Companies with a relatively heavy impact on climate change have been
given just under a year to meet strict new criteria to remain in, or
enter, the FTSE4Good index.
Finalized climate change criteria announced by FTSE last month will
require ‘high-impact’ companies to have a series of policies and
programmes in place by 1 January 2008. They must have assigned
board-level or senior-executive responsibility for climate change
issues to an individual or a specific committee, and have also publicly
stated that addressing climate change is a key concern for the business.
By the same date they will also have to be publicly disclosing either
their total operational carbon dioxide or greenhouse gas emissions, or
be disclosing an accepted comparative figure for their industry sector,
such as the amount of carbon dioxide per tonne of product.
Six months later, by 1 July 2008, high impact companies must also have
either publicly set a strategic goal of ‘significant quantified
reductions’ of greenhouse gas emissions over more than five years, or
put in place management targets for emissions reductions over less than
five years.
Further down the line, by 1 January 2009 they will have to be able to show one of three things: 
a reduction in carbon intensity of at least five per cent over the previous two years that
for the previous two years they have been in the top quartile of
companies in their subsector when assessed on ‘accepted carbon
efficiency metrics’ that
they have implemented a quantifiable ‘transformational initiative’ such
as buying low-carbon electricity or generating renewable energy.
Companies that have a medium impact on climate change, such as brewers
and travel and construction businesses, will be set similar criteria
but given six months longer to meet them.
About 250 companies are seen as having a heavy impact on climate
change, and of these fewer than 50 are thought to satisfy the criteria
at present. FTSE’s in-house Responsible Investment Unit will work
directly with affected companies to help them understand the criteria
and what they have to do to comply.
Belinda Howell, chief executive of climate change consultancy
Greenstone Carbon Management said the criteria were ‘a great start and
a step in the right direction,’ but added that FTSE4Good’s measurement
targets ‘are not clear enough’ and should be based on a single
international standard for measuring emissions. The reduction targets
were also not challenging enough, she claimed.
