Dow Jones has added British American Tobacco to its sustainability indices in its latest annual review, although a company with connections to the controversial North Dakota access pipeline has been ditched.
BAT is among the largest addition to the Dow Jones Sustainability Indices alongside Samsung and Dutch microelectronics business ASML Holding.
The rebalance has also seen miner Rio Tinto dropped, alongside Reckitt Benckiser and energy transportation company Enbridge, which has a significant stake in the North Dakota Pipeline.
The changes will be effective from 18 September.
The indices are based on ESG analysis by sustainability investment specialist RobecoSAM and are marketed as the “gold standard for corporate sustainability”.
RobecoSAM head of sustainability application and operations Manjit Jus says inclusion in the DJSI is “coveted” by firms and lands them among the “premier league of companies”.
“We understand the right questions to ask in our [Corporate Sustainability Assessement] in terms of financially material sustainability aspects within the corporate world.”
A spokesperson for S&P Dow Jones Indices says the DJSI World was developed in 1999 using a “best-in-class approach” meaning that the best 10 per cent within an industry, including controversial ones, will be selected.
“Investors who opt for a best-in-class approach appreciate the diversification they get,” the spokesperson said.
BAT is the only tobacco company included in the indices.
The DJSI range includes ethical-exclusion sub-indices, which are screened by Sustainalytics for exposure to tobacco, as well as alcohol, gambling, armaments, cluster bombs, firearms, landmines, adult entertainment, nuclear weapons, nuclear power generation and nuclear power sales. RobecoSAM determines exposure to uranium mining for the selected universe.
Within financial services UBS was ranked as the industry group leader in part due to its wide range of products, including impact funds, long-term theme funds, renewable energy and cleantech financing, green bonds and ecomortgages.