— Since launching FTSE4Good in 2001 sustainable investment models have moved from niche to norm
— Launch of new FTSE4Good Emerging Markets Index and FTSE4Good Emerging Latin America Index
— Launch of new ESG Ratings data model
— FTSE Russell sees growing demand for underlying ESG parameters and for “Smart Sustainability” indexes
FTSE Russell today celebrates the 15th anniversary of its flagship ESG Index Series, FTSE4Good. The Index Series was launched in 2001 and provides investors with a transparent and objective benchmark. Companies meeting specific thresholds in relation to environmental, social and governance (ESG) practices are included in the index series with regular reviews to ensure that they continue to meet the criteria.
Fifteen years ago the assessment was relatively simple but that has evolved into a much deeper and more sophisticated methodology. Since 2001, the ESG areas covered by the criteria have grown from just three Themes* at launch to 14 today. In turn, the number of indicators assessed has grown from around 40 to a model which now comprises over 300 data points, which are applied according to the industrial sectors and countries in which a company operates.
The model applies particular emphasis on quantitative and sector specific indicators. For example, within the Health and Safety Theme, assessing fatality rates for engineering and construction companies, and in the Climate Change Theme, assessing energy utility companies on tonnes of greenhouse gas emissions per MWh.
The area of sustainable investment has changed dramatically with consideration of ESG factors now seen as standard for most large institutional investors**. To mark the 15th anniversary, FTSE Russell is launching today the FTSE4Good Emerging Markets Index and FTSE4Good Latin America index, extending the FTSE4Good Index Series to over 15 indexes. These will provide valuable additions for those investors using FTSE4Good indexes who require an index option for their emerging markets allocations.
FTSE Russell is also releasing its new ESG Ratings data model, which provides underlying environmental, social and governance data on more than 4,100 companies across more than 300 indicators. This data will be available to subscribers alongside the Green Revenues (LCE) data model.
FTSE4Good is part of FTSE Russell’s wider and extensive sustainability offering which includes the recent launch of the Green Revenues (LCE) data model and FTSE Russell’s first Smart Sustainability index. Green Revenues (LCE) is a ground breaking data model that tracks companies that generate green revenues, a critical component missing from current sustainability models. The Smart Sustainability index*** is the first to combine a smart beta factor approach alongside climate change considerations. It has been chosen by Legal & General Investment Management (LGIM) for its new Future World Fund, which HSBC Bank UK Pension Scheme has selected for its equity default option, worth £1.85 billion, in its Defined Contribution scheme.
Mark Makepeace, Chief Executive, FTSE Russell, said:
“When we launched the FTSE4Good Index Series 15 years ago there was scepticism that this was a serious area for professional investors. Since then, the world and the investment landscape has changed beyond recognition and sustainable investing, climate risk, the transition to a low carbon economy, and ESG integration are now a core focus for our clients across asset owners, asset managers, consultants and banks.”
The global rise of ESG investing:
Over 1,500 signatories with over US$60 trillion under management have signed the United Nations backed Principles for Responsible Investment (PRI), a doubling of the assets pledged to PRI since 2011.** Signatories commit to a range of principles including incorporating ESG principles into investment analysis and decision making processes. Signatories also have to provide detailed annual reports on their progress in implementing the principles.
London Stock Exchange Group is a pioneer in supporting the growing global green and sustainable financing movement, providing a comprehensive green and sustainable product offering. Further information can be found online at our Global Sustainable Investment Centre.
– Ends –
Notes to editors:
* The 14 Themes are: Anti-corruption, Biodiversity, Climate Change, Corporate Governance, Customer Responsibility, Health & Safety, Human Rights & Community, Labour Standards, Pollution & Resources, Risk Management, Supply Chain (environment & social), Tax Transparency and Water Use
** Source https://www.unpri.org/about
*** FTSE All-World Ex CW Climate Balanced Factor Index
For further information:
Ed Clark, +44 (0)20 7797 1222
Tim Benedict, +1 212 314 1199
Hong Kong: Fennie Wong, +852 2164 3267
Sydney: Laura McCrackle, +61 2 8823 3526
Notes to editors:
About FTSE Russell:
FTSE Russell is a leading global provider creating and managing a wide range of indexes, data and analytic solutions to meet client needs across asset classes, style and strategies. Covering 98% of the investable market, FTSE Russell indexes offer a true picture of global markets, combined with the specialist knowledge gained from developing local benchmarks around the world.
FTSE Russell index expertise and products are used extensively by institutional and retail investors globally. More than $15 trillion is currently benchmarked to FTSE Russell indexes. For over 30 years, leading asset owners, asset managers, ETF providers and investment banks have chosen FTSE Russell indexes to benchmark their investment performance and create investment funds, ETFs, structured products and index-based derivatives. FTSE Russell indexes also provide clients with tools for asset allocation, investment strategy analysis and risk management.
A core set of universal principles guides FTSE Russell index design and management: a transparent rules-based methodology is informed by independent committees of leading market participants. FTSE Russell is focused on index innovation and customer partnership applying the highest industry standards and embracing the IOSCO Principles. FTSE Russell is wholly owned by the London Stock Exchange Group.
For more information, visit www.ftserussell.com.
© 2016 London Stock Exchange Group plc and its applicable group undertakings (the “LSE Group”). The LSE Group includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE TMX Global Debt Capital Markets Inc. and FTSE TMX Global Debt Capital Markets Limited (together, “FTSE TMX”) and (4) MTSNext Limited (“MTSNext”). All rights reserved.
FTSE Russell® is a trading name of FTSE, Russell, FTSE TMX and MTS Next Limited. “FTSE®”, “Russell®”, “FTSE Russell®” “MTS®”, “FTSE TMX®”, “FTSE4Good®” and “ICB®” and all other trademarks and service marks used herein (whether registered or unregistered) are trade marks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and are owned, or used under licence, by FTSE, Russell, MTSNext, or FTSE TMX.
All information is provided for information purposes only. Every effort is made to ensure that all information given in this publication is accurate, but no responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for any errors or for any loss from use of this publication or any of the information or data contained herein.
No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Russell Indexes or the fitness or suitability of the Indexes for any particular purpose to which they might be put.
No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing in this communication should be taken as constituting financial or investment advice. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group index data and the use of their data to create financial products require a licence from FTSE, Russell, FTSE TMX, MTSNext and/or their respective licensors.