Dow Jones, a bedrock institution of Wall Street, has been providing financial information and data analysis to the investment markets in the United States for more than 130 years. Many American investors naturally assume that they can depend on the Dow Jones Sustainability Indices (DJSI) to identify corporations with superior sustainability track records.
But when they do so, are they actually relying on Dow Jones’ expertise? According to a 20 year old Swiss organization named RobecoSAM, it (and not Dow Jones) is the firm that “assesses the world’s largest companies via its Corporate Sustainability Assessment (CSA), which uses a consistent, rules-based methodology to convert an average of 600 data points per company into one overall score. This score determines inclusion in the DJSI.”
Hmm. According to this information, American investors who depend on the DJSI are really relying on the expertise of RobecoSAM. So, if they trust the analytical capabilities of RobecoSAM’s analysts, they can presumably depend on the DJSI. Can’t they?
Perhaps not. According to a different 20 year old Swiss organization named RepRisk, it (and not Dow Jones or RobecoSAM) produces data that “is used for the Media and Stakeholder Analysis component of the assessment. RepRisk’s ESG risk screening, identification, and analysis complements the detailed industry-specific questionnaire and extensive documentation that companies provide as part of the annual CSA for the DJSI.”
Yikes! So American investors who depend on the DJSI are really relying on the expertise of RobecoSAM and of RepRisk. Those two firms are performing the analytical work on the indices. Dow Jones, meanwhile, is simply adding its brand name to the product.
Is that a concern? To be fair to RobecoSAM and RepRisk, perhaps not. After all, their analysts may be skilled and objective professionals.
And yet there is a reason why the DJSI isn’t named the RobecoSAM and RepRisk Sustainability Indices. American investors would clearly prefer to rely on the Dow Jones Sustainability Indices. But do those investors truly understand who is actually managing the DJSI?