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Definition: Dow Jones Euro STOXX Sustainability Index
An index that of leading euro zone companies that aims at measuring the performance on financial basis using their environmental policies and sustainability index. The companies that have operations in Euro zone are only considered.
Annual checkup of the companies are done based on which they are allotted scores under various sections. This annual checking is done on all eligible firms to ensure measurement of the company’s progress and to also quantify the new initiatives and strategies that have been initiated by the company. This also helps them to understand where does the firm stand in comparison with its peers that belong in the same category.
Index is measured by the free float market capitalization. Changes are made to the index annually to accommodate changes in the company’s sustainability scores.
Various factors like company’s efforts in sectors of climate change, energy efficiency, management of knowledge, shareholders’ position and relationships, corporate governance and overall policies are used to arrive at the final sustainability score by assigning different weights.
Every industry has its own set of critical and different parameters. This is also considered in the sustainability score and hence every company is evaluated based on the industry it belongs to and the parameters necessary for it as well. Sustainability is a part of the long term strategies for a given company. This will include economical, social and technical costs. While the technical cost can be quantified and measured on a quarterly or annual basis, the first two can’t.