FTSE4Good: exploring its implications for corporate conduct

David Power · Lorna A. Stevenson

53 citations0/0 files storedAccounting Auditing & Accountability Journal

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Corporate Social Responsibility Reporting Sustainable Finance and Green Bonds Corporate Identity and Reputation

Abstract

Purpose The purpose of the paper is to critically evaluate membership of the FTSE4Good “socially responsible investment” indices (membership of which is based on ethical criteria), which were launched in the UK in July 2001 as a means of increased accountability and change. Design/methodology/approach The paper adopts an interpretive and critical approach when examining the perceptions of company representatives. The empirical findings are based on a small number of interviews and a postal questionnaire. Some descriptive and inferential statistics are used to summarise and help interpret the questionnaire results. Findings Respondents indicated that inclusion in the indices had a significant effect on their firms' reputation, and on relationships with specific stakeholder groups. All interviewees emphasised that peer group pressure encouraged top management to maintain their membership of the indices. Questionnaire respondents indicated an even balance of views regarding tightening the admission criteria for the indices. The influence of FTSE4Good on corporate conduct was found to be limited and mainly confined to reporting activity, though policy and management systems were amongst other areas where some impacts were noted. A small proportion of respondents felt that membership of the indices had had some significant influences on their companies. Originality/value The investigation of the influence of a “mass market” ethical investment index on constituent companies is where the main originality of this paper lies. In particular the interviews with constituent firm representatives and the questionnaire results are novel for ascertaining perceptions about the impact of inclusion in the indices on constituent companies.

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References

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2015Carrot and Stick? The Role of Financial Market Intermediaries in Corporate Social Performance 2015The Market Performance of Socially Responsible Investment during Periods of the Economic Cycle – Illustrated Using the Case of FTSE 2011Accountability and human rights: A tentative exploration and a commentary 2017Market efficiency of traditional stock market indices and social responsible indices: the role of sustainability reporting

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