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Case Study

Falling from grace: Sulzer and the Dow Jones Sustainability Index

By Ulrich Steger and Oliver Salzmann

11 pages

October 2002

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Reference: IMD-2-0099

In September 2001, Sulzer AG was dropped from the Dow Jones Sustainability Indexes, which is composed by the Zurich-based SAM Group. SAM justified the removal with a badly managed implant recall at a US subsidiary of Sulzer’s former medical division Sulzer Medica, which Sulzer AG had spun off in July 2001. The case illustrates the challenge of conclusively rating companies’ sustainability performance in complex strategic and/or operational situations, and the dilemma rated companies can face. The complex situation in this case results from Sulzer AG’s significant strategic reorientation to industrial activities, a hostile takeover attempt and the product recall at Sulzer Medica, in which, when the recall was launched, it had a majority interest – with the intention of selling it in the near future. Moreover, the case provokes discussion about internal and external effects of the removal from the index, and adequate reactions of Sulzer AG in the short and long term.

Keywords

Sustainability Ratings, Corporate Governance, Product Recall, Crisis Management, Corporate Sustainability Management

Settings

September 2001

Type

Field Research

Available Languages

English

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Teaching note

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