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A good place to learn about sustainable investing, and maybe even identify some investment possibilities, is at the Web site of Sustainable Asset Management.

Simply put, a company is considered to be "sustainable" if its policies and practices adequately address environmental, social and governance issues. Advocates maintain that over the long run, sustainable companies will perform better financially and deliver higher investment returns than companies that ignore such criteria.

SAM, a leader in sustainability research and asset management based in Zurich, recently published The Sustainability Yearbook 2009 in which it ranks 367 companies in 57 sectors. A company it views as best in its sector qualifies as a "SAM Sector Leader." Companies that have shown the greatest relative improvement in sustainability performance are "SAM Sector Movers." You not only can download the yearbook at SAM's site, but you can also register to use its interactive sustainability tool, which allows you to easily organize companies listed by name, country, sector and other more.

The tool also lets you see how countries and sectors score based on specific sustainability criteria, like environmental reporting or labor practices for example, or how they rank overall on environmental, social and economic factors. (SAM uses "economic" to refer to compliance, corruption, corporate governance and crisis and risk management issues.)

Granted, this is one firm's ranking based on its own methodology, but the site is a very useful starting point for people who want to learn about sustainability research and decide whether they want to consider such criteria in selecting investments.

SAM, with about $12.4 billion in assets, has a global client base and a wide range of products that fall into the categories of asset management, indexes and private equity. Its Dow Jones Sustainability Indexes are probably its most widely known products. SAM selects stocks for these indexes based on a sustainability assessment it does of large companies every year.

I wanted more detail on what SAM considers when evaluating companies based on sustainability, so I recently spoke with one of its senior equity analysts, Philipp Mettler, CFA, who focuses on the transportation and apparel sectors. We talked about the firm's overall screening process for its annual assessment and what he looks at when he evaluates apparel companies.

When SAM does its sustainability assessment, it invites 2,500 of the world's largest companies in terms of free-float market capitalization to participate by answering questionnaires that the firm sends to them. About 600 firms voluntarily participate, Mettler says, and SAM gathers information on another 1,200 of those firms from various sources, such as Web sites, annual reports and other public documents. SAM assigns points to answers and ranks companies based on their total scores.

How does one know if the companies are providing honest, unbiased answers? Mettler admits some companies might try greenwashing, but for at least 80% of the questions companies must also provide documents to back up their answers. Some companies also use external auditors to verify their answers. About half the questions are specific to the industry in which a company operates and the rest relate to general issues on topics such as corporate governance, environmental concerns, and crisis and risk management, he says. Each participant answers a total of about 60 to 70 questions.

How SAM weights a company's responses to environmental, social and economic questions depends on the industry, Mettler says. For example, in the apparel sector, the responses to social questions are weighted more heavily than those to environmental ones. Why? Because apparel companies typically outsource most of their production, and getting reliable information about their suppliers' environmental practices can be hard, he says. For example, Adidas has about 1,000 first-tier suppliers and it would be extremely difficult for it to collect greenhouse gas emissions data from all of them, Mettler says. (A recent report from the Green Chemistry In Commerce Council noted difficulties in monitoring suppliers but found progress is being made.) Automobile companies, on the other hand, usually manufacture their vehicles themselves and therefore could collect and provide such data more easily, he says.

Brand and supply-chain management are examples of factors over which apparel companies do have more direct control, Mettler says. With brand management, he'll compare how one company's brand is organized and marketed in comparison to one of another firm. He'll also look at how the brand impacts financial performance. On supply chain management, he wants to know if a company has standards for its suppliers against child or slave labor, and for layoff, overtime and disciplinary practices. "Our second step is to ask whether their suppliers have signed these standards, and the third step would be to find out how many abuses have happened. You would also ask how many audits have been done, why the audits were done and where, how many abuses there were and what has been done to prevent abuses in the future. Usually these companies are very transparent and a lot of the information is already in their sustainability report," he says.

Mettler notes that only companies that score in the top 10% of their industry are chosen for the Dow Jones Sustainability World Index, which currently includes 317 firms, so that means some sustainable companies might not make it in to that index. For example, in the textile and apparel sector, the index includes only three companies-Adidas, Nike and Puma, Mettler says. Other sustainable firms might make it into SAM's regional indexes, he adds.

Just because a company makes it into one of the Dow Jones Sustainability Indexes doesn't mean you should run out and buy that firm's stock. The indexes track their groups' overall financial performance, and SAM believes they will outperform relative to their peers over the long run. But as with many other indexes, the current valuations of components aren't considered. In fact, many of SAM's active portfolio managers consider fair value and price momentum in deciding when to buy. "For example, if we have an $80 price target for Nike and the share price is $65, a portfolio manager might not buy it because the price momentum is not favorable," Mettler says.

While it focuses on large-cap companies for its core products, SAM does offer some small- and mid-cap investment portfolios, Mettler notes. But no matter what the product, SAM's overall goal is the same: to identify the best sustainable companies in different industries. "The best companies, the most sustainable companies, create value for shareholders and stakeholders," Mettler says.