Dow Jones STOXX Sustainability Index

AAA

DEFINITION of 'Dow Jones STOXX Sustainability Index'

A stock index that measures the financial performance of leading European companies as measured by their sustainability practices. The stock universe is the Dow Jones STOXX 600 Index, which captures more than 90% of the aggregate market cap of European-based companies.

The STOXX Sustainability Index contains the top 20% of these companies in terms of their aggregate sustainability score as obtained by SAM Group, a Zurich-based research firm.

The free float market capitalization-weighted index is reviewed both annually and quarterly; the quarterly reviews focus on share counts and weightings while the annual review incorporates the most recent sustainability scores and industry evaluations.

BREAKING DOWN 'Dow Jones STOXX Sustainability Index'

The sustainability indexes aim to capture companies on the leading edge of sustainability practice/reform; the sustainability score that each company receives is based on an intricate weighting system that examines company actions regarding things such as corporate governance, environmental performance, energy efficiency and climate change strategies.

The focus of the research (and related company score) is more on long-term sustainability than on short-term company benefits, so the financial performance of the index may underperform other benchmarks such as the Dow Jones STOXX 600 and MSCI Europe Indexes.

The index was first published in 2001, and in addition to the base index there are specialized sub-indexes that exclude industries such as alcohol, tobacco, firearms and gambling.

RELATED TERMS
  1. Dow Jones Sustainability World ...

    A global index consisting of the top 10% of the largest stocks ...
  2. Green Economics

    A methodology of economics that supports the harmonious interaction ...
  3. Free-Float Methodology

    A method by which the market capitalization of an index's underlying ...
  4. Dow Jones EURO STOXX Sustainability ...

    A stock index that measures the financial performance of leading ...
  5. Corporate Governance

    The system of rules, practices and processes by which a company ...
  6. Benchmark

    A standard against which the performance of a security, mutual ...
Related Articles
  1. Mutual Funds & ETFs

    Go International With Foreign Index Funds

    As global trade continues to expand and the world's economies grow, spice up your portfolio with these exciting opportunities.
  2. Personal Finance

    Go Green With Socially Responsible Investing

    Find out how morals and ethics can bring you a surprising return.
  3. Mutual Funds & ETFs

    Socially Responsible Mutual Funds

    It is possible to avoid unethical investments and still profit from mutual funds. Find out how!
  4. Term

    What's an Investment Advisor?

    An investment or financial advisor makes investment recommendations and analyzes securities.
  5. Investing Basics

    Learn About the New York Stock Exchange

    The New York Stock Exchange (NYSE) is nicknamed the “Big Board,” and for good reason. It’s the largest, oldest and best-known stock exchange in the world.
  6. Investing

    What Rising Volatility Means for Momentum

    After remaining torpid for most of the year, equity market volatility is once again rising.
  7. Investing

    How To Invest For The Greater Good

    We discuss why is important to prioritize economic, social and governance factors when making investment decisions, regardless of gender or generation.
  8. Term

    Risk and Reward In Emerging Market Economies

    An emerging market economy is one that’s progressing into an advanced economy.
  9. Investing

    What Are The Three Key Elements of a Bond ETF?

    We explore the bond ETFs basics, because the only way to appreciate the benefits that this type of investment offers is to first understand how they work.
  10. Fundamental Analysis

    Explaining the Capital Market Line

    The capital market line (CML) depicts the level of additional return above the risk-free rate for each change in the level of risk.
RELATED FAQS
  1. Who are BMW's main suppliers?

    Among about 40 main suppliers for its automotive production, some of the principal parts suppliers for BMW include Brembo, ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. What is the difference between shares outstanding and floating stock?

    Shares outstanding and floating stock are different measures of the shares of a particular stock. Shares outstanding is the ... Read Full Answer >>
  4. What is the difference between market risk premium and equity risk premium?

    The only meaningful difference between market-risk premium and equity-risk premium is scope. Both terms refer to the same ... Read Full Answer >>
  5. What is the difference between the QQQ ETF and other indexes?

    QQQ, previously QQQQ, is unlike indexes because it is an exchange-traded fund (ETF) that tracks the Nasdaq 100 Index. The ... Read Full Answer >>
  6. What is the difference between an investment and a retail bank?

    The activities and types of clients for an investment bank versus those for a retail bank highlight the primary difference ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  2. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  3. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  4. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  5. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  6. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!