Ethical Performance
inside intelligence for responsible business


Japanese firms take FTSE4Good by storm

October 2004

Japan has been given its own FTSE4Good index in recognition of the growing importance of CSR to Japanese companies.

It is only the third country with a domestic FTSE4Good index, after the UK and the US. The index, which began operating last month, is run along the same lines as the other FTSE4Good indices, with similar qualifying criteria.

FTSE Group, the global equity index provider, said Japanese companies’ continuing strong performance in the global FTSE4Good Index Series had prompted it to set up a domestic index. Of 79 companies to be added to the FTSE4Good index series in its half-yearly review last month, 45 were from Japan – by far the largest number from any country. Previous reviews have also seen an influx of Japanese companies. ‘There is now huge interest in this area within Japanese companies,’ said FTSE. ‘During the last two reviews we’ve had a big increase in Japanese companies meeting the criteria.’

FTSE4Good Japan has 166 large and mid-cap constituents whose social, environmental and ethical performance is assessed by Tokyo-based Good Bankers, an SRI investment advisory firm which is a research partner of Ethical Investment Research Services, London-based provider of data for FTSE4Good UK.

The latest intake of Japanese businesses into the FTSE4Good global series is partly due to a technical adjustment of the index universe. However, FTSE says that even so, ‘Japanese companies would still have been by far the largest number in terms of new entrants’. Japanese firms already in the index also maintained their level of performance. Only Meiji Dairies was dropped in this review.

Among the 23 global companies removed from the FTSE4Good global index series were a handful of prominent retailers, among them Benetton, Blacks, House of Fraser, Mothercare and the Peacock Group, which all failed to meet new environmental criteria introduced by FTSE.

The review was also the first since the introduction of new criteria for marketing breast milk substitutes. Before these criteria were introduced this spring, companies marketing breast milk substitutes were automatically disqualified. Now they can be included if, among other things, they comply with the WHO International Code on Marketing of Breast Milk Substitutes.

However, none of the nine companies affected – Abbott Laboratories, Bristol Myers Squibb, Danone, HJ Heinz, Meiji Dairies, Nestlé, Novartis, Royal Numico and Wyeth – met the criteria at the first time of asking.

Draft criteria on labour standards in supply chains now out for private consultation are likely to be ready by next March.

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