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July 03, 2001
ARESE Launches New European Sustainability Index
by Mark Thomsen
ASPI Eurozone is the first of a family of indexes that will include companies based solely on their
sustainability performance.
SocialFunds.com --
ARESE, a Paris-based firm
that conducts research on corporate social, environmental and sustainability performance, recently
announced the introduction of the first of a series of new indexes. The first index, the ASPI
Eurozone, will track the financial performance of companies in the Eurozone that are leaders in
sustainability. The Eurozone comprises the European Union members that have adopted the Euro.
The new series of indexes, called ASPI, uses corresponding Dow Jones
STOXX indexes as a benchmark financial universe, but include only companies that have been rated
highly in terms of sustainability. ASPI is an acronym for ARESE Sustainiable Perfomance Indexes.
The indexes are a real landmark in terms of the institutionalization and mainstreaming of
SRI on the Continent," said Sarj Nahal, Senior Analyst with ARESE. "We have reached a point in
terms of assets under management for SRI where people are looking for benchmarks."
ASPI
takes a positive approach toward corporate sustainability, including companies that set good
examples for sustainability or are moving toward best practices. There are no exclusionary
screens, so conceivably the indexes could include tobacco and other controversial business lines
often excluded by many funds in the U.S.
ARESE's ratings for corporate sustainability
performance are based on five criteria: community and international civil society; corporate
governance; customers and suppliers; health, safety and the environment; and human resources and
international labor standards. Companies are assessed on each of these five criteria in terms of
their leadership, implementation and results.
The ratings are done by sector, so
companies are compared to other companies with similar impacts on stakeholders and similar risks.
The ratings for each criteria translate into five scores for each company, which are averaged
geometrically to yield a mean corporate sustainability score. Because a geometrical average is
used, any company scoring zero, the lowest score, on one of the criteria receives a zero mean score
and therefore is excluded from the index.
As on overall policy, ARESE has decided that
only the top 50 percent of the companies it has ranked shall be included in ASPI at any given time.
ARESE aims to assess and rate as many companies as possible that are listed on the
relevant STOXX financial benchmark index, regardless of market capitalization. If, however, the
relative weight of any company is found to be greater than 10 percent, the weighting of the company
will be capped at 10 percent.
ARESE is planning to review the ASPI series quarterly on
the basis of its ongoing sustainability assessments and any changes in its ratings. If a company
is dropped from ASPI due to a change in the corresponding STOXX index, it will be replaced by the
next best-ranked company regardless of industry sector. ARESE is also planning to review its
assessment methodology annually.
While a company's financial results do not affect whether
it is included in ASPI, ARESE believes the indexes should
perform well. "Between 1992 and 2001, the APSI Eurozone would have outperformed the Dow Jones Euro
Stoxx by 20 percent," said Nahal. "Between 1998 and 2001, it would have done 7 percent better."
The ASPI series includes country-specific indexes based on corresponding Dow Jones STOXX
indexes as well as ASPI Europe and ASPI Global. According to Nahal, the first country-specific
index will be ASPI France, which will debut in September of this year. Introduction of ASPI
Europe, which will cover the U.K. and other countries outside the Eurozone, is planned for the end
of this year or early 2002. ASPI Global will be launched toward the end of 2002.
©
SRI World Group, Inc. All Rights Reserved.
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