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American businesses have fared badly in last month's annual review of the Dow Jones Sustainability Index, partly due to the removal of a number of financial services companies.
The review has led to a net loss of seven US companies from the index, with ten American businesses added on the grounds that they are among the best in their sector, and 17 deleted.
Alex Barkawi, managing director of SAM Indexes, which compiles the index, told EP it was 'interesting' that six of the 17 were from the financial services sector, which for the past two years has been subject to persistent attacks from non-governmental organizations seeking improvements in its social and environmental performance.
The financial services companies that fell out of the index - Bear Stearns, Chicago Mercantile Exchange Holdings, Equity Office Properties Trust, Goldman Sachs, Investors Financial Services and New Century Financial - all did so because their overall performance on social and environmental issues was judged weaker than others in their sector.
A similar picture also emerged in last month's review of the FTSE4Good Index, in which the US had five deletions and three additions - the only country to register a net loss. There was one financial services business among the five US deletions - Hartford Financial Services Group.
Barkawi emphasized that the performance of the companies removed from the index has not necessarily worsened, because the DJSI takes a best-in-class approach. 'It's just that they have not improved as much as others,' he said.
However, those that have fallen out of FTSE4Good have done so specifically because they no longer meet its core criteria. FTSE has been concerned about the relatively weak performance of US companies against its index criteria for some time and set up a committee two years ago to look into the matter, but progress has continued to be slow.
US financial services companies have in particular been the target of an ongoing campaign by the Rainforest Action Network, which says the sector needs to improve its performance dramatically on social and environmental issues. Goldman Sachs, deleted from the DJSI, has been one of its highest profile targets.
A further indication that the US is lagging behind in the field is that SAM Indexes has not sold a single licence for the use of its DJSI North America index in the first year of its existence. Barkawi said that although US investors had expressed interest in the index, none had been asset managers.
Overall the DJSI World Index will have 46 companies added and 36 deleted. FTSE4Good has added 24 and deleted nine.
The review has led to a net loss of seven US companies from the index, with ten American businesses added on the grounds that they are among the best in their sector, and 17 deleted.
Alex Barkawi, managing director of SAM Indexes, which compiles the index, told EP it was 'interesting' that six of the 17 were from the financial services sector, which for the past two years has been subject to persistent attacks from non-governmental organizations seeking improvements in its social and environmental performance.
The financial services companies that fell out of the index - Bear Stearns, Chicago Mercantile Exchange Holdings, Equity Office Properties Trust, Goldman Sachs, Investors Financial Services and New Century Financial - all did so because their overall performance on social and environmental issues was judged weaker than others in their sector.
A similar picture also emerged in last month's review of the FTSE4Good Index, in which the US had five deletions and three additions - the only country to register a net loss. There was one financial services business among the five US deletions - Hartford Financial Services Group.
Barkawi emphasized that the performance of the companies removed from the index has not necessarily worsened, because the DJSI takes a best-in-class approach. 'It's just that they have not improved as much as others,' he said.
However, those that have fallen out of FTSE4Good have done so specifically because they no longer meet its core criteria. FTSE has been concerned about the relatively weak performance of US companies against its index criteria for some time and set up a committee two years ago to look into the matter, but progress has continued to be slow.
US financial services companies have in particular been the target of an ongoing campaign by the Rainforest Action Network, which says the sector needs to improve its performance dramatically on social and environmental issues. Goldman Sachs, deleted from the DJSI, has been one of its highest profile targets.
A further indication that the US is lagging behind in the field is that SAM Indexes has not sold a single licence for the use of its DJSI North America index in the first year of its existence. Barkawi said that although US investors had expressed interest in the index, none had been asset managers.
Overall the DJSI World Index will have 46 companies added and 36 deleted. FTSE4Good has added 24 and deleted nine.
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