Index firm FTSE and EIRIS part company on FTSE4Good index

Abrupt end to 12-year sustainable index relationship

Index firm FTSE has announced that it is parting company with EIRIS, the ESG research house which has worked with it on the FTSE4Good sustainable index family since its inception 12 years ago.

The pair has agreed that the relationship will terminate at the end of this month, FTSE said in a statement.

It added it would develop a new methodology for the index and related products. More details would be provided “in due course”.

Responsible Investor understands that the FTSE contract was one of EIRIS’s largest but that it was seen internally as something of a ‘loss leader’ for the foundation-owned company.

The link with FTSE was useful as it built similar relationships with other exchange groups around the world, notably the Johannesburg Stock Exchange and the Bolsa Mexicana de Valores, sources suggested. EIRIS reported £3.6m (€4.3m) of turnover in 2011 and an operating loss of around £85,000.

The decision to end the relationship follows the appointment last year of Kevin Bourne as head ofFTSE’s ESG Service Unit with a brief to develop services to “measure and model” the transition to a low carbon economy.

Bourne, the former Global Head of Electronic Trading at HSBC who headed up the bank’s Climate Change Index initiative, joined FTSE when his quantitative ESG boutique LCE Risk [low carbon economy] was absorbed by the company.

The arrangement between FTSE and EIRIS dates back to 2001 when FTSE launched its now familiar FTSE4Good series assessing companies on four criteria – the environment, human rights, social issues and stakeholder relations.

Meanwhile, FTSE has announced its September semi-annual review, which sees 30 new additions to the FTSE4Good series. Notable among them are Canadian tech firm Blackberry, UK asset manager Jupiter Fund Management and eight companies from the US including the likes of MGM Resorts International. There are no deletions from the series and the changes take effect on September 20.