DEFINITION of 'Dow Jones Sustainability World Index'
A global index consisting of the top 10% of the largest stocks in the Dow Jones Global Indexes (which cover more than 2,500 companies) in terms of their sustainability and environmental practices. The index was started in 1999, and is maintained by Dow Jones in conjunction with SAM Group, a Zurich-based research firm that conducts detailed sustainability analyses of thousands of global market-cap leaders each year.
BREAKING DOWN 'Dow Jones Sustainability World Index'
The index is weighted based on free-float market capitalization, and changes are made once each year in September based on the newest sustainability scores. Each company represented in the index has its corporate sustainability assessed through an intricate weighting system that looks at economic, environmental and social metrics, as well as industry-specific criteria. Companies are also evaluated each year; those that fail to show consistent progress may be removed from the index.
The Dow Jones Sustainability World Index covers dozens of industry groups and has members in more than 20 nations. Because of increased investor appetite for socially-conscious investments and corporate environmental responsibility, the index has been licensed by many private wealth managers to use as a benchmark, and has billions of assets under management pegged to it.
Many companies that become members of the index see it as an opportunity to enhance shareholder awareness of environmental efforts and will issue press releases to announce their index membership and tout their environmental sustainability leadership.