February 12, 2002
First Nasdaq-based Social Index Unveiled
by Mark Thomsen
KLD and Nasdaq create the KLD-Nasdaq Social Index, the first index to screen Nasdaq companies for
social and environmental criteria.
Social investors will no longer have to go wanting for a benchmark of the tech-heavy Nasdaq stock
market. KLD Research & Analytics, Inc., a leading provider of social indexes and corporate social
research services based in Boston, and The Nasdaq Stock Market announced today the introduction of
the KLD-Nasdaq Social Index
(KLD-NSI). The KLD-NSI is based on the Nasdaq Composite Index and is the first socially
screened index of Nasdaq companies.
"The KLD-Nasdaq Index provides investors
exposure to sectors of the marketplace with strong growth potential," said ZoŽ Van Schyndel, KLD
Senior Vice President of Research Products. "With this new option available in the socially
responsible investing marketplace, investors now have socially responsible alternatives for any
type of investment strategy they would like to follow."
In constructing the KLD-NSI,
social and environmental criteria were applied to Nasdaq Composite domestic companies with over $1
billion in market capitalization. The Index uses social and environmental criteria which includes
both exclusionary and qualitative screens. The exclusionary screens reject alcohol, tobacco,
gambling, military contracting, nuclear power, and firearm stocks. The qualitative screens rate
companies on community citizenship, diversity, employee relations, environmental protection,
product safety, and non-U.S. operations.
Among the top ten holdings of the KLD-NSI index
are Oracle Corp. (ORCL), a computer software and systems producer, which has notably strong
diversity policies; Amgen, Inc. (AMGN), a biotech research and production company with exceptional
community involvement programs; and Qualcomm Inc. (QCOM), a communications technology firm that KLD
has rated highly in terms of involving employees in company ownership and management.
Nasdaq Composite Index includes over 4,000 companies, but currently only 283 companies qualify for
inclusion in the KLD-NSI. Based on Nasdaq's annual reconstitution of its Composite Index, Ms. Van
Schyndel indicated the number of companies in the KLD-NSI could increase or decrease by
approximately 20 percent.
As with KLD's other indexes, research analysts review index
companies on a continual basis. The KLD-NSI will be reconstituted every November. Companies may
be removed from the Index in between reconstitutions in the event of a corporate action, such as a
merger, or a change in a company's social or environmental record.
Social investors may be
seeing financial products based on the KLD-NSI in the near future. Ms. Van Schyndel indicated KLD
is currently in discussions with several firms regarding financial products based on the new Index.
The introduction of the KLD-NSI is part of KLD Research & Analytics' continuing drive to
offer social investors more benchmarks. In 2001, KLD launched the KLD Broad Market Social Index
(BMSI) and the KLD Large Cap Social Index (KLD LCSI). It is also the provider of the Domini 400
Social Index (DSI 400), which was introduced in 1990.