U.S. Community Investing Index

Overview

The U.S. Community Investing Index (“USCII” or “the Index”; Bloomberg Ticker: CMTYIDX) is a public equity index designed to identify companies that contribute positively to the communities in which they source and operate.

Heron developed the index in 2005 to understand how large companies contribute to (or detract from) Heron’s mission to help people and communities help themselves out of poverty in the United States. Over the past decade, Heron and its research partners have continued to refine the methodology, to draw from new data sources, and to better align the index with Heron’s impact and mission objectives.

Strategy

Heron and its research partners use a rigorous methodology to identify companies that contribute positively to the communities in which they source and operate. The positive screen relies on four pillars, each driven by a central hypothesis as well as underlying industry-relative scoring criteria: 

Pillar Heron's Hypothesis Evaluation Criteria
Human Capital One of the most direct opportunities for companies to impact society is through their employees. Companies are evaluated relative to industry peers based on the following indicators: benefits and compensation, health and safety practices, broad-based employee ownership, professional development, and employee turnover.
Leadership Commitment to Long-Term Value Creation Companies that create long-term value for society will thrive financially over the long term. Companies are evaluated based on the extent to which long-term value creation is embedded in the culture of the firm and tied to leadership compensation. Factors considered include board diversity & independence, pay distribution, accounting policies, and the extent to which management compensation is tied to long-term environmental & social performance metrics.
Core Business Impact on Civic Capital Companies contribute to or detract from civic capital through their core business (operations as well as products and services). Companies are evaluated based on industry-relative performance metrics. For example, banks are evaluated based on financial product safety & overall loan/deposit activity relative to government subsidies. Oil companies are evaluated based on carbon emissions, biodiversity & land use, and toxic emissions & waste.
Supply Chain Multiplier Effect Net contribution to or detraction from society is greatly influenced by a company’s supply chain. Companies are evaluated based on their management of global supply chain risks (labor practices & raw materials sourcing) in addition to their domestic sourcing practices (local procurement and/or purchasing from Minority- and Women-Owned Businesses).

Index Performance

 

*Source: Bloomberg price returns (not adjusted for dividends). Returns greater than one year are annualized.

Process

Index Creation

As depicted in the Index Creation image, Heron is responsible for selection of securities in the index. Heron compiles a positive screen using the four pillars and underlying indicators shown above. Each company is scored between 0 and 5. Companies that score a 2.5 or higher are considered to be net positive contributors and are considered for inclusion. The selection universe is then run through a rules-based “reality check,” where scores may be overridden in the event of ongoing and/or severe controversies that may have been over- or under-expressed in the scoring process due to timing or other factors. Through coordination with S&P Dow Jones indices, the USCII is created using a free-float adjusted market-capitalization weighting methodology. 

Index Monitoring

The USCII is overseen by an advisory committee of professionals in pertinent fields, including but not limited to sustainable investing, philanthropy, and social data. The advisory committee meets quarterly with Heron staff and research partners to discuss methodology enhancements and review index performance. 

Product Creation

State Street Global Advisors (“SSGA”) has created an investment vehicle that aims to replicate the Index. Visit SSGA’s website for all product inquiries. 


The U.S. Community Investing Index (the “Index”) is the property of the F.B. Heron Foundation, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Index. The Index is not sponsored by S&P Dow Jones Indices or its affiliates or its third-party licensors (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices will not be liable for any errors or omissions in calculating the Index. “S&P Dow Jones Indices” and the related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by the F.B. Heron Foundation. S&P® is a registered trademark of Standard & Poor's Financial Services LLC (“SPFS"), and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”).