US finance giants Goldman Sachs, Morgan Stanley and State Street have been deleted from the Dow Jones Sustainability Index (DJSI) North America following the introduction of a new ‘systemic risk’ element as one of a range of assessment criteria used.
A range of finance firms have been deleted from the wider DJSI index family in an annual review called the Corporate Sustainability Assessment conducted for index firm S&P Dow Jones Indices by sustainability specialist RobecoSAM.
Other companies that have been axed from various indices in the series include HSBC, Lloyds Banking Group and Zurich Insurance. But Bank of New York Mellon has been added to the DJSI North America index and UBS and Bank of America are among the largest additions to the main DJSI World.
Goldman, Morgan Stanley and State Street were axed from the North America index alongside household names Procter & Gamble, Merck and Kraft Foods. HSBC and Lloyds were deleted from the main DJSI World index, along with the likes of Glencore Xstrata, Johnson & Johnson, Vodafone, Caterpillar and Deutsche Telekom.
It follows a new ‘Financial Stability & Systemic Risk’ criterion introduced for 2013.
RobecoSAM says: “Threats to the system’s stability by overly complex firms impose large external costs to shareholders, citizens, markets and the broader economy.”The new criterion is based on a framework developed by the Financial Stability Board, the Switzerland-based body which oversees global financial stability.
The criterion has a weight of 4% only is not solely responsible for the banks’ deletion, RobecoSAM says. The firms were deleted because their total score which adds up financially relevant economic, environmental and social factors.
The assessment’s climate strategy section is for the first time this year aligned with the CDP [the former Carbon Disclosure Project] framework, following an agreement announced earlier this year. The questions do not go into the same level of detail, but companies may base their answers on their CDP response.
From September 23, the DJSI World will have 333 components following 39 additions and 47 deletions. Some 3,300 companies were invited to be assessed and 1,831 were analysed, based on 818 competed questionnaires and 1,013 assessments based on public information alone.
Guido Giese, Head of Indices at RobecoSAM said: “We encourage active participation in our Corporate Sustainability Assessment each year and this year we were happy to see a 31% increase in participation from companies in emerging markets.” Link