Blog : BOARD TALK
|Posted on June 6, 2017 at 6:10 PM|
There is some good news, at least. The emphasis on environmental, social and governance (ESG) issues continues to grow despite Donald Trump.
FTSE Russell, the global index provider, has added 77 companies to its FTSE4Good index, with the largest number coming from the USA, which remains the largest contributor of companies to the index. It reveals in its June semi-annual review of the index that 31 companies have also been removed, reflecting the high standards required for companies to maintain inclusion.
Some 13 Japanese companies were added to the index alongside companies from a further 11 countries.
The 10 largest firms to be added to the index, in alphabetical order, are 3M Company, AIA Group Ltd, Analog Devices, Applied Materials, Celgene Corp, Colgate-Palmolive, IBM, KDDI Corp, Johnson Controls International PLC and Norfolk Southern Corporation. (my emphasis).
Companies in the index are assessed across over 300 data points, which are applied according to the industrial sectors and countries in which a company operates.
"The area of sustainable investment has changed dramatically with consideration of ESG factors now a core focus for most large institutional investors across asset owners, asset managers, consultants and bank" said FTSE Russell.
According to the latest data from the Global Sustainable Investment Alliance, there is now globally over $22 trillion of assets being professionally managed under responsible investment strategies, an increase of 25% since 2014, it said.
High quality ESG data is essential for the construction of FTSE Russell’s Sustainable Investment indexes and data.
In February, London Stock Exchange Group (LSEG) issued guidance, through its Global Sustainable Investment Centre, setting out recommendations for good practice in ESG reporting. The report’s intention is to help companies gain a clear understanding of what ESG information investors would like to see provided by companies.
Corporate reporting, corporate governance and systemic risk are increasingly being considered together and were the subject recently of a panel event in London.
LSEG, as a leading international markets infrastructure provider connected to issuers, sell side and investors sees itself as ideally placed to help promote good practice across the industry. The guidance builds on market standards such as the Financial Stability Board’s (FSB) Task Force on Climate-Related Financial Disclosures report and the UN Sustainable Development Goals.
FTSE Russell celebrated the 15th anniversary of its flagship ESG Index Series in December 2016 and there are now over 15 indexes in the global FTSE4Good series.