The Dow Jones Sustainability Index (DJSI) results for 2008 are out, and although I’m not a huge fan of corporate sustainability beauty pageants, this one is probably the most credible measure of performance yet. That said, the DJSI is a far from perfect measure of corporate sustainability performance and contribution towards global sustainable development.
With this year’s results, no stunning news then for the Technology sector with Intel continuing to lead over all and SAP (see my disclosure) also continues its lead in the software sub sector with Symantec as a new addition to the existing group which also includes Autodesk, Trend Micro and Microsoft. Intel’s overall lead is well deserved but I can imagine some nervousness in Santa Clara after a challenging year not least with OLPC fallout as Dave Stangis described in his ‘A Painful Start to the New Year’ blog post back in January.
If there is something to niggle with on the DJSI is that it is still very much a risk based assessment of sustainability performance which alone, in my view, is trending towards redundancy at least for the Tech sector. For example, in two major focus areas of risk and human capital management the Technology and Utilities sectors score inversely. The Technology sector scores almost 10% and 0.5% below average respectively whilst the Utilities sector scores best with scores 13% above average in each category. This is indicative of sustainability rankings overall – the higher the impact, the better the risk recognition and management systems which results in a higher score even if the actual sustainability impact is not improving all that much.
So what gives? First, high impact companies such as those in the Utilities sector have had a sustainability baptism of fire and have become more adept at managing sustainability disciplines in ways that create value for their business especially in terms of risk reduction. Second, for lower impact Technology companies there has never really been any serious pressure to perform on sustainability on the risk side. That is not to say the risk has not been entirely present – the Human Capital Development scores for example should give any Tech exec pause for thought. Admittedly, risk and human capital management are generic categories that any industry can and should do well managing regardless of the industrial context. But this does beg the point - firms that are more focused on sustainability, even if out of necessity, seem to be better adapted to understanding & managing the risks and opportunities that are relevant, eventhough more externalised, to the current business model.
But the big issue with rankings such as DJSI is that they are still too generic and too focused on risk management systems above all other performance considersations. What we need to measure real sustainability performance in the Tech Sector is a sustainability index that measures & balances well not just risk but also sustainability opportunity and especially sustainability innovation opportunity cost.