|
March 01, 2001
FTSE Steps Forward with Four New Socially Responsible Indices
Four indices will be divided by geographical region with goal of advancing global social investing
standards.
SocialFunds.com --
FTSE, a U.K.-based stock market index firm, recently introduced new indices that may help establish
a global standard for socially responsible investments. The four indices, named FTSE4Good, will be
weighted by market capitalization and will consist of a tradable and a benchmark index for each of
four geographical areas: the U.K., Europe, the U.S. and the world. The U.K. and European indices,
the first to go live, will begin following companies in June.
 "We want it to be a step towards
encouraging companies to adopt socially responsible principles," said Mark Makepeace, FTSE Chief
Executive, at a recent news conference. Makepeace also announced that licensing fees from the
indices, estimated to be $1 million in the first year, would be donated to the United Nations
Children's Fund (UNICEF).
According to FTSE, FTSE4Good is grounded in the principles put
forth by global conventions on business conduct. Examples of such conventions include CERES, the
U.N. Global Compact and OECD Principles for Multinational Enterprises.
With these
principles as a foundation, FTSE evaluates a company's commitment to social responsibility by
examining performance in three areas: minimizing damage to the environment, supporting and
protecting human rights, and fostering good relations with stakeholders. The indices will only
include companies that are progressing toward a best practice model for each area. Firms engaged
in controversial activities, such as weapons and tobacco manufacturers, will be excluded from
FTSE4Good.
Ongoing management of the FTSE4Good indices will be conducted by an independent
committee of international social investing experts. The committee is going to establish a
selection process for the indices and will review the companies listed bi-annually. The committee
will also handle controversies and act as an appeal board for companies. FTSE will not have a vote
on the committee.
FTSE developed the indices in association with EIRIS (the Ethical
Investment Research Service). EIRIS is an independent provider of research on corporate social,
environmental and ethical performance.
Makepeace said during the news conference that
over 50 percent of eligible companies in each region may fail to be included in FTSE4Good.
According to FTSE, this is partly due to a lack of data about corporate social performance. FTSE
and EIRIS are working with companies to collect such information and make it more available.
The indices can serve as the basis for mutual or institutional funds, or for picking stocks to
create an individualized fund. In a separate announcement, U.K.-based Close Fund Management has
said it will launch funds based on the FTSE4Good indices for individual and institutional
investors. The first fund to be introduced will track FTSE4Good's U.K. index.
http://www.ftse4good.com/frm0101.asp
©
SRI World Group, Inc. All Rights Reserved.
Top
| 
