September 19, 2003
FTSE4Good Indexes Add Bank of America, Delete Molson and ConocoPhillips
by William Baue
As a result of its semiannual review, FTSE4Good adds Bank of America, a company deleted by DJSI,
demonstrating yet another distinction between the indexes.
At the close of markets today, changes to the FTSE4Good indexes based on its semi-annual review will
take effect. The socially responsible investing (SRI) indexes, which cover the global, European,
UK, and US markets, made 72 additions, including Bank of America (ticker: BAC), Toyota (TM), and Hewlett-Packard (HPQ).
There were also 25 deletions. Those include ConocoPhillips (COP), which failed to pass the
human rights criteria that FTSE4Good strengthened in April 2003, and Canadian beer maker Molson (MOL.A), which
failed to meet environmental criteria. There were no deletions in FTSE4Good's third set of
criteria, social and stakeholder relations.
"The large number of companies meeting the
tightened criteria and joining FTSE4Good is very encouraging," said Mark Makepeace, CEO of FTSE
Group. "FTSE has put in place a proactive engagement program to assist companies to understand and
meet the new FTSE4Good criteria, and we are seeing the success of that program in these review
Many of the changes made by FTSE4Good correspond with those made earlier this
month by the Dow Jones Sustainability Indexes (DJSI), which utilizes a best-in-class approach
instead of screening as FTSE4Good does. For example, both index families added Toyota and
Hewlett-Packard. However, there were also discrepancies.
Whereas DJSI deleted Bank of
America due to its lack of progress on environmental performance and corporate governance, Bank of
American now ranks eighth on the FTSE4Good US 100 Index and twelfth on its Global 100 Index.
David Harris, corporate social responsibility (CSR) executive at FTSE4Good, explained that Bank
of America had not previously been in FTSE4Good
because the company had not met the stringent
stakeholder and human rights criteria. Because FTSE4Good has a policy of not disclosing the
specific reasons why a company is or is not included in their indexes, he declined to discuss in
detail the reasons why Bank of America made it into the index. However, he confirmed that Bank of
America has now met the FTSE4Good selection criteria and that those criteria are available on
Just last week, Bank of America revealed that it was the subject of
investigation by New York Attorney General Eliot Spitzer's office for late day trading, or
executing trades after the markets had closed. This controversy will not affect Bank of America's
inclusion in FTSE4Good indexes, though, as late trading is not covered by FTSE4Good criteria,
according to Mr. Harris.
Looking forward, FTSE4Good is working on two new criteria:
supply chain and labor. A document on these two criteria will soon be released for public comment,
Mr. Harris told SocialFunds.com. Whenever FTSE4Good determines new criteria or strengthens
existing criteria, it informs its index constituents of these changes and allows the constituents
time to improve their performance before applying the criteria to the index screening process.
In the longer term, FTSE4Good is considering two additional criteria, one covering bribery and
corruption, and another covering corporate governance. The latter will require significant
research before establishing it as a criterion, Mr. Harris said.