The Global Compact 100 is a stock index composed of a representative group of UN Global Compact signatories. Selected companies must have implemented, and demonstrated executive commitment, to the principles, in addition to maintaining a base-line profitability. Developed by Sustainalytics, the Global Compact 100 does not look at sustainability performance in isolation of basic financial health. Rather it marries corporate performance on ESG issues with a requirement of consistent base-line profitability.
Companies are eligible for the GC 100 if they or their parent company have been Global Compact signatories for a minimum of one year, are publicly listed, and fall within the research universe of Sustainalytics, which provided the research for the index. Additionally, companies in the index must pass a financial screen that requires positive pre-tax earnings, on average, for the 3 years preceding the index annual review. In the case that a company is already a constituent of the index, it will only be removed if there are two consecutive years of negative 3-year average earnings figures.
Past performance is not an indicator of future outcomes
The Global Compact 100 is being calculated on a real-time basis by S&P Dow Jones Indices and is available on Bloomberg. The Bloomberg codes for the total return index denominated in US dollars and Euros is GC100TR and GC100TRE, respectively.
The index has caught the attention of capital markets globally, and it’s probable that third-party investment companies will look to create investable products based on the Global Compact 100.
Yes, the Global Compact 100 is being calculated on a real-time basis (every 15 seconds) by S&P Dow Jones Indices and is available on Bloomberg. The Bloomberg codes for the total return index denominated in US dollars and Euros is GC100TR and GC100TRE, respectively.
Companies are eligible for the index if they or their parent company have been Global Compact signatories for a minimum of one year, they are publicly listed, and they fall within the research universe of Sustainalytics, who provided the research for the index. As well, they must pass a minimum financial screen that requires positive EBIT on average for the three years preceding the index annual review. In the case that a company is already a constituent of the index, it will only be removed if there are two consecutive years of negative three-year average EBIT figures.
The constituents of the index are reviewed on an annual basis in September. Changes in the index will reflect changes in the universe of publicly listed Global Compact signatories, market developments and company developments.
The turnover of the index will not exceed 10 constituents or 10% of the free-float market capitalization of the index.
The purpose of the financial screen was to eliminate the small part of the universe that was not generating positive earnings (EBIT) in the three years leading up to the index selection. Less than half of one per cent of companies became ineligible for inclusion based on this criteria.
The index was constructed for all three years starting with the selection of the 2010 constituents using the pre-established methodology and the information available at the time (universe of signatories, EBIT for the preceding three years and policies and practices for companies that Sustainalytics covered in September 2010, September 2011 and September 2012). The performance for the Index was then calculated over the three-year period with the constituent changes taking place on the 10th of September in 2011 and 2012.
Constituents are chosen for the Index with the three goals of sector representation (free-float market capitalization weights) within a range of the key, well-known global indexes; geographic representation within a range of the key, well-known global indexes; and to choose companies that have strong practices and performance in adhering to the principles of the UN Global Compact around management of human rights, labour rights, the environment and anti-corruption. Among the indicators used in the selection of the constituents were the company’s level of reporting in relations to the Global Compact’s required annual Communication on Progress and whether or not the company’s chief executive submitted its annual letter of support for the UN Global Compact and its principles.