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You are here: Home > Learning Materials > Accounting > Management Accounting > Social Accounting > FTSE4Good Index Series |
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Social AccountingFTSE4Good Index SeriesThe FTSE is the Financial Times Stock Exchange Index and they have put together the FTSE4Good Index. What that means is that all companies that meet certain corporate social responsibility standards are allowed to be members of that series. Companies are included on the basis of their environmental record, whether they develop positive relationships with their stakeholders and whether they are supporters of universal human rights. Which companies would you put on the FTSE4Good Index list?How do you decide? Well, read the newspapers, take a look at their annual reports and accounts, watch the television news and look on news Web sites. If you want a copy of a FTSE company's annual report and accounts, there is a good chance you can get it free of charge from the FT's Annual Reports Service.(http://ft.ar.wilink.com/asp/P003_search_ENG.asp) You should be reading good things about your chosen companies, for example:
Here's a good one: look at the news stories about Manchester United. Remember that Manchester United was bought by the American billionaire Mr Malcolm Glazer in the spring of 2005. Do you also remember that there was a lot of fuss over it from Manchester United supporters and some of its shareholders? Well, have you heard anything bad recently? Erm, not really! Have you heard anything good recently? Erm, yes! Sir Alex Ferguson was told in July that if he wanted to buy Michael Owen, or any other good player, he could. Do you think Manchester United is on the FTSE4Good Index list, by the way? Which companies should definitely not be on the FTSE4Good Index list? Think about it, some companies just can't be there and your job is to decide why. Want some clues?How about companies that sell things that:
Are we there yet? Good, no tobacco companies, no arms manufacturers, no manufacturers of weapons systems. Actually, there are several FTSE4Good Indices: for the UK, for Europe and for the USA. Read the FTSE4Good Index Series to find out more [PDF, 206 KB]. Why would a company want to get onto the FTSE4Good Index list? In other words, what does a company get out of being on the list rather than not being on it?This is the biggest question of the three because it is probably more complicated than the other two big questions. One reason is that a lot of stakeholders want to deal with companies that are socially responsible: they are fair traders, they don't use sweated labour, they don't sell shoddy goods. So by being on a list like the FTSE4Good Index, stakeholders know that a company is socially responsible and worth dealing with. The FTSE4Good Index Series Web site gives us four headings that we can use to sort out why companies want to be on the list:
Summarise why you think a company would want to be on the FTSE4Good Index list under each of the following headings:
Now take a look at the company benefits of being in FTSE4Good to see what the FTSE4Good Index people have put under these headings. 
Image: Are Marks and Spencer on the FTSE4Good list? Who decides which companies are eligible to go on the FTSE4Good list?FTSE works in association with the Ethical Investment Research Service (EIRIS), and its network of international partners to research company corporate responsibility performance. EIRIS is a leading independent provider of research into the social, environmental and ethical performance of companies. How do they decide?A variety of sources are used to check the most up to date and relevant information:
Source: FTSE4Good Index Series [PDF, 206 KB] In addition, fact sheets detailing the information held by EIRIS are distributed to companies on a regular basis for updating and reviewing. FTSE4Good members come from all over the world and, as of February 2004, the main membership was found in the UK and the USA, with Japan running in at number three.
Which British companies are on the FTSE4Good list?Here are just a few examples:
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