Indices for good

A new set of indices have been launched to measure the performance of ethically invested funds.

Friday, March 2nd 2001, 7:51AM

A new set of four indices has been launched by the London Stock Exchange to provide benchmarks for ethical funds.

The new indices, branded FTSE4Good, underline the continuing growth of ethical, or socially responsible investment.

The four FTSE4Good indices cover the UK, Europe, the US and the whole world.

Dow Jones launched a similar series of indices in 1999, run from Zurich by SAM Sustainability Group.

FTSE will also launch four tradeable indices for each of the four regions. These will allow the construction of exchange-traded funds (listed index funds like WiNZ).

The "universe" from which each will be built will be the relevant broad-based index. For the UK, it will be the 800-plus stocks of the FTSE All-Share.

The UK and European indices are to start in June, the other two by the end of the year.

FTSE chief executive Mark Makepeace says half the stocks in the FTSE All-Share will not meet the criteria for inclusion in the SRI index. Of the FTSE 100, a little more than half meet its criteria.

Criteria on which stocks will be selected include the environment, human rights, social issues and stakeholder relations. An independent committee will meet every six months to review the indices. It will act as an "appeals board" for companies that feel they should have been included.

Ethical investing has been growing rapidly in the US and the UK. While initially focused on a negative screening process which excluded certain industries such as arms or tobacco, it has now developed to include wider environmental concerns and broadened further to consider sustainability issues. (For more on the different styles read Good Returns' latest ethical investment column).

In New Zealand CS First Boston is promoting a new ethical investment trust managed by Jupiter, and Tower is due to launch an ethical unit trust later this month.

For more details of the Jupiter fund click here.

The FTSE4Good indices are being done in conjunction with Unicef, the United Nations Children's Fund. They were launched this week by by former James Bond star Roger Moore who is one of Unicef's "goodwill ambassadors". All revenues from the indices, calculated at about US$1m for the first year, will go to Unicef.

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