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The BBC's Rory Cellan Jones
"The new 'FTSE4Good' is designed to promote ethical investment"
 real 56k

Guy Hooker, dir. of Ethical Investment Cooperative
"They have not obviously researched this properly"
 real 28k

Chief Executive of FTSE Mark Makepeace
"I think it's a positive story for UK companies"
 real 28k

Tuesday, 10 July, 2001, 14:52 GMT 15:52 UK
'Ethical' index snubs Tesco
FTSE4Good logo
Britain's biggest supermarket chain, Tesco, has been left out of a new 'ethical' stock market because it is not green enough.

The amount of money going into this area has quadrupled recently

Mark Makepeace, chief executive, FTSE International
The FTSE4Good family of stock market indexes is designed to promote socially responsible investment.

About a third of Britain's top companies, including those involved in tobacco, armaments, gambling and the nuclear industry, have been left out - along with more surprising ommissions such as Tesco, the Royal Bank of Scotland and the Daily Mail's parent company.

But Tesco arch rival Sainsbury has made it on to the list, along with Boots - and all of Britain's big petroleum companies.

The move will come as an embarrassment to Tesco bosses, who pride themselves on their environmental credentials.

The retail giant is understood to have failed the FTSE4Good test because it has not carried out a thorough enough audit of its environmental policies.

The FTSE4Good index will begin on 31 July, but the full list of companies to be included was released on Tuesday morning.

Human rights

Companies such as Tesco, which fail to meet the FTSE4Good criteria may appeal.

They will be told of their shortcomings and may be included later if they make the necessary changes.

Fund managers who use the index will pay a licence fee - but the fees will be donated to the international children's charity, Unicef.

Mark Makepeace, chief executive of FTSE International, said the organisation was responding to growing demands from investors.

"The reason we are introducing these indices is because companies increasingly invest in what they call socially responsible companies," he told BBC Breakfast.

"The amount of money going into this area has quadrupled recently.

"The big pension funds in the UK are being driven by the UK government which is demanding they have policies in the area of social investment."

There will be eight FTSE4Good indices, two each for UK, US and global companies.

One bank has already signed up to offer funds which track FTSE4Good indices and more are expected to follow.

The three criteria for entry are environmental stability, relationship with stakeholders and support for human rights.

But hard line campaigners on socially responsible investment are expected to claim that excluding only one-third of FTSE 100 firms is not strict enough.

And the inclusion of BP, Shell and their industry peers is also likely to spark debate.

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