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Ethical investing – 150 firms selected

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The field of socially responsible investment, or SRI, is growing, with a new set of ethical indices set to be launched, The Economist reported in its July 14 edition.

FTSE, jointly owned by the Financial Times and the London Stock Exchange, assessed more than 1,600 firms for environmental, social and humanitarian behavior.

The 50 firms with the highest market capitalization that cleared the screening have been selected for the FTSE4Good indices for British and European shares, with another 100 firms appearing on each of the American and world equity indices, The Economist said.

According to the Social Investment Forum socially responsible investment in the U.S. exceeded $2 trillion in 1999, or one in every eight dollars under management, The Economist said, adding that the number seemed “implausibly high.”

It said that Fidelity, the biggest U.S. mutual fund firm, with about $1 trillion under management, lacks an SRI fund. And the social-index fund launched last year by Vanguard, another big U.S. mutual fund giant, manages only $76 million.

Indices that track socially responsible investment have their critics. Deborah Doane of the New Economics Foundation in London, for example, told the Economist that FTSES4Good does not judge pharmaceutical firms on their human rights policies, as it does mining and software companies, despite concerns about poor countries’ right to costly medicines.

And Stuart Hart at the University of North Carolina at Chapel Hill said the Dow Jones Sustainability Index uses a sophisticated questionnaire sent to companies that relies heavily on their own assessment. And only one fourth actually respond.

For full story, go to The Economist.

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