FTSE Group (“FTSE”), the leading global index provider and pioneer in responsible investment, has completed the semi-annual review of its flagship FTSE4Good index and ESG ratings. At the same time it is more than doubling the number of companies globally for which supply chain labour standards criteria apply from 164 to almost 400. It is rolling out the criteria to several new industrial sectors and those companies who are not meeting these criteria will need to do so in order to maintain their inclusion in the FTSE4Good indices.
21 additions to and 7 deletions from the FTSE4Good Index Series
The September annual review sees 21 new additions to the FTSE4Good Index Series from six countries. Tiffany & Co, the jewellery retailer, is one of the companies entering the index. It has met the inclusion criteria including supply chain labour standards which are particularly applicable to their industry. Tiffany is a leader in developing approaches and standards in responsible jewellery sourcing. The USA contributed 11 new additions to the Index, with three from the UK, three from Australia, two from Japan one from Switzerland and one from Canada.
Seven companies are being deleted from the index as they no longer meet the FTSE4Good criteria. To see the details of the constituents which have been added or deleted please see “September 2012 FTSE4Good: Semi-Annual Index Review Results” at http://www.ftse.com/Indices/FTSE4Good_Index_Series/Index_Reviews.jsp
Supply chain criteria global roll-out to new sectors
Companies not taking responsibility for the working conditions in their supply chain can face major risks to their reputation and brands. This also represents a potential risk to investors in these companies through revised valuations. The criteria identifies companies facing these risks; placing them into risk categories and assessing how well they are managing the issue. Initially FTSE applied the Supply Chain Labour Standards Criteria only to companies that produce clothing, accessories, footwear, toys and food products. Over the last few years attention has expanded to other consumer products including;
• consumer and office electronics; televisions, computers, music systems, mobiles, printers and photocopiers,
• home products; furniture, towels, and bed linen, and
• other consumer products; jewellery, watches.
Therefore FTSE today announces the extension of its criteria to now encompass companies providing these products. A detailed research report providing more background and analysis on assessing portfolio risks from supply chain labour rights will issued shortly by FTSE.
“Since we launched FTSE4Good over a decade ago our focus has always been the continual evolution of standards and encouraging improvements in company environmental, social and governance practices” says Mark Makepeace, FTSE’s Chief Executive. “At this review we continue this process by raising the hurdle on supply chain labour standards.“
The changes to the index will be effective after the close of markets on 21 September.