Premium
The financial performance of the FTSE4Good indices
Author(s) -
Collison David J.,
Cobb George,
Power David M.,
Stevenson Lorna A.
Publication year - 2007
Publication title -
corporate social responsibility and environmental management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.519
H-Index - 73
eISSN - 1535-3966
pISSN - 1535-3958
DOI - 10.1002/csr.144
Subject(s) - corporate social responsibility , purchasing , business , portfolio , social responsibility , sustainability , index (typography) , socially responsible investing , finance , accounting , actuarial science , marketing , corporate governance , public relations , ecology , world wide web , political science , computer science , biology
Abstract This paper examines the financial performance of the FTSE4Good 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 FTSE4Good 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 FTSE4Good's corporate social responsibility criteria do no worse than their counterparts who do not follow a socially responsible strategy when purchasing equities. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.