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How to Improve Your DJSI Score

Peter Truesdale, OBE

Around this time of year I get calls and emails from companies asking for some guidance. They usually say something like: “Are you able to help us with this year’s Dow Jones Sustainability Indices?” I call back. I ask them what their criteria for success are. They say: “How do I improve my DJSI score?”

Some would think that improving the DJSI score is an ignoble aim. I don’t. But it does beg the question: How do you improve your DJSI score?

The bad news is that the question is more complex than is generally recognised. The good news is that each element of the complexity is scalable.

Let’s break that complexity down into some guidance on the six key steps:

  1. Get in alignment with DJSI thinking
  2. Identify the right colleagues to help
  3.  Get them on board
  4. Recognise the purpose of each question
  5. Remember if it’s not in your answer, it won’t get a mark
  6. Logging and plugging the gaps in disclosure, policy, management, measurement and philosophical alignment

 

1. Get in alignment with DJSI thinking

For most CR/Sustainablity professionals going to DJSI from the day job requires switching channels. One moment you are watching a comedy programme, the next you are watching Stephen Hawking talking about black holes. Well, it’s not quite that bad. You haven’t a chance of keeping up with British scientist Stephen Hawking. You have every chance of understanding the DJSI questionnaire.

It just requires you to say to yourself: “I’m not dealing with our irrational procurement department. I’m not trying to communicate with a tetchy stakeholder. No. I’m trying to get into the mind-set of a data-driven investment analyst.” Unless you get into that mind-set the chances of on-going improvement in the DJSI score are minimal.

2. Identify the right colleagues to help

Completing the DJSI questionnaire requires you to secure the co-operation of colleagues in other functions. Why the hell should they bother? They have got enough to do in their own day jobs.

In most companies a knock-out response to the question: “Why should I help complete the questionnaire, don’t you know I’m busy enough already?” is: “The CEO has decided we should participate to increase our sustainability and investment credentials.” That shuts them up.

However, I have noticed clients using rather more sophisticated forms of persuasion. Colleagues can be quite keen when told that the exercise will enable them to benchmark against others in the industry. They particularly like the idea that it will enable them to prove they are the best.

3. Get them on board

With the exception of colleagues in Investor Relations, few will have seen anything quite like the DJSI questionnaire. Left to themselves they will answer questions in line with their own professional discipline and character type. Yet their professional discipline is not investment.  The character type of analyst is a tad out of the ordinary. Conclusion: don’t leave them to themselves! They require support and assistance.

In the following sections I outline some guidance on the things you need to understand and to tell them if they are to be set up to improve the DJSI score. The way I frame these pieces of advice is: “It’s just like doing an exam at school”. From Chile, to Singapore, to North America, I have yet to find the country where this analogy fails to get the message across.

4. Recognise the purpose of each question

The first rule about exam success is: answer the question you have been asked not the one you wish you had been asked.

Here it must be said RobecoSAM, who devise the assessment, are rather more generous than my teachers ever were. Each question comes with a question rationale. This explains the background to the issue. It also states the specific purpose of the Question: “With this question RobecoSAM seeks to…” These are designed to provide useful guidance. Nonetheless, unless respondents are directed to the question rationale, they do have a tendency just to jump straight in.

The questions are highly structured. They are compiled to ask for yes/no answers. They ask for specific numbers. They ask for attached documents. They ask for references to public documents. They (sometimes) in the body of the question ask for a brief prose explanation.

You don’t have to be Sherlock Holmes to deduce that the questions are tightly structured because the scoring is tightly structured round the data that the questionnaire solicits. Even so, this is not an insight that everybody seems to grasp naturally. Best to support colleagues by explaining this to them.

5. Remember if it’s not in your answer, it won’t get a mark

The marks are generated by the data shared. If the data is not shared, an assessment cannot be made, so no mark will follow. In the first year of responding, some companies are unduly sensitive about sharing information, particularly documents. This often has a negative impact on the score. If your aim is to maximise your mark, then you must maximise the completeness of the answer.

If the exam paper has ten questions but you only attempt eight don’t be surprised if you don’t get full marks. If you fail to complete the questionnaire fully, you must logically be diminishing your chances of score improvement.

Each question currently has a general Comment Box. Many respondents imagine that this needs filling with lots of groovy examples, general descriptions and purple prose. Wrong. DJSI is a data driven activity. The structured questions drive the score.

6. Logging and plugging the gaps in disclosure, policy, management, measurement and philosophical alignment

Even the best first response to DJSI tends to have a lot of gaps. Don’t worry. Gaps are there to be plugged! The key question is what kind of gap is it.

In my experience the gaps fall into the following areas.

Firstly, there are gaps in disclosure. These fall into two categories.

The first category is where a question asks for supporting documentation. The company has the documentation but the guardian of the documentation refuses to share it. This is a form of self-harm. Withholding the documentation depresses the score. It is particularly potty in that the DJSI guidance makes it clear that any commercially confidential information can be blanked out. Often, but not always, document-deniers change their tune after a first successful submission.

The second category is where the questionnaire asks for where the information is publicly available. This is not a random requirement. The request is made because RobecoSAM believes that for the benefit of the prospective shareholder (or the company’s own good) the information cited should be publicly accessible. In most of these cases the gap is easy to plug. The company has got it but has not, left to itself, wanted to publish it. Often as the company gets into the swing of DJSI it chooses to publish the relevant documents on-line.

More surprisingly completing the questionnaire reveals policy gaps. The company has no tax policy, though the questionnaire asks for one. The company has no policy on charitable contributions, though one is requested. This frequently triggers consideration of whether or not it would benefit from having a policy. The gap gets plugged. The same is true about management systems (and verification of such systems). Again, a gap revealed frequently quickly turns into a gap filled.

Plugging gaps in measurement of performance (and targets for improving performance) are often more long-term projects. If you haven’t got a measurement system, you can’t wave a magic wand and instantly conjure one up. If you haven’t got three years of data, you haven’t got a trend.  Nonetheless, over time, these can be brought into being to help improve your DJSI score.

One occasionally comes across gaps in the response because the company has a different philosophical view of the topic from RobecoSAM. Fair enough! The world would be a dreary place if all of us agreed about everything.

Again and again I see a combination of these steps – and real-time on the ground improvements in performance – driving up DJSI scores. Improving performance is a matter of disciplined application, not one of capricious inspiration.

Peter Truesdale OBE is a Director at Corporate Citizenship. He has been helping companies to improve their DJSI scores for more years than he cares to (or indeed can) remember. For more information on the assistance that Corporate Citizenship can provide to support you with your the Dow Jones Sustainability Index, please visit our services page. We regularly run webinars and other events on DJSI. To find out more, please sign up to our monthly newsletter.

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