Dow Jones Indexes and Dharma Investments, a private investment firm pioneering the development of faith-based investment, have launched the Dow Jones Dharma Indexes.
The new indexes measure the performance of companies selected according to the value systems and principles of Dharmic religions, especially Hinduism and Buddhism.
The indexes are designed to underlie financial products such as exchange-traded funds and other investable products that enable investors to participate in the performance of companies which are compliant with Dharmic religious traditions.
“The Dow Jones Dharma Indexes are the first faith-based indexes created to measure Dharma compliant equities. As faith-based and socially responsible investing continues to grow worldwide, our goal is to provide the investment community with the most comprehensive benchmarks that comply with these principles,” says Michael A. Petronella, president, Dow Jones Indexes.
“India and Asia have made remarkable advances economically over the last few years and in parallel we believe that bringing our religious values onto the global stage offers sustainable solutions to the problems facing the world today. The principle of Dharma contains precepts relevant to good conduct, but also the implicit requirement of mindfulness about the sources of wealth – and therefore responsible investing,” adds Nitesh Gor, CEO, Dharma Investments.
The index universe for the Dow Jones Dharma Indexes is defined as the top 5,000 components of the Dow Jones Wilshire Global Total Market Index as measured by float adjusted market capitalization, and all components in the Dow Jones Wilshire India Index.
To be included in the Dow Jones Dharma Indexes, stocks must pass a set of industry, environmental, corporate governance and qualitative screens for Dharmic compliance.
Industry screens include unacceptable sectors and business practices. Environmental screens take account of a company’s impact or policies with respect to emissions, climate change and carbon footprint analysis, oil and chemical spills and waste management and recycling.
Corporate Governance screens comprise the handling of labour relations, disputes, discrimination allegations, human rights violations, working conditions and wages.
Excluded from the index are companies from sectors that are deemed unacceptable due to the nature of their business activities and operations. Excluded are also companies that have exposure to unacceptable business practices.
Some examples of unacceptable sectors are aerospace and defence, brewers, casinos and gaming, pharmaceuticals, tobacco. Some examples for unacceptable business practices are alcohol, adult entertainment, animal testing and genetic modification of agricultural products.
To ensure the quality of the indexes and the integrity of the underlying index methodology, three boards were established to define, build and implement the screening criteria: the Dow Jones Dharma Academic Advisory Committee, the Dow Jones Dharma Supervisory Board and the Dow Jones Dharma Religious Council.