• Since the 1970s, U.S. corporate executives have emphasized shareholder value over stakeholder capitalism. This has lately come to be seen as overdone and unwise for a company’s longterm benefit. The intangible aspects of corporate performance emphasized by stakeholder capitalism are important factors in value creation.
• The Drucker Institute created an intangibles-focused model based on the principles of management theory’s definitive thinker, Peter Drucker, to assess corporate effectiveness in five dimensions: employee engagement and development, customer satisfaction, innovation, social responsibility, and financial strength.
• &P Dow Jones Indices has combined the Drucker Institute’s four non-financial dimensions with S&P DJI’s definition of financial quality, the quality factor, to provide a holistic approach.
• The S&P Drucker Institute Corporate Effectiveness Index calculates a combined average score for each stock in the S&P 500®, then further selects the stocks with the best blend of combined average score and consistency across dimension scores.
• The index exhibits an improved risk/return profile compared with the S&P 500 and offers a uniquely differentiated approach to capture companies that reinvest in stakeholders.