[3] The index excludes companies due to their involvement in tobacco production, weapons, or coal power industry and rates companies for inclusion based environmental sustainability, relationships with stakeholders, attitudes to human rights, supply chain labour standards and the countering of bribery.
According to an event study reported in 2007, it was uncertain whether inclusion in or exclusion from the index effectively incentivised the affected companies to change their behaviour in regards to social responsibility.
Curran and Moran, who undertook the study, found that the movements in share prices which followed FTSE4Good announcements were not significant in a statistical sense.
The ICB breakdown is shown here- compared to the FTSE All-World index, technology is overrepresented by 7% and consumer discretionary is underrepresented by 6%, with all other sectors being within ±1.5%.
[7] Consumer staples (the sector normally containing alcohol and tobacco), as well as industrial goods and services (containing defence) and energy (containing oil, gas and coal) all have therefore the same weighting as the broader index.