Dow Jones Sustainability World Index

Exploring the Dow Jones Sustainability World Index: A Guide to Sustainable Investing

In the realm of global finance, sustainability has become an increasingly significant factor for investors. The Dow Jones Sustainability World Index (DJSI World) stands as a beacon for those seeking to align their investment strategies with environmental, social, and governance (ESG) principles. Let's delve into what makes this index unique and how it influences investment decisions worldwide.

Understanding the DJSI World Index

Launched in 1999 by S&P Dow Jones Indices in collaboration with RobecoSAM, the DJSI World comprises the top 10% of the largest 2,500 stocks in the S&P Global Broad Market Index, selected based on their sustainability practices. This index serves as a benchmark for socially conscious investors and encompasses companies from diverse sectors across the globe.

Characteristics and Methodology

With over 300 constituents, the DJSI World boasts an impressive track record, delivering five-year annualized net total returns of 7.8% as of June 2020. Notably, the index demonstrates a strong emphasis on the technology sector, followed by healthcare and financials. Companies undergo rigorous evaluation, considering economic, environmental, and social metrics, with weightage determined by free-float market capitalization.

Special Considerations and Impact

The DJSI World undergoes an annual review process, with companies assessed for their ongoing commitment to sustainability. Those failing to meet the criteria risk exclusion from the index, highlighting the importance of consistent progress in ESG practices. Moreover, ethical considerations play a significant role, with companies scrutinized for involvement in controversial industries and issues.