FTSE plans ethical index

June 15, 2001 Posted: 0619 GMT

LONDON (CNN) -- The UK's main stock market indices maker FTSE plans to launch its first ethical index called FTSE4Good as early as next week.

FTSE, which is jointly owned by the London Stock Exchange and the Financial Times newspaper, is in the process of completing its list of companies for a benchmark index for investors and funds to track.

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One of the most difficult problems facing the compilers is whether to  exclude whole industries, such as defence and tobacco, or instead work on a company-by-company basis, the FT said.

When Dow Jones created its similar Sustainability Indices two years ago it opted to exclude just the arms industry, and only then when arms represented more than half of a company's revenues.

When FTSE began consulting in February it had a long list of possible exclusions, including animal testing, nuclear power, pornography and companies engaging in "irresponsible marketing of breast milk substitutes", the FT said.

Craig MacKenzie of the FTSE4Good advisory panel said its consultation results were evenly divided, with about 20 groups strongly in favour of sector exclusions and 20 against.

As for expelling companies once the indices are up and running, Dow Jones has not yet seen fit to do this, although it has downgraded two Swiss companies, Credit Suisse and Sulzer, as a warning shot, the report said.

In the U.S., the leading SRI index provider Domini recently dropped the world's largest supermarket chain Wal-Mart (WMT: Research, Estimates)  from its Domini 400 index because of its strategy.

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