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GreenMoney Journal - publishing since 1992
Fall 2010 issue
Socially Responsible Investing – Better Companies, Better Communities
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FTSE4Good Adds Final Two Indexes to its Series
William Baue, www.socialfunds.com
FTSE launches the FTSE4Good Global Index and the FTSE4Good US Index, the last two in its series of
eight indexes covering the performance of companies practicing corporate social responsibility.
Last November, UK-based stock market index firm FTSE finalized its introduction of the
FTSE4Good series of eight real-time indexes with the launch of the last two: the FTSE4Good Global
Index and the FTSE4Good US Index. These two benchmark indexes consist only of companies adhering to
FTSE's standards for corporate social responsibility, based on internationally accepted codes of
conduct, as do the other six indexes.
The FTSE4Good series, which was first announced in
March 2001, consists of four tradable indexes and four benchmark indexes. A tradable index allows
investors to trade and invest in companies covered by the benchmark index. In July 2001, FTSE
launched all four tradable indexes: the FTSE4Good UK 50 Index, FTSE4Good Europe 50 Index, FTSE4Good
US 100 Index and FTSE4Good Global 100 Index. As well, it launched two of the four benchmark
indexes: FTSE4Good UK Index and FTSE4Good Europe Index.
The completion of the series
extends the availability of information on socially responsible investments to cover 90 percent of
the world's financial markets. Socially responsible investing "has increased by over 1000% in the
last four years," said FTSE Group chief executive Mark Makepeace. "FTSE created the FTSE4Good index
series to provide this fast-growing investment sector with an independent and accurate tool to
measure the performance of companies meeting international CSR standards."
FTSE ensures
objectivity by contracting an independent research firm, the Ethical Investment Research Service
(EIRIS), to gather information on the companies covered by the indexes. Furthermore, the FTSE4Good
Advisory Committee, a group of experts within the field of socially responsible investment that
acts independent of FTSE, reviews the indexes bi-annually, in March and September, to further
ensure their objectivity.
FTSE determines companies' eligibility for inclusion by
applying standards in three criteria areas: environmental sustainability; upholding and supporting
universal human rights; and positive relations with stakeholders. It also excludes companies
involved in the tobacco, weapons, and nuclear power industries.
As of October 31, 2001,
the top five constituents in the FTSE4Good US Index: Microsoft (ticker: MSFT), AIG (AIG), Johnson &
Johnson (JNJ), Intel (INTC), and Merck & Co. (MRK). The top five constituents of the FTSE4Good
Global Index inserts two British companies amongst the top three U.S. companies, with BP (BP)
placing third and GlaxoSmithKline (GSK) fifth.
Although the FTSE4Good series is only just
getting under way, the FTSE4Good Advisory Committee already anticipates the announcement of
substantial improvements in March 2002 for implementation in September of that year. Among these
improvements: balancing the three criteria areas and raising FTSE's existing standards in order to
encourage even more vigorous adherence to the principles of corporate socially responsibility.
For more information check out the conversation on "Is FTSE4Good just stock market
capitalism dressed in green?" with Craig Mackenzie of Friends Ivory & Sime and Rob Cartridge of
Just Pensions debate the credentials of the new stock index that boasts environmental standards
The Ecologist magazine, Nov 2001 at- http://www.theecologist.org
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