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.
On November 19, U.K.-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 FTSEs 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 worlds 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 FTSEs existing standards in order to encourage even more vigorous adherence to the principles of corporate socially responsibility.