The Ghosts Of Sustainable Investing’s Past, Present And Future

Summary

Twenty years ago, investors mocked the launch of the first ESG focused index called FTSE4Good.

Two decades later, interest in ESG indices is driving some of the biggest allocations of capital today.

FTSE Russell Americas Head of Sustainable Investment Tony Campos discusses what has changed since then, what’s driving markets’ and companies’ need for certainty, and what the world of sustainable investing might look like in 2026.

metamorworks/iStock via Getty Images Twenty years ago, investors mocked the launch of the first ESG focused index called FTSE4Good. But two decades later, interest in ESG indices is driving some of the biggest allocations of capital today. FTSE Russell Americas Head of Sustainable Investment Tony Campos discusses what has changed since then, what’s driving markets’ and companies’ need for certainty, and what the world of sustainable investing might look like in 2026. Transcript:

Jamie : OK, so Tony, I want to, if you don’t mind, go a little bit back to basics. You say you have been there 17 years – were there even any real like ESG style indices, even back then and like going over the last 17 years, how has that product changed and who are your clients and who uses the products that you have?

Tony : 20 years ago, FTSE launched FTSE4Good, one of the first-ever global ESG indexes. So that actually predates my time at the company. I believe I was the fourth person to join focused on ESG in 2004, but FTSE4Good at the time was quite important and different. Now, if we think over the last 20 years, I say often sustainable investment has changed a lot over that time, but one thing has really stayed consistent, which is a lack of definitions and standards. That’s one of the biggest challenges we have.

Jamie: Can I ask about FTSE4Good – so back then, how would FTSE have gone about constructing that index?

Tony: The real concept here is you start with your standard market cap weighted universe because you want broad exposure. Our clients are looking for broad, diversified global equity…

Jamie: Big liquid names as well.

Tony: Exactly. Now, from an ESG perspective, you have to define how you’re going to set transparent rules for how you will define who gets in and who gets out. For FTSE4Good, we look at that through two dimensions of corporate ESG practices and behaviour. One is thinking about company conduct. So what’s the risk management and impact of the company’s day to day operations from an environmental and social perspective?

But you can also think about the impact of the company’s products and their use in society. Some can be negative, some can be positive. So it’s possible to have a company that makes environmentally beneficial products like solar panels or wind turbines, but treats their employees poorly, or maybe manufacturers those products in an environmentally harmful way. Equally, you could have a company who maybe their products are something like tobacco, but they do so in a fairly environmentally thoughtful way.

Jamie: OK, so you don’t just look at environmental impact. It’s a lot about corporate culture as well. So how about corporate culture and the way people treat employees and diversity? How do you measure that?

Tony : So that’s a big challenge. It’s one that I think the industry is pretty aware of. But ultimately, the disclosure from companies is not yet sufficient enough to allow us to make fully informed decisions about diversity and inclusion. Part of the reason for that is the publicly available data that’s provided is sparse and difficult to compare across time, across regions, across sectors.

Jamie: As the years go by and ESG becomes a bigger and bigger topic, are there becoming ways of measuring ESG more easily with companies? And does that then help you create products, create indices which are more aligned with what you’re trying to achieve?

Tony: Yeah, absolutely. So there’s been a great development in the quality of data that’s been disclosed and therefore the tools and models that can utilize that data. Now that quality of disclosure still isn’t as good as it needs to be, but it’s much better than where we were certainly 20 years ago and FTSE4Good launched.

Jamie: Okay, so we’ll come onto the future in a second, but let’s go back to FTSE4Good. So that was really the pioneering product, which I imagine at the time didn’t get a huge amount of attention because people simply […]

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