Sustainability Benchmarking: Does it Tell the Full Story?


As sustainability benchmarking season is upon us we are pleased to be able to report positive results.  We have improved our scores under the Dow Jones Sustainability Index and are one of only 2 property companies making the top 20 in an assessment of the quality of carbon reporting within the FTSE 100. Our DJSI performance has improved this year largely as a result of stronger environmental results and stakeholder engagement; two areas we have focused on as they are material considerations for the business.

Our inclusion within indices such as the DJSI and FTSE for Good are important as they make us available for stock selection by the growing number of funds with social, ethical and environmental investment criteria.  Between 2011 and 2013 European investment funds with integrated Environmental and Social Governance strategies grew 65% to €5 trillion. But as the potential financial consequences of climate change and other sustainability risks become increasingly apparent, does inclusion within an index provide sufficient information to really understand a company’s approach to managing sustainability based risks? As has become very apparent in recent weeks, when things go wrong for a business in this area they can go very badly wrong and the impacts on a business can be devastating.

It is inevitably difficult for one set of questions to really reflect the full sustainability risks a group of very different companies might face. The surveys they are based on are robust, regular and detailed and have grown in sophistication over the years.  They also provide an important starting point for cross business engagement on ethical and environmental governance issues and are a good catalyst for driving improvements.  But they can never be the complete answer.  Hammerson has a comprehensive approach to reporting and transparency and we participate in a wide range of benchmarks and indices. But the investors that understand us best are those that engage with us directly.  The number of one-to-one conversations we now have with ESG specialists within investor teams and analysts is rising.  As the potential impacts of ESG risks become more and more apparent we expect this trend to continue.


This blog piece was originally published on Hammerson's website here.