The financial performance of the FTSE4Good indices

Abstract

This paper examines the financial performance of the FTSE 4 Good indices; the indices include companies from different geographical areas on the basis of pre-determined social responsibility criteria: currently environmental sustainability, relationships with stakeholders, attitudes to human rights, supply chain labour standards and the countering of bribery. The results indicate that over the period of analysis from 1996 to 2005 these indices outperformed their relevant benchmarks. However, most of this outperformance was due to risk differences between the FTSE 4 Good indices and their benchmarks. In addition, much of the outperformance arose in the period before the indices could be used by practitioners. Nevertheless, the results suggest that investors who invest in a portfolio of companies that satisfy FTSE 4 Good's corporate social responsibility criteria do no worse than their counterparts who do not follow a socially responsible strategy when purchasing equities.

Do different industries report Corporate Social Responsibility differently? An investigation through the lens of stakeholder theory

“…The FTSE4Good indices were taken as these companies are acknowledged as being leaders in CSR, and therefore would be an exemplar for other companies in their respective industries in this area. Furthermore Collinson et al (2007) and Knox, Maklan, and French (2005) also used FTSE4Good listed firms and it has been described as one of the most important indices to consider (Marquez and Fombrun 2005).…”

The Performance of Socially Responsible Investments in Indonesia: A Study of the Sri Kehati Index (SKI)

“…Another study by Cummings (2000) indicated that SRI ethical trusts outperformed the trust's industry average index as the conventional benchmark. Meanwhile, Collison et al (2008) analyzed the risk-adjusted return performance of SRI indices using Treynor's Ratio over two periods. However, unlike the earlier studies, the analysis resulted in negative values, which indicated that the SRI indices underperformed their conventional counterparts.…”

Carrot and Stick? The Role of Financial Market Intermediaries in Corporate Social Performance

“…Most of the studies regarding RI indices have focused on the effect of inclusion or exclusion from indices on corporate share prices (e.g. see Consolandi et al, 2009;Collison et al, 2008;Capelle-Blancard & Couderc, 2009;Wai, 2011: Robinson, Kleffner & Bertels, 2011Curran & Moran, 2007). However the question remains whether these intermediaries may also have an effect on CSP, and if so, what the key mechanisms are to bring about these effects?…”

“…Research into the main RI indices in the RI market, has focused mainly on the financial performance of these indices (Collison et al, 2008) or the effect of inclusion and exclusion from the indices on share price (Capelle & Couderc, 2009;Wai, 2011;Robinson et al, 2011;Doh et al, 2010).These studies have not examined whether inclusion in RI indices can have effects on CSP. There is increasing evidence that the measurement by intermediaries is not neutral, but may act to incentivise improvements in what is being measured, 8 especially when reputational stakes are high (Sauder, 2006;Sauder & Espeland, 2009).…”