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Dow Jones STOXX Sustainability Index

Dow Jones STOXX Sustainability Index

What Is the Dow Jones STOXX Sustainability Index?

The Dow Jones STOXX Sustainability Index was a stock index, first distributed in 1999, which zeroed in on European companies that score highly on environmental, social, and governance (ESG) ratings. In 2010, Dow Jones ended its joint effort with STOXX, while continuing to offer ESG-situated stock indexes under various names.

Today, indexes like the Dow Jones STOXX Sustainability Index have consistently ascended in notoriety all through the world, as investors progressively hope to incorporate environmental factors into their dynamic criteria.

Grasping the Dow Jones STOXX Sustainability Index

The Dow Jones STOXX Sustainability Index came about because of a joint effort between Dow Jones and Company and two Swiss-based firms: STOXX and RobecoSAM. Its purpose was to capture European companies on the leading edge of environmental sustainability rehearses.

To achieve this, the administrators assigned a sustainability score to each company in view of a far reaching rating system that inspected company activities concerning corporate governance, environmental effects, and progressing research and development (R&D) on environmental issues.

These companies were drawn from an investment universe equivalent to generally 90% of the aggregate market capitalization of European-based companies. Of these, the chose invested addressed generally the top 20% of, not entirely set in stone by their sustainability scores.

Thusly, the Dow Jones STOXX Sustainability Index gave a helpful reference point to investors keen on working on the environmental standards of their portfolio, whether by choosing individual stocks from the index, or by developing investment products, for example, exchange traded funds (ETFs), which utilize the index as their benchmark.

In 2010, Dow Jones and Company ended its partnership with STOXX, while continuing to team up with RobecoSAM. Today, there are numerous indices accessible that are marketed under the overall umbrella of the Dow Jones Sustainability Index family. These incorporate different region-and country-explicit indexes for areas like Korea, Chile, North America, and the Asia-Pacific region.

Certifiable Example of the Dow Jones STOXX Sustainability Index

The Dow Jones Sustainability Indexes are refreshed on an annual basis in December. To form the indexes, S&P Global welcomes roughly 4,500 publicly traded companies to take part in their Corporate Sustainability Assessment (CSA), a survey that S&P Global purposes to compute each company's sustainability score on a scale of 0 to 100.

The assessed companies are then positioned inside their particular industries and the highest-scoring companies inside every industry are chosen for the indexes. The top 10% are remembered for the global index, while the top 20% are added to regional indexes and the top 30% are chosen for country indexes.

The North American Dow Jones Sustainability Index, for instance, is involved the top 20% of the 600 biggest U.S. companies in the S&P Global Broad Market Index in view of their sustainability scores. As of June 2022, this index's biggest holdings comprised of a portion of the United States' biggest and most notable firms, including Microsoft (MSFT), Visa (V), and Procter and Gamble (PG) among others.

Highlights

  • Today, there are various stock indexes offered under the Dow Jones Sustainability Index umbrella.
  • It was planned to assist investors with incorporating ESG factors into their portfolios.
  • The Dow Jones STOXX Sustainability Index was a stock index offered somewhere in the range of 1999 and 2010.