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FTSE4Good index brings 82 more firms into the fold

April 2002

Another 82 companies have been added to the four FTSE4Good indices following a second review by its advisory committee.

New constituents include Safeway, Rank Group, Egg, Eurotunnel (all UK), Interbrew (Belgium), Credit Lyonnais (France), Banca di Roma (Italy), Citigroup, Kimberly-Clark (both US), Nissan (Japan) and Nova Chemicals (Canada).

As a result FTSE4Good now accounts for 83 per cent of the market capitalization of the FTSE All-Share index, up from 76 per cent at FTSE4Good’s launch in July 2001.

Lee Coates, director of the Ethical Investors Group, claimed that such extensive coverage undermined FTSE4Good’s claims to highlight the best performers on ethical matters. ‘If they are already up to 83 per cent of the FTSE All-Share after just two six-monthly reviews, all we have to do is give them a couple more reviews and they’ll be at almost 100 per cent,’ he said. ‘It may make the institutional investors feel good, but it’s fairly pointless.’

However, FTSE4Good’s chief executive, Mark Makepeace, told EP: ‘Only 313 of the 718 companies in the FTSE All-Share are now in FTSE4Good, so less than half in terms of numbers actually meet the criteria. The market capitalization figure is high because the bigger companies are the ones that are doing most on CSR. The mid-cap and small-cap companies are not keeping up with the pace of change.’

Makepeace said the challenge for FTSE4Good was to tighten its standards on CSR so that the bigger companies were encouraged to continue improving, but not to get too far ahead for the mid and small-caps to catch up. FTSE4Good will announce changes in the next few weeks ‘which will be about raising the bar’, he added.

All 26 of the companies taken out of the index in the latest review have been removed because their market capitalization fell below the minimum level required for inclusion, and not for corporate social responsibility reasons.

The FTSE4Good indices cover four markets: Europe, Global, UK and US. The advisory committee is made up of ‘independent practitioners’ in socially responsible investment and corporate social responsibility.

A socially screened investment index based on the technology-heavy Nasdaq stock market has been launched in the US.

The KLD-Nasdaq Social Index will screen around 280 companies listed on Nasdaq and worth at least $1billion (£700million) for, among other things, their environmental stewardship, employee relations, and tobacco links.

The evaluations are being carried out by KLD Research & Analytics, a provider of social research services for institutional investors.

Among the ten largest names in the new index are computer software company Oracle, which KLD says has ‘notably strong diversity policies’, and biotech company Amgen which has ‘exceptional community involvement programmes’.




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