Management. Since that time more than a dozen various indices have been created for the world, regions or industries. The DJSI methodology is based on positive selection and aims at identification of best in class companies. The basic criterion considered during selection of companies for indices is the analysis of three aspects: economy, environmental protection and social responsibility.
More about DJSI:
http://www.sustainability-index.com/
- Calvert Social Index (CSI)
Calvert investment fund index has been calculated since 2000. It measures economic situation of American companies defined as socially responsible. When selecting companies for the index they are analysed from the perspective of their products (type of created products), environment (protection and pollution), place of work (compliance with rules and standards) and integrity.
More about CSI:
http://www.calvert.com/sri-index.html
Index launched by London Stock Exchange and Financial Times in July 2001. At present indices are calculated for the entire world, for selected markets and for selected regions. The index underlying companies undergo: negative selection (companies that are excluded are those dealing with weapons production, substance production or violating social equality principles) and positive selection (environmental protection activities, development of positive relations with environment, maintenance and development of human rights, combating corruption). These indices are the sole indices that enjoy special status recognized by UNICEF.
More about FTSE4GOOD indices:
http://www.ftse.com/Indices/FTSE4Good_Index_Series/index.jsp
- FTSE Johannesburg Stock Exchange Socially Responsible Index (JSE SRI)
Launched in May 2004 by Johannesburg Stock Exchange in collaboration with EIRIS, FTSE4GOOD – FTSE International Ltd. and KPMG. The primary objective of index creators was to implement a benchmark for investors and indirect support and promotion of responsible management in the RPA region. Johannesburg Stock Exchange Socially Responsible Index was the first of this kind financial instrument implemented in emerging markets. In addition to running socially responsible business the basic selection criterion for companies was the respect for human rights.
More about JSE SRI:
http://www.jse.co.za/About-Us/SRI/Introduction_to_SRI_Index.aspx
- Sao Paolo Stock Exchange Corporate Sustainability Index (ISE)
Implemented by BOVESPA, Sao Paulo Stock Exchange in collaboration with Centre for Sustainability Studies of Fundaçao Getulio Vargas (CES-FGV) and IFC (International Finance Corporation) in December 2005. The underlying idea of index creators was to implement a benchmark for investors interested in responsible investment and to promote CSR amongst Brazilian companies.
Methodology is based on positive selection (ESG criteria).
More about ISE:
http://www.bmfbovespa.com.br/Indices/download/ISE_ing.pdf
- KLD Global Sustainability Index Series (GSI)
Index launched by KLD Research & Analytics in October 2007.Index is a benchmark created based on ESG criteria with reference to three geographical areas: North America, Europe, Asia and Pacific. Index methodology is based on positive selection (ESG criteria).
More about KLD GSI:
http://www.kld.com/indexes/gsindex/index.html
