Corporate economic performance and sustainability indices: a study based on the Dow Jones Sustainability Index

Sustainable investing recognizes companies’ role in solving some of the major sustainability challenges globally and that companies driving impactful sustainability agendas can be best positioned to grow, and one way to do this is through inclusion into a sustainability stock-market index. Current research has investigated the financial benefits of being included into sustainable indices and has found contrasting results. To expand on existing work, we report an analysis that aims at better understanding whether there is any negative economic impact related to participation in the sustainability index DJSI. To do this, we gained data on three financial indicators (market cap, net sales, and EBITDA) on five different non-related industries (Airlines, Aluminum, Apparel, Pharmaceuticals, and Forest Products). Ten companies in each industry were selected based on market-cap, with 5 being in-index and 5 being out. Although most indices’ rationale is to identify companies that are best-in-class performers in sustainability and economically, we report an unexpected conclusion of no obvious financial consequences from being part of sustainability index. Only one industry—forest products—had positive impacts of index-inclusion, and the other industries’ impacts were non-consequential. This indicates that sustainability indices may promote sustainable development with no financial impact. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s43546-022-00251-0.