Cisco Recognized in the 2006 Dow Jones Sustainability Index
Findings highlight Cisco's corporate citizenship and long-term shareholder value
January 18, 2007
By Jenny Carless, News@Cisco
Corporate sustainability is not just a 'nice to have' that makes stakeholders and employees feel good about a company; it's an important business strategy. This is seen in the fact that, increasingly, analysts are paying attention to sustainability as a key indicator of a company's success and prospects for ongoing success.
The Dow Jones Sustainability Index (DJSI) defines corporate sustainability as 'a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.'
DJSI recently released its 2006 results, and Cisco has an impressive showing - entering its World Index for the first time and scoring highly in the technology sector.
This recognition reflects the company's ongoing efforts toward excellent corporate citizenship, on a number of fronts. For example, Cisco has been honored with a string of recent corporate citizenship awards, and it is a leading participant in the U.S. Environmental Protection Agency's Green Power Challenge program, working to reduce the overall environmental impacts associated with conventional electricity use.
A Strong Showing for Cisco
Cisco first entered the DJSI North American Index in 2005. In 2006, it was added to the more competitive DJSI World Index, which monitors the leading 10 percent of the largest 2,500 companies in terms of corporate sustainability from each industry.
Its showing in these two indexes was notable. For example:
- Cisco's scores in the economic and social dimensions were unbeaten in the communication technology sector. It did particularly well in the areas of corporate citizenship and digital inclusion.
- The company placed in the top 20 percent of the 600 largest North American companies that lead in sustainability.
"The Dow Jones Sustainability Index provides a global benchmarking tool for Cisco to measure our continuous progress on the path to corporate sustainability," says Tae Yoo, vice president of Corporate Affairs. "We're pleased to have this validation, particularly from such a well-respected source, not only that Cisco is a good corporate citizen but that our approach is providing long-term shareholder value."
"Cisco has been improving its sustainability performance through the years. We were pleased to see the company become a DJSI World Index member in 2006, scoring above average in several sustainability criteria within the communication technology sector," says Jvan Gaffuri, an analyst with SAM Research AG. "We hope the commitment toward sustainability at Cisco will be expanded further - to reach excellence in the broader economic, environmental and social dimension, strengthening the basis for long-term growth and stakeholder value creation."
The Dow Jones Sustainability Index
DJSI reports that it reviews issues such as corporate governance, risk management, branding, climate change, supply chain standards and labor practices in considering companies for inclusion. Companies are assessed with general as well as industry-specific sustainability criteria - based on sustainability trends - that cover economic, environmental and social issues with a focus on creating shareholder value.
Sustainability indexes provide guidance for individuals seeking the opportunity to invest in companies that have strong environmental and social records. They are also important for social responsibility investors (SRIs), a special group of investment houses that recommend socially responsible companies to their customers.
Since 1999, the DJSI has tracked the financial performance of the world's leading sustainability-driven companies, and asset managers rely on these indexes for objective benchmarks to manage sustainability portfolios. More than US$5 billion in total assets is currently under management in DJSI-based investment vehicles. To date, 60 licenses have been sold to asset managers in 14 countries who use the DJSI family as a benchmark for mutual funds and other financial products.
More and more investors are identifying sustainability as a key factor in both current and future corporate success. As this interest in sustainability grows, it can benefit companies and investors alike.
Cisco's recognition in the DJSI is an indicator of the company's focus on sustainability practices. The company remains committed to being a sustainable and socially responsible company going forward, as a way to better the communities and the environment in which it works, while continuing to provide great shareholder value.
Jenny Carless is a freelance writer based in Santa Cruz, CA.
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