Good news for enviro-investors

ZURICH-based investment analyst firm SAM Group has released its first annual Australian sustainability index, measuring the performance of Australia’s leading ‘triple-bottom-liners’ against the rest of the market.

According to the company’s Australian SAM Sustainability Index (AuSSI), the organisations it targeted as leaders in terms of economic, environmental and social criteria outperformed the Standards & Poor/ASX 200 by 1.1%, with stock prices increasing by 10.7% over the first eight months since the index was created.

Sustainability leaders identified in the 2005 AuSSI included several energy companies and utilities, including Woodside Petroleum, Origin Energy, Australian Gas Light, Australian Pipeline Trust and Envestra.

The AuSSI was compiled by SAM group subsidiary SAM Indexes, with the cooperation of Environment Protection Agency Victoria and The Australian newspaper.

SAM Indexes said the AuSSI comprised the top 40% in terms of sustainability out of 184 companies listed on the Australian Stock Exchange, using the same research criteria as the globally recognized Dow Jones Sustainability Indexes for which SAM selects sustainability leaders on a worldwide scale.

Leading companies are chosen from all 21 listed industry categories and assessed in terms of corporate governance, climate change, supply chain standards, labour practices, and human resources development.

According to SAM Indexes, sustainable development is increasingly important to the corporate community, with “real and permanent” changes to business practices and corporate governance boosting the stability of Australia’s leading market performers.

The AuSSI 2005 review found that:

• Sustainability is moving from corporate strategy and operations into product and service offerings, particularly in the mining and energy sectors;

• Industries are creating their own specific criteria to accurately define sustainability leadership, such as the importance of effective carbon emission strategies and ‘environmentally aware’ products in the energy and mining sectors;

• The companies involved in the AuSSI listings have almost universally converged around reporting, strategy and systems to improve their sustainability credentials. The SAM Group posited the change was a response to the Enron debacle, with evidence of increased corporate governance procedures from companies not in the AuSSI listings;

As of November 1 2005, the AuSSI will add 10 new companies and delete five of the companies included in the 2005 annual review, bringing the total number of companies listed in the index to 73.

SAM Indexes said the changes would reflect the constant refinements in sustainable asset management analysis and represent emerging industry-specific sustainability standards.

Although the annual review of the AuSSI-listed companies reflects changes in the relative position of companies in terms of sustainability within their industry, SAM Indexes said most of the companies facing deletion had in fact improved their sustainability performance over the year, only to be overtaken by emerging sustainability leaders.

The 10 companies to be added to the AuSSI listing on November 1 include Caltex Australia. None of the companies to be deleted is in the energy sector.

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