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February 16, 2000
Canadian Firm Launches Social Index
Michael Jantzi Research Associates introduces the first index of socially responsible stocks in
Canada.
SocialFunds.com --
The recent performance of social indexes in the U.S., Domini Social Index and Citizens Index, have
made it clear that socially responsible investing has a strong foothold in this country. A new
index in Canada may provide the same promising message for social investors north of the border.
 Introduction of the Jantzi Social Index
was announced yesterday by Michael Jantzi Research Associates (MJRA), a leading provider of social
and environmental research for institutional investors in Canada. MJRA has designed the Jantzi
Social Index (JSI) to be a benchmark for money managers and other investors against which they can
measure the performance of socially screened portfolios of Canadian companies.
"It's
critical to have a benchmark index that appropriately reflects the realities of social investing in
Canada," said Allan Brown, Manager of the $2-billion Investors SUMMA fund. "The Jantzi Social Index
fills this need."
"The JSI will raise awareness of socially responsible investing and
spur it to even greater growth here in Canada," said Leslie Cliff, Director of Private Assets at
Genus Capital Management in Vancouver.
The JSI is a socially screened, market
capitalization-weighted common stock index modeled on the S&P/TSE 60. The JSI consists of 60
Canadian companies that pass a set of broadly-based social and environmental screens, reflecting
the current state of socially responsible investing in Canada. Interestingly, these screens do not
correspond exactly to their U.S. counterparts.
Exclusionary screens ensure that companies
involved in the production of nuclear power, or that derive significant revenues from the
manufacture of tobacco products or from weapons-related contracting, are not part of the index. The
same attention is not given to alcohol and gambling, typical "sin" screens employed in U.S.
indexes.
The JSI also employs qualitative screens to analyze companies' records in the
areas of ethical business practices, community relations, diversity, employee relations,
environment, human rights, and product safety. These screens are used to identify which companies
are, on balance, negative or positive in these areas so they can be excluded or included, however,
a poor record in one of these issue areas does not necessarily eliminate a company consideration.
"Although not perfect, the companies in the JSI reflect a higher standard of social and
environmental performance than one would expect to find in traditional stock indices or
benchmarks," said Michael Jantzi, President of MJRA.
MJRA began development of the JSI by
analyzing the social and environmental records of the S&P/TSE 60 companies. Seventeen companies
were eliminated from JSI contention through the screening process, and were replaced by other
companies in the TSE 300, attempting to maintain large market capitalization and industry
representation. Another goal was to find companies that demonstrated exceptional social
characteristics as well.
Working with its partners, Dow Jones Indexes, which is
calculating the JSI, and State Street Global Advisors (SSgA), which provides quantitative analysis
and support, MJRA will track the performance of the Jantzi Social Index over time. The JSI promises
to finally answer the question: How does the application of social criteria affect investment
performance in the Canadian market?
In initial backtesting studies undertaken by SSgA,
the JSI outperformed both the TSE 100 (by .82 percent) and the TSE 300 (by 1.58 percent) from the
beginning of 1995 until the end of 1999. "Although the backtesting process was extremely thorough,"
says Michel Malo, SSgA's Director of Portfolio Management, "the real interest will be seeing how
the JSI performs going forward."
"It's important to remember that the Jantzi Social Index
is not meant to reflect the 60 best companies in Canada, nor does it presume to represent the only
60 companies in the country that meet social and environmental criteria," said Jantzi.
More to the point, the JSI represents the behavior of a portfolio of stocks in companies that a
socially responsible investor might purchase. As such, Canada and the rest of the world will be
watching in anticipation.
©
SRI World Group, Inc. All Rights Reserved.
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