Isra-Mart srl : FTSE launches ethical ratings service

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The FTSE Group has launched a new ethical scoreboard designed to make it easier for fund managers to gauge the environmental and social practices of firms in which they invest.

A decade after the launch of its FTSE4Good Index Series, the group yesterday launched ESG Ratings, a publicly available data service which claims to measure the environmental, social and governance (ESG) practices of more than 2,300 public companies around the world.
The scoreboard rates individual firms on their overall ESG rating, which is also broken down into six specific criteria including environmental management and climate change.

FTSE also unveiled a list of firms in its FTSE4Good index with the best ESG practices, led by insurers Aviva, Bank Hapoalim and telecoms group Vivendi.

The company said that the ratings are risk-relative and show how successful a firm is at managing its own specific ESG risks, meaning that those with higher ESG risks have to achieve more to obtain a high score in the ratings.

The new service is designed to respond to a growing awareness among investors that ESG factors affect corporate risks and can help provide an indication of long-term sustainable investment returns.

Speaking ahead of the launch, Business Secretary Vince Cable urged investors to lean on the companies they invest in to drive more long-term thinking.

"To facilitate this there is a great need for a focus on broader corporate performance, rather than a narrow focus on near-term financials," he said. "Environmental, social and governance considerations are an important part of this."