FTSE4Good

In July 2001 a new index for socially responsible investment was launched by UK-based index provider FTSE. The 'FTSE4Good' offers four tradeable indices: the UK 50, the Europe 50, the USA 100 and the Global 100.

Companies contained in the indexes are selected on the basis of three criteria: environmental sustainability, social issues and stakeholder relations, and human rights.

The ten largest organizations in the Global 100 index include such names as Microsoft, Johnson & Johnson, Vodaphone and AOL Time Warner. Also included in the list are Coca-Cola, HSBC Holdings, Toyota, Deutsche Telekom, Sony, and Sun Microsystems

Retrospectively, the global index has significantly outperformed the FTSE All-World index, although this may be partly due to the fact that it contains a relatively high proportion of firms in the financial services, computer services and telecoms sectors.

According to Gareth Parker, head of index design at FTSE, many business leaders have come forward since the launch of FTSE4Good to enquire why their company had been left out of the ratings.

Quoted in Ethical Performance newsletter, Parker explains: 'They are coming to us asking why they are out and what they need to do.'

He said FTSE4Good was a 'pragmatic and easily understood' index. 'Normally, FTSE indexes try to be disinterested, but in this case we are trying to be the opposite; we are trying to create change.'