What is a sustainability index?

A sustainability index is an instrument used to measure the sustainability of a business across environmental and social factors. It provides non-financial data that can tell investors and stakeholders how a company is managed in a day-to-day setting and the importance that they place on environmental stewardship and social responsibility. There are dozens of different indexes that businesses can disclose to, each providing their own parameters and levels of credibility amongst the public. The Dow Jones Sustainability Index and FTSE4Good are the most popular in Europe, whilst the MSCI KLD 400 Social Index has a large representation in the US. Sustainability indexes are becoming increasingly important, not only as a measure of risk for investors, but also as a measure of environmental impact. In the face of aggravating climate change, it is paramount that businesses place sustainability at the forefront of their management. Being able to benchmark your company against others as well as being subject to pressures from the public is also a valuable driver of sustainability in business.

What is a sustainability index used for?

Sustainability indexes are primarily used by investors who are interested in introducing sustainable investments to their portfolios. The rise in this interest is in part due to the fact that a business’ sustainability performance is a strong indicator of future performance. A study by HEC Paris titled “Do Investors Actually Value Sustainability Indices?” analysed the impact on companies that are listed on the Dow Jones Sustainability Index. Their findings showed that the listed businesses had a higher percentage of shares held by long-term investors, as well as higher visibility amongst financial analysts.

How do sustainability indexes work?

Each sustainability index works slightly differently, all having a unique assessment criteria and methodology. The general procedure, however, involves a yearly disclosure cycle. This begins with an invitation for companies to participate in the disclosure process, which is often completed through a questionnaire. Participating businesses will have several weeks to several months to complete the questionnaire – depending on the sustainability index – and their answers will be analysed and scored according to each index’s methodology. Once all companies have been given a score, the results are made public and the cycle will begin again for the following year.

What are the benefits of having a sustainability index?

The benefits of having a sustainable index range from financial to non-financial, and benefit businesses, investors, and the public alike. Businesses: Sustainability indexes are useful tools in benchmarking your businesses’ non-financial performance. Measuring your impact is the first step in improving it, and disclosing to a sustainability index allows your business to track progress and make credible plans for improvement. Investors: Sustainability indexes provide non-financial information on companies that give indications of future financial performance. This data is incredibly useful to investors who are looking for long-term, sustainable portfolios. Public: Sustainability indexes make business sustainability data publicly available. With sustainability being of increasing importance to consumers, this helps members of the public to easily decide where they should spend their money, ultimately driving the market in a more sustainable direction.

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10 positive climate news stories from 2023 so far

Sustainability, Technology, ESG

March 2, 2023

Emily Vernon

With scary statistics about the climate crisis dominating the news, it’s easy to be left feeling overwhelmed and pretty helpless.

So in this blog post, we’re bringing you ten pieces of positive environmental news to combat climate doom and show that promising progress is being made around the world.

1. Heat pumps avoided 8 million tonnes of CO₂ emissions in Europe last year

Data from Europe shows that 3 million heat pump units replaced around 4 billion cubic meters of natural gas in 2022 – the equivalent of avoiding 8 million tonnes of CO₂ emissions.

This means that heat pumps are now helping Europe to avoid 54 megatonnes of CO₂, roughly the equivalent annual emissions of Greece!

2. Baby kangaroo poo could be the secret to stopping cows’ methane farts

It may sound like science fiction, but scientists at Washington State University are putting kangaroo poo to the test.

By adding a microbial culture made from baby kangaroo feces plus a known methane inhibitor to a cow stomach simulator, acetic acid was produced instead of methane.

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3. Renewable energy will become the world’s top source of electricity by 2025

According to the International Energy Agency’s Electricity Market Report 2023, 90% of new electricity demand between now and 2025 will be covered by clean energy sources like wind and solar, along with nuclear energy.

This growth in output means that renewables will become the world’s largest electricity source within three years – providing 35% of the world’s electricity and overtaking coal.

4. Australia blocks new coal mine 10km from Great Barrier Reef

For the first time in history, Australia has blocked the creation of a coal mine under environmental laws.

Environment Minister Tanya Plibersek said the project posed an unacceptable risk to the World Heritage area, which is already highly vulnerable, having suffered four mass bleachings in the past six years due to rising sea temperatures.

5. Wind and solar produced more electricity than gas in the EU in 2022

Despite the turbulence of 2022 – from cutting ties with Russia to climate-driven drought and soaring gas prices – Europe’s clean energy transition soldiered on.

Wind and solar power were responsible for a record fifth (22%) of the EU’s electricity, which is a big step in the right direction.

6. Beavers are returning to London, and they might protect a local train station from flooding

Beavers are making a comeback in London for the first time since they were hunted to extinction 400 years ago.

They will be released in Ealing’s Paradise Fields – an eight-hectare site of woodland and wetlands minutes from Greenford Tube station – as part of a project to protect against urban flooding and create diverse wetland habitats.

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7. New solar-powered technology can transform plastic waste into sustainable fuels and cosmetics

Researchers at the University of Cambridge have developed a system that can convert waste into chemical products using solar power.

The game-changing technology can simultaneously transform two streams of waste – greenhouse gasses and plastic – into two sustainable fuels: syngas and glycolic acid.

8. Ozone layer on track to recover within decades, UN reports

The 1987 Montreal Protocol, under which 197 countries pledged to phase out ozone depleting chemicals, is finally paying off.

A UN-backed panel of experts, presenting at the American Meteorological Society’s annual meeting, said the ozone would heal by around 2066 over the Antarctic, by 2045 over the Arctic and by 2040 for the rest of the world.

9. England bans some single-use plastics

Each year, the English public uses around 1.1 billion single-use plates and 4.25 billion items of cutlery, and only 10% of these are recycled.

Now, environment secretary Thérèse Coffey has confirmed these items will be outlawed from October 2023, giving businesses time to prepare ahead of its introduction.

10. Deforestation in Brazil's Amazon falls in first month under Lula

Luiz Inacio Lula da Silva was sworn in as Brazil's president in January, marking a new era for the country's environmental policies.

And it looks like things are already improving: satellite data shows that deforestation in January was down a massive 61% from the previous year.

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