FTSE4Good

FTSE4Good is a list of companies to help ethical investors invest in socially responsible companies and to avoid investing in those that are not. FTSE4Good describes its corporate index as having been "designed to measure the performance of companies that meet globally recognised corporate responsibility standards, and to facilitate investment in those companies." The FTSE4Good index is one of indices developed by the FTSE, a company owned by The Financial Times and the London Stock Exchange.

Overview
FTSE4Good, launched in July 2001 by the FTSE Group, measures the ethical performance of UK companies. The US equivalent is the Domini 400 Social Index, which is a socially screened version of the Standard & Poor's 500-stock index.

Other similar indices:
 * Dow Jones Sustainability Indexes, are global indexes tracking the financial performance of the leading sustainability-driven companies worldwide
 * Corporate Responsibility Index, run by Business in the Community
 * Trucost, an independent environmental research company which assesses companies' carbon emissions

Selection criteria
FTSE4Good uses the group EIRIS (Experts in Responsible Investment Solutions) to do the actual research and selection of companies to go into the index or list. The FTSE4Good committee makes the final decision on whether a company is included or excluded. The selection criteria is:
 * Company working towards environmental sustainability
 * Company developing positive relationships with stakeholders
 * Company upholding and supporting universal human rights
 * Ensuring good supply chain labour standards
 * Countering bribery

Companies that are excluded are:
 * Tobacco producers
 * Companies manufacturing either whole, strategic parts, or platforms for nuclear weapon systems
 * Companies manufacturing whole weapons systems
 * Owners or operators of nuclear power stations

FTSE4Good raises the bar for companies
In 2003, FTSE4Good set higher standards for its human rights criteria. Ethical Corporation wrote, "The increased membership conditions mean that companies who wish to be continually included in FTSE4Good will have to raise their human rights standards from September 2003 or face being excluded from the index, membership of which many companies flaunt proudly as a demonstration of their commitment to increased responsible practice."

FTSE4Good Index Drops 17 Companies
In March 2007 the Environmental Leader reported, "An additional 25 companies worldwide have met the FTSE4Good Corporate Responsibility standards and will be added to the index series. Globally, 17 existing constituents will be removed from the index as they no longer meet the criteria. The four U.S. companies entering into the index series are Northern Trust, Realogy, Spectra Energy, and Symantec. The twelve U.S. companies to exit the FTSE4Good index series are Aetna, Ameriprise Fiancial, Automatic Data Processing, Cablevision Systems, Ceridian, Citizens Communications Company, Countrywide Financial Corporation, First Data, Freddie Mac, Gannett, Intuit, and Viacom. FTSE4Good recently launched new climate change criteria on 6th February. High impact companies have until January 2008 to meet these new criteria to remain in the FTSE4Good index series."

FTSE cites "human rights" concerns at DuPont, UPS
In 2010, DuPont Co (DD.N) and United Parcel Service Inc (UPS.N) were among eight companies dropped from FTSE4Good index series because of concerns about human rights, climate change, and similar matters. FTSE gave few specifics about the reasoning behind the changes it made to its widely followed FTSE4Good index series. At least one of the companies said it simply missed a deadline for filing.

BP thrown off
Because of the 2010 Gulf of Mexico oil spill and the company's handling of it, BP is to be taken off the index. The Guardian writes, "Greenpeace and other green campaign groups have lobbied for BP to be taken off ethical investment indexes after the Deepwater Horizon disaster."

"The global index provider said its policy committee, which is used by many ethical fund managers to provide yardsticks to the industry, had decided to exclude BP from the end of next week. The move to eject BP from the FTSE4Good, which could further hit the company's already battered share price as investors withdraw, underlines the damage to its reputation wreaked by America's worst offshore oil pollution incident. Greenpeace and others had launched a major campaign to have the British oil group removed while earlier this year BP was evicted from the Dow Jones Sustainability Index. Ethical investors account for an increasing portion of share buyers and the decisions could hit future demand for BP shares, which closed down nearly 1% on the day.

Personnel
Policy committee members as of November 2010:
 * Craig Mackenzie, (Acting Chairman). Director, Centre for Business and Climate Change, University of Edinburgh Business School
 * Andy Banks, Head of Corporate Governance, Legal & General Investment Management
 * Chris Sutton, Senior Investment Consultant, Towers Watson
 * Ethan Kapstein, Paul Dubrule Professor of Sustainable Development, INSEAD
 * Helen Wildsmith, Head of Ethical and Responsible Investment, CCLA
 * Masaru Arai, Advisor to the Board of Directors, Daiwa Asset Management
 * Simon Williams, Independent, Corporate Responsibility and Marketing
 * Toby Shillito, Director, CR Index and Advisory Services, Business in the Community
 * Tom Delfgaauw, Falstaff, former Chairman of Council of AccountAbility
 * William Oulton, Head of Responsible Investment- EMEA, Mercer
 * David Bull, (ex-officio), Executive Director, UNICEF UK
 * David Harris, (ex-officio), Director, Responsible Investment Unit, FTSE Group
 * Mark Makepeace, (ex-officio), Chief Executive, FTSE Group
 * Peter Webster, (ex-officio,) Executive Director, EIRIS
 * Reg Green, (ex-officio), Chairman of Breast Milk Substitutes Expert Committee
 * Thomas Donaldson, (ex-officio), Chairman of US Advisory Committee

Contact details
FTSE Group 12th Floor 10 Upper Bank Street Canary Wharf London E14 5NP Tel: +44 (0)20 7866 1800 Fax: +44 (0)20 7866 1804 Email: info AT ftse.com Website: http://www.ftse.com/Indices/FTSE4Good_Index_Series/index.jsp

Related SourceWatch articles

 * Corporate Social Responsibility
 * Green America
 * Greenwashing
 * Rio Tinto and the FTSE4Good Index

External resources

 * Eco investing, Wikipedia, accessed November 2010.