The Dow Jones Sustainable Indexes and the FTSE4Good Index announced the results of their annual reviews, finding that several Canadian companies have failed their social and environmental criteria.

Launched in 1999, the Dow Jones Sustainability Indexes are the first global indexes tracking the financial performance of the leading sustainability-driven companies worldwide.

 

In September, the index announced a number of new companies that have been added to the indexes, and others that have been dropped.  Among the companies dropped from the DJSI World Index was Terasen Inc., a Vancouver-based gas and utility company.

"Terasen did not improve its sustainability performance as much as other companies did since last year," said DJSI analyst Urs Schon in an email to the SIO. "Especially in the social dimension, our assessment identified room for improvement.  Therefore, given a growing sustainability competitiveness in the utility sector, the company was not among the 10% best companies anymore."

Alcan, the Canadian aluminum company, was recognized by DJSI for its progress on a number of issues.  DJSI named Alcan as the market sector leader out of all companies in the basic resources sector in its world index.  It replaced Dofasco, which continues to stay on the index, but was no longer named as the world sector leader.

"Although Dofasco's sustainability performance is still strong, Alcan has made more progress in some of our criteria in the last year," said DJSI analyst Sybillie Borner.  "For instance, Alcan has implemented a system to measure the impact of its philanthropic contributions.  Moreover, its guidelines for the selection of suppliers go beyond those of Dofasco, covering aspects such as human rights and labour standards."

 

The FTSE4Good is a series of socially responsible indexes launched in 2001 by the FTSE Group.  FTSE4Good also released results of its annual review in September, and found that Petero-Canada failed to make inclusion this year.

 

Mark Makepeace, CEO of the FTSE Group, said: "The FTSE4Good series is established as a barometer for CSR practice by companies all over the world.  The methodology, which uniquely includes ongoing criteria evolution, ensures that the series always reflects current CSR standards."  FTSE4Good toughened its human criteria in February 2003, including a mandatory requirement that companies have a policy regarding use of security forces on international projects.

 

The issue of security forces has been particularly controversial in Canada since the 2003 publication of the Canadian book Making a Killing: How and why corporations use armed force to do business by former Globe and Mail journalist Madelaine Drohan.

 

Andrea Ranson, spokesperson for Petro-Canada, was quoted in an article in socialfunds.com as saying: "Petro-Canada does not have a formal policy in this regard, however our Principles for Investment and Operations describes the International Code of Ethics for Canadian Business, the UN Global Compact, and the Universal Declaration of Human Rights.  As well, our commitment on human rights states that we will 'not be complicit in human rights abuses' and we will 'support and respect the protection of human rights within our sphere of influence.  Operationally we believe our practices are responsible and principled related to the use of security forces, however to further demonstrate this we are developing a formal policy."

 

Mairead Hancock, Client Services Adviser with the Ethical Investment Research Service, advisor to the FTSE4Good Indexes, said that Canadian Tire and Great West Life were dropped for environmental reasons.  "Both Canadian Tire and Great West were removed from the index on the grounds that they failed to meet the new FTSE4Good environmental requirements for medium impact companies."

 

BCE, the Canadian telephone and communications conglomerate, was added to the index.

 

For more information, visit www.sustainability-indexes.com and www.ftse.com/ftse4good/index.jsp