FTSE announces today an innovative new family of indices named FTSE4Good, designed to be a first step towards setting a global standard in the fast growing area of socially responsible investment (SRI). FTSE4Good aims to increase awareness and acceptance of SRI amongst the international business community, and will also generate significant funds for UNICEF.
Developed in association with EIRIS (the Ethical Investment Research Service), FTSE4Good is a series of indices, consisting of both a tradable and a benchmark index for each of the following four regions: UK, Europe, US and Global. The overarching SRI principles and constituent selection criteria are being defined by an expert committee and have been researched by FTSE and EIRIS. Operating within a defined framework of best practice, each company must meet the FTSE4Good SRI selection criteria to be included in the indices. It is anticipated that a limited number of companies may be excluded from the indices based on their sector activities.
Research to date suggests that over 50% of the constituents for each region may fail to be included in the FTSE4Good indices. FTSE believes this is partly due to a lack of publicly available SRI information on company performance. FTSE and EIRIS are working with companies to enhance the availability of SRI information. FTSE and the FTSE4Good Advisory Committee will also seek views on the draft selection criteria prior to the final criteria and constituent lists being published. The FTSE4Good indices are expected to go live in June 2001.
Close Fund Management will launch the official funds for the FTSE4Good Indicies available to both retail and institutional investors. The first in the series will track the FTSE4Good UK Index. All licensing fees from the fund will be donated to UNICEF. FTSE expects other products to follow.
Mark Makepeace, FTSE Chief Executive said: "FTSE4Good represents an aspirational framework for change. We want it to be a step towards encouraging companies to adopt socially responsible principles."
David Bull, Executive Director of UNICEF UK added: "With the announcement of the FTSE4Good indices, FTSE is advancing the debate on socially responsible investment and encouraging good corporate practice. In the context of the Global Movement for Children, UNICEF urges companies to play their part, alongside Governments and NGOs in building a world fit for children. FTSE’s contribution to UNICEF’s work will make a significant difference to children’s lives".
Peter Webster, Executive Director of EIRIS commented, "Following the pensions disclosure regulation last July, many fund managers are developing their SRI capabilities. The FTSE4Good indices are another indication that the investment community is starting to integrate these issues into their thinking."
Marc Gordon, Managing Director of Close Fund Management, commented: "We are delighted to managing the FTSE4Good funds with FTSE in support of UNICEF in an initiative which we believe will bring SRI into the mainstream market."