Ethical Performance
inside intelligence for responsible business


FTSE4Good drops 19 for failing tests

May 2006

Liz Claiborne, Nordstrom and Hilton Hotels are among the 19 companies dropped from the FTSE4Good index after the benchmark index’s latest review.

The majority were removed for failing to meet the index’s revised environmental management standards. These standards, introduced in 2002, require participants to meet progressively higher standards on environment-related policy, monitoring and reporting. Will Oulton, FTSE’s head of responsible investment, said: ‘They’d been given a lot of warnings ... they were well aware of what they had to do.’

Meanwhile, Inco was dropped from the ethical index for failing to meet revised human rights criteria. The Canada-based nickel producer has operations in more than 40 countries, including China and Indonesia. Inco blamed its efforts to take over rival company Falconbridge for distracting attention and resources from remedying shortfalls in its human rights policy.

At this latest review, 40 companies have joined the index. Most are UK-based (13 companies), followed by Japan (eight) and the US (six). Several global companies are new entrants, including Goldman Sachs, Motorola, Peugeot and tyre manufacturer Bridgestone.

The FTSE4Good policy committee is considering new criteria on management accountability for social, environmental and ethical matters. ‘We’re working on what kind of incentive structures are in place at board level to make sure that ... the CSR team doesn’t end up in a lower department,’ Oulton told EP. More details will be made public at the end of this year.

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