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FTSE4Good expands again – but ousts 17 firms

October 2002

Fifty-nine companies have been added to the four main FTSE4Good indices and 17 removed in the latest review of constituents.

BHP Billiton, Ford, Tate & Lyle and Telecom Italia are among those included for the first time, while Carlsberg and Swatch have been removed.

Of particular note among the new entrants are 15 Japanese companies, which account for a quarter of those admitted. Five of them, Canon, Fujitsu, NEC, Nissan Motor and Sharp, are among Japan’s 30 largest companies by market capitalization.

The Ethical Investment Research Service, which compiles the data used to decide the indices’ constituents, claimed the greater Japanese presence was ‘due to the increased interest in corporate social responsibility there’. Tokyo-based So-Tech Consulting provides Eiris with the social data on Japanese companies.

Only five US companies joined the index, while seven were removed – just under half of all those dropped.

For the first time since the indices were launched in July 2001, a number of companies have been removed because they failed to meet certain corporate social responsibility standards rather than, as on previous occasions, because their market capitalization fell below the threshold.

Among these were UK-based oil company Abbott, which has operations in Iran and Libya, and was removed after failing to convince FTSE4Good that it had any human rights policies. Construction company Heywood Williams was dropped for failing to meet ‘stakeholder criteria’ on issues such as equal opportunities and health and safety, while the Peterhouse Group has been excluded because of work on a nuclear submarine project.

Some companies, however, entered the index for the first time because they no longer work in areas that previously ensured their exclusion. Among these are engineering company IMI, which has sold its munitions business, National Grid, which no longer has nuclear interests, and BHP Billiton, which sold its uranium mine.

The 323 firms in the indices now represent 84.5 per cent of the investible market capitalization of the FTSE All Share, which is FTSE4Good UK’s universe. However, there are 707 companies in the universe, so more than half are excluded.

The FTSE4Good review coincided with an update of the Dow Jones Sustainability World Index family, which is used by 40 asset managers to benchmark sustainability portfolios.




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