The FTSE4Good Index Series is a series of
ethical investment
Ethics is the philosophy, philosophical study of Morality, moral phenomena. Also called moral philosophy, it investigates Normativity, normative questions about what people ought to do or which behavior is morally right. Its main branches inclu ...
stock market indices launched in 2001 by the
FTSE Group
FTSE International Limited trading as FTSE Russell ( "Footsie") is a British provider of stock market index, stock market indices and associated data services, wholly owned by the London Stock Exchange (LSE) and operating from premises in Canary ...
which reports on the performance of companies which demonstrate "strong
Environmental, Social and Governance practices". A number of
stock market indices are available, for example covering UK shares, US shares, European markets and Japan, with inclusion based on a range of
corporate social responsibility
Corporate social responsibility (CSR) or corporate social impact is a form of international private business industry self-regulation, self-regulation which aims to contribute to societal goals of a philanthropy, philanthropic, activist, or chari ...
criteria. Research for the indices is supported by the
Ethical Investment Research Services (EIRIS). The index excludes companies due to their involvement in tobacco production, weapons, or coal power industry and rates companies for inclusion based
environmental sustainability
Sustainability is a social goal for people to co-exist on Earth over a long period of time. Definitions of this term are disputed and have varied with literature, context, and time. Sustainability usually has three dimensions (or pillars): env ...
, relationships with stakeholders, attitudes to human rights, supply chain labour standards and the countering of bribery.
[Collison, D. J., Cobb, G., Power, D. M. and Stevenson, L. A. (2008), "The financial performance of the FTSE4Good indices". ''Corporate Social Responsibility and Environmental Management'', 15: 14–28. .]
The index series is published by
FTSE Russell.
According to an
event study reported in 2007, it was uncertain whether inclusion in or exclusion from the index effectively incentivised the affected companies to change their behaviour in regards to social responsibility. Curran and Moran, who undertook the study, found that the movements in
share prices which followed FTSE4Good announcements were not
significant in a statistical sense.
[M. Martin Curran, Dominic Moran (2007)]
"Impact of the FTSE4Good Index on firm price: An event study"
''Journal of Environmental Management'', Volume 82, Issue 4, March 2007, pp. 529-53. . As to the financial performance for investors, there is no evidence that a portfolio that is subject to ethical criteria performs significantly differently compared to their unrestricted equivalent.
FTSE4Good All-World Index
The FTSE4Good All-World Index contains 1713 companies, representing 47 countries. Compared to the
FTSE All-World index, Pakistan and Iceland are the only countries no longer represented. Japan is the country with the biggest gain in weighting, the USA is the country with the biggest loss in weighting.
The
ICB breakdown is shown here- compared to the FTSE All-World index, technology is overrepresented by 7% and consumer discretionary is underrepresented by 6%, with all other sectors being within ±1.5%.
[FTSE4Good All-World Index datasheet, 20 May 2024] Consumer staples (the sector normally containing alcohol and tobacco), as well as industrial goods and services (containing defence) and energy (containing oil, gas and coal) all have therefore the same weighting as the broader index.
Top 10 Constituents by index weight
See also
*
Dow Jones Sustainability Indices
*
MSCI KLD 400 Social Index
References
External links
FTSE4Good Index Series
FTSE Group stock market indices
Ethical investment stock market indices
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