FTSE4Good Index

FTSE4Good Index is a series of stock market indices launched by FTSE Group, a subsidiary of the London Stock Exchange, in partnership with EIRIS, a leading CSR research firm, to promote responsible investment practices among investors, such as CalPERS, TIAA, and Vanguard Group. The index series is designed to measure the performance of companies that meet specific Environmental, Social, and Governance (ESG) criteria, as defined by organizations like the United Nations Environment Programme Finance Initiative and the World Business Council for Sustainable Development. Companies like Microsoft, Coca-Cola, and Johnson & Johnson are included in the index, while those like British American Tobacco and ExxonMobil are excluded due to their poor ESG track record, as assessed by NGOs like Greenpeace and Amnesty International.

Overview

The FTSE4Good Index series includes a range of indices, such as the FTSE4Good Global Index, FTSE4Good UK Index, and FTSE4Good US Index, which cover various regions and markets, including the New York Stock Exchange, NASDAQ, and London Stock Exchange. These indices are designed to provide investors with a benchmark for responsible investment, enabling them to track the performance of companies that meet specific ESG criteria, as set by organizations like the Global Reporting Initiative and the Sustainable Accounting Standards Board. Investors, such as BlackRock, State Street Global Advisors, and Fidelity Investments, can use these indices to create investment portfolios that align with their values and corporate social responsibility goals, while also considering the United Nations Sustainable Development Goals and the Paris Agreement.

Selection criteria

The selection criteria for the FTSE4Good Index series are based on a comprehensive assessment of companies' ESG practices, including their performance on human rights, labour standards, environmental sustainability, and corporate governance, as evaluated by organizations like the International Labour Organization and the World Wildlife Fund. Companies must meet specific criteria, such as having a strong track record on climate change mitigation, biodiversity conservation, and supply chain management, as well as demonstrating a commitment to transparency and accountability, as required by laws like the Dodd-Frank Act and the EU Non-Financial Reporting Directive. The criteria are developed in consultation with stakeholders, including NGOs, such as Oxfam and WWF, investors, like Norway's Government Pension Fund Global, and companies, such as Unilever and Nike, to ensure that they reflect best practices in responsible investment, as promoted by initiatives like the Principles for Responsible Investment and the Global Impact Investing Network.

History and development

The FTSE4Good Index series was launched in 2001, in response to growing demand from investors, such as pension funds, like CalPERS and TIAA, and endowments, like Harvard University and Yale University, for responsible investment products, as encouraged by organizations like the United Nations Environment Programme Finance Initiative and the World Business Council for Sustainable Development. The indices were developed in partnership with EIRIS, a leading CSR research firm, which provides ESG research and analysis to support the index selection process, using data from sources like Bloomberg and Thomson Reuters. Over the years, the FTSE4Good Index series has expanded to include a range of indices, covering different regions and markets, such as the FTSE4Good Emerging Markets Index and the FTSE4Good Developed Markets Index, which track the performance of companies listed on exchanges like the Shanghai Stock Exchange and the Tokyo Stock Exchange.

Impact and reception

The FTSE4Good Index series has had a significant impact on the investment industry, promoting responsible investment practices among investors, such as institutional investors, like BlackRock and Vanguard Group, and retail investors, like those using robo-advisors like Betterment and Wealthfront. The indices have been widely adopted by investors, including pension funds, like Norway's Government Pension Fund Global and Canada Pension Plan Investment Board, and endowments, like Harvard University and Yale University, as a benchmark for responsible investment, and have influenced the development of other ESG indices, such as the Dow Jones Sustainability Index and the MSCI ESG Indexes, which are used by investors like State Street Global Advisors and Fidelity Investments. The indices have also been recognized by organizations, such as the United Nations, World Bank, and International Finance Corporation, for their contribution to promoting sustainable development and responsible investment, as outlined in agreements like the Paris Agreement and the Addis Ababa Action Agenda.

Related indices

The FTSE4Good Index series is part of a broader range of ESG indices, including the Dow Jones Sustainability Index, MSCI ESG Indexes, and S&P 500 ESG Index, which provide investors with a range of tools for responsible investment, as encouraged by initiatives like the Principles for Responsible Investment and the Global Impact Investing Network. These indices are designed to measure the performance of companies that meet specific ESG criteria, such as carbon footprint reduction, diversity and inclusion, and human rights protection, as assessed by organizations like the Carbon Disclosure Project and the Human Rights Campaign. Investors can use these indices to create investment portfolios that align with their values and corporate social responsibility goals, while also considering the United Nations Sustainable Development Goals and the Paris Agreement, and tracking the performance of companies listed on exchanges like the New York Stock Exchange, NASDAQ, and London Stock Exchange.