navigating the ratings and rankings landscape, a focus on djsi
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Navigating the ratings and rankings landscape
March 31, 2011
A focus on the Dow Jones Sustainability Indexes
AgendaIntroduction
Context
DJSI overview
Reasons to respond
Navigating the application
Questions and answers
Peter Truesdale – Associate Director
Peter is an Associate Director of Corporate Citizenship, he specializes in a number
of aspects: reporting, report assurance, and external standards. He has worked
with a range of global companies and professional firms including ANZ, Lafarge,
Mars, and SABMiller.
Megan DeYoung – Director, United States
Megan manages Corporate Citizenship’s US practice and works with clients to
develop and implement citizenship strategies that are closely tied with the
business and to communicate clients’ initiatives to internal and external
stakeholders. She has worked with many global companies including Abbott,
Hershey’s, Aramark, and Unilever.
Presenters
� Corporate Citizenship is a corporate responsibility management
consulting company with offices in the US and UK
� Since 1997, we have advised leading, global corporations on how to
enhance and align their citizenship and traditional business activities to
create strategic business value
� We have a team of 30 and experience in
40 countries
“They have a real understanding of the
issues in diverse countries around the world”
- Unilever
Corporate Citizenship’s work is global
We work across the spectrum of corporate responsibility and
sustainability activity
� We have developed strategy for several FTSE 100, Fortune 500, and DJSI Super Sector leaders
� We have devised and implemented environmental data management systems in over 100 countries
� We helped businesses invest $2.2 billion in local communities in 2009
� We are one of the most awarded and trusted reporting consultantsworldwide, working on 135 reports over for more than a decade with FTSE 100 and S&P 500 companies
� We are global market leaders for assurance (135 reports verified)
“They understood what was important to the way we operate, and where we could make the greatest difference” - Abbott
• Engage managers and employees about value of corporate responsibility
• Focus on priority areas• Align with business
objectives• Engage internal and
external stakeholders
• Be yourself• Communicate, don’t
just report• Create transparency
• Pursue ratings and rankings
• Enable others to praise you 1.
Internal buy-in
2.
Robust CR
program
3.
Authentic
communications
4.
External
recognition
Reputation comes from a robust CR program and authentic
communications
It is easy to become overwhelmed by ratings and rankings,
but you can survive and prosper
Trends � Enormous growth� Consolidation of research firms� Some coverage in mainstream media
Challenges � Variation in methodology (information sources, criteria)
� Varied performance by single company
Added value � Third-party validation of corporate responsibility commitment
� Comparison with competitors
� Internal buy-in and support of corporate responsibility
� Insight into company’s strengths and weaknesses
� Leverage for increased transparency
Tips � Prioritization (ratings/rankings, programmatic improvement areas)
� Leverage of existing material
Many ratings / labels focus on a subset of citizenship issues
Economic Environment Social
Dow Jones Sustainability Indexes
are one of the few ratings that touches numerous aspects of citizenship across a
company
Dow Jones Sustainability Indexes combine finance with corporate responsibility
� Dow Jones launched the first set of global sustainability indexes in 1999 called Dow Jones Sustainability Indexes (DJSI)
� DJSI tracks financial performance of leading sustainability-driven companies worldwide
� DJSI focuses on how company recognizes risks and opportunities arising from sustainability issues in its business strategy
� Sustainability Asset Management (SAM), an investment group focused exclusively on sustainability investing, manages DJSI
� Top companies within industry group are included in DJSI
DJSI is four indexes that include top companies by sector
DJSI World2,500 largest global
companies
DJSI Europe
DJSI North America
DJSI Asia/Pacific
• Top 10% in each industry
group selected
• Each industry group has 20%
target market cap
* Includes Canada and US.
** Includes companies from South Korea, Australia, New Zealand, Japan, Hong Kong, Taiwan, and Singapore.
• Top 20% in each industry
group selected
• Each industry group has 45%
target market cap
• Top 20% in each industry
group selected
• Each industry group has 45%
target market cap
• Top 20% in each industry
group selected
• 45% market cap coverage in
each market sector
SA
M a
ssessm
en
t
600 largest European
companies
600 largest North American*
companies
600 largest Asia/Pacific**
companies
Do
w Jo
ne
s T
ota
l Glo
ba
l Sto
ck
Ma
rk
et In
de
x
Investors can opt to exclude certain sectors
XXAdult
Entertainment
XXXXArmaments &
Firearms
XXXXTobacco
XXXXGambling
XXXXAlcohol
DJSI Asia
Pacific
DJSI North
America
DJSI EuropeDJSI World
� Food & Beverage� Beverages� Food Producers
� Health Care� Healthcare Providers� Medical Products� Biotechnology� Pharmaceuticals
� Media� Media
� Oil and Gas� Oil & Gas Producers� Oil Equipment & Services� Pipelines� Alternative Energy
� Industrial Goods & Services� Aerospace & Defense� Containers & Packaging� Diversified Industrials� Electrical Components &
Equipment� Electronic Equipment� Industrial Engineering� Industrial Transportation� Support Services� Waste & Disposal Services
� Personal & Household Goods� Durable Household Products� Furnishing� Home Construction� Nondurable Household Products� Leisure Goods� Personal Products� Clothing, Accessories & Footwear� Tobacco
� Insurance� Insurance
� Utilities � Electricity� Gas Distribution� Water
� Real Estate� Real Estate
� Travel & Leisure� Gambling� Hotels, Restaurants, Bars, and
Recreational Services� Travel & Tourism� Airlines
� Retail� Food & Drug Retailers� Specialized Consumer
Service� General Retailers
� Telecommunications� Fixed Line Telecommunications � Mobile Telecommunications
� Technology� Software� Computer Services & Internet� Communication Technology� Semiconductors� Computer Hardware & Electronic
Office Equipment
� Automobiles & Parts� Auto Parts & Tires� Automobiles
� Chemicals� Chemicals
� Basic Resources� Forestry & Paper� Aluminum� Steel� Mining� Pipelines� Alternative Energy
� Construction & Materials� Building Materials &
Fixtures� Heavy Construction
� Banks� Banks BNK
� Financial Services� Financial Services
Companies within a sector are evaluated for listing
Two (2) Sectors
• Beverages
• Food Producers
Supersector
• Food & Beverage
Polling question #1
� Did your company respond to the DJSI invitation in 2010?
