The new index series increases exposure to companies based on the strength of their gender diversity leadership at the board level in addition to how well they manage their wider social impact. This is achieved by adopting a factor based approach, tilting stocks to overweight or underweight depending on their gender diversity at board level and social impact score.
The initial indexes created within the series, and being launched today, are the FTSE All-Share Women on Boards Leadership Index and the Russell 1000 Women on Boards Leadership Index. The constituent weightings in the underlying indexes* are adjusted based on two measures:
- Gender Diversity Adjustment – Ratio of female board members to total number of board members in excess of the ICB Industry average. An industry Neutrality Adjustment is applied to the Women on Boards adjustment
- Social Impact Adjustment – Based on the Social Pillar score (out of five) as calculated in FTSE Russell’s ESG Ratings data model**
Mark Makepeace, CEO, FTSE Russell, said:
The launch of FTSE Russell’s new index series is another demonstration of our commitment to promote strong stewardship practices and market standards. The initial indexes are based on the FTSE UK All-Share® and Russell 1000®, incorporating a universe of almost 900 companies and can be used by market participants to increase their exposure towards companies demonstrating leadership in this space. By using a factor-based methodology, we can adopt a positive approach highlighting leadership, promoting awareness and improving inclusive environments at all levels”.
FTSE Russell is responding to a growing trend among asset owners to integrate ESG considerations into passive investments and this trend is increasing transparency and disclosure in the capital markets with investors collaborating to improve company engagement and corporate performance. The FTSE Women on Boards Leadership Index Series is built using a transparent, rules-based index methodology and is managed in accordance with FTSE Russell’s global best practice of index governance.
In the FTSE All-Share Women on Boards Leadership Index, the following companies have been ranked the highest combined Gender Diversity and Social Impact score within their industry:
Oil & Gas – Royal Dutch Shell
Basic Materials – BHP Billiton
Industrials – Royal Mail
Consumer Goods – Unilever
Health Care – GlaxoSmithKline
Consumer Services – Kingfisher
Telecommunications – BT Group
Utilities – SSE
Financials – Jupiter Fund Management
Technology – Micro Focus International
[Words: FTSE Russell Press Release]