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Faith at the Stock Exchange: The Dharma Index

Mutiny, Nov 19, 2008

New Delhi, India -- Although only close to two percent of Indians invest in stocks the sensex occupies awesome media and public space. It ups and downs are reported across the length and breadth of the country and over numerous television channels and news papers. It is as if the sensex does not merely mirror the economic health of the nation but its numerous intangible complexities too.

If mathematical tools are indeed so useful that they can calculate just about anything, then they can perhaps measure something as nebulous as morality and righteousness? Well it appears that they can and sometime earlier this year, a tool appeared under the auspices of the venerable financial news powerhouse Dow Jones & Company. The company has launched new “dharma indexes” to track the stocks of companies that observe the values of dharma-based religions such as Hinduism and Buddhism.

“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,” says Nitesg Gor, the CEO OF Dharma Investments, a private equity firm that is partnering Dow Jones in rolling out the index. Shorn of CEO speak, it really means that Dow Jones is now capable of measuring a company’s ethics and moral conduct and will accordingly enable it to advise its clients to invest in companies that uphold high ethical and moral standards. Implicit of course is the assumption that ethical business practices translate in to good business returns in the long run; if not in the short run. Remember that neither Dow Jones, nor Dharma Investments nor their clients are into philanthropy!

The Dharma index is no joke. Review committees of religious leaders and scholars will screen companies’ environmental policies, corporate governance, labour relations and human rights, among other measure. By upholding the premise of dharma, companies will demonstrate conscientious practices about the groundwork of wealth and in turn support equally conscious investing.

While Shariah based indices and investment practices have been around for a while, largely stemming out of roots in the Islamic banking, they are somewhat easier to implement, since Islamic law is codified and therefore relatively black and white in its interpretation. But codifying and then tracking righteousness and the concept of ethical duty in a dry, mechanical way and making business decisions would be an interesting path to follow.

May be one day some one will replicate and customize this tool for nations to use and mirror themselves against a code. Rating agencies like Standard and Poor would then regulate Indian notions like rajdharma and raajneeti and Ram Rajya and then rate them from time to time with regular reviews and assessments. In a world and time that measures the GNP and GDP and of late, the human development index; this would be a fascinating development in a very materialistic world.
The closest tool there is today that resembles any thing like the Dharma Index, is Bhutan’s Gross National Happiness index, which acknowledges that it takes a lot more than wealth to create and generate happiness and has been measuring the happiness of its people for years even though it has never become really popular.

As a parting shot, if India, the nation that is – and not just the entity often called India inc. were to be assessed on the Dharma index,  where would it find a place ? On the higher echelons or the lower? Furthermore, every day here we find news that the Sensex is plummeting new depths. Would it be true of the state of Dharma in the country too, were the Dharma index to track it?



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