� Yes
� No
� Did not receive an invitation
The DJSI selection process is competitive
2,617 companies invited to submit applications
1,393 companies analyzed• 698 companies submitted questionnaire
• 695 companies analyzed exclusively on publicly available information
318 companies qualified
2010 Selection Process
There are external and internal benefits to even responding
to DJSI
Inclusion is competitive: what do companies gain?
1,393 companies analyzed
DJSI is the equivalent of a
sustainability Oscar!
� Most prestigious
� Most recognized
� Most respected
benchmark of
sustainability
performance
318
companies
listed
There are numerous internal gains
whether companies are listed or not:
� Build corporate citizenship
reporting
� Increase awareness and
reputation of citizenship
internally
� Identify areas for operational and
strategy improvement
Polling question #2
� Is your company planning to respond to the DJSI invitation in 2011?
� Yes
� No
� Not anticipating an invitation
DJSI evaluates companies based on several sources of
information
1. Survey � There are generic questions and sector specific questions � Dozens of questions; can be as much as 100� Sector survey usually changes only slightly year-to-year, but occasionally is
overhauled � Topics related to economic, environment, and social� Web-based application process
3. Media and stakeholder analysis
� SAM conducts additional research to review media coverage and stakeholder views on certain topics are considered
2. Company
documentation� Inclusion of documents that support our responses and provide additional
information and/or proof points of our activities; DJSI accepts documents which are:� Publicly available (preferred)� Confidential
� Documents may be policies, spreadsheets, snapshots of intranet web pages, and many other types of support
What criteria does DJSI cover?
� DJSI focuses on how a company recognizes the risks and opportunities
arising from sustainability issues in its business strategy
� DJSI looks at a company’s economic, environmental, and social impacts
Economic
� Corporate governance� Risk and crisis management� Codes of conduct /
compliance / anti-corruption and bribery
Environment
� Environmental reporting
Social
� Labor practice indicators� Human capital development� Talent attraction and
retention� Corporate citizenship /
philanthropy� Social reporting
General criteria
What is the survey format?
Question
Answer (table, check boxes)
Relevant documents
(attachments)
Location to provide requested data or indicate the answer choice(s) that apply to your company
Option to add references to support or expand your response
Area to provide comments to explain answer and provide additional information
Qualitative response
General question or industry specific question on company’s economic, environmental, and social impacts
What are the key considerations when responding?
Investor survey � DJSI is not interested in sustainability per se; they are interested in how the risks and opportunities arising from sustainability issues are recognized in business strategy
� DJSI lists companies with systems and processes that drive continuous performance improvement and lead to effective business long-term
Confidentiality � The entire submission is confidential
� Sensitive documents can be marked confidential
Relative
scoring
Expectations � If this is your first submission, have realistic expectations
� There is much to gain internally just by going through the process
� Companies can improve their responses year-on-year without changing their position on an index because other companies improve as well
� DJSI rewards continuous performance
There are three models for external review
Quick review of
response� We identify questions
with perceived easy opportunities to enhance a company’s response
� We can conduct this review at any point, but find it is often useful to perform this review at the beginning and when the draft is close to complete, but there is still time to make revisions before the submission deadline
Deep dives of response
� We conduct a review of priority sections of a company’s response, providing insight on what the section is asking and probing about structures and processes a company has that may apply to the section
� We provide ongoing support for owners of priority sections as the owners develop their response
Management of
submission� We develop the first
draft of the submission based on last year’s submission and publicly available information
� We meet with internal stakeholders to discuss individual questions to enhance responses
� We revise responses based on internal meetings and new or updated documentation
April May June
Turn around time of the submission is about two months
The entire DJSI process runs over several months
DJSI Survey
released –
April 7
DJSI Survey
Due – June 2
September
DJSI Results
Released –
September 8
March
Where we
are now
Give us a ring
For further information please contact:
Corporate Citizenshipwww.corporate-citizenship.com
Peter TruesdaleAssociate Director
Corporate Citizenship5th Floor, Holborn Gate330 High HolbornLondon WC1V 7QGUnited Kingdom
T: +44 (0)20 7861 1631E: peter.truesdale@
corporate-citizenship.com
Megan De YoungDirector, United States
Corporate Citizenship241 Centre Street4th FloorNew York, NY 10013United States
T: +1 212 226 3702 E: megan.deyoung@
corporate-citizenship.com
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