Top ethical fund managers have welcomed the FTSE4Good index, due to be launched at the end of this month, signalling a change in the way the City views socially responsible investment (SRI).
Friends Ivory & Sime, Henderson Global Investors and Morley Fund Management, leaders of the UK's SRI business, have no plans to use the index as a benchmark for measuring the performance of ethical funds.

The index means business will be under more pressure to consider environmental, for example.

But the National Association of Pension Funds (NAPF) has raised doubts about the index. Its director general, David Cranston, said NAPF was not in favour of a drawing a distinction between ethically 'good' companies and 'bad' companies.

Although ethical fund managers have given backing to the index, many advocate caution because ethics is a subjective issue.

According to a recent survey, two-thirds of the largest pension funds, with assets totalling £400bn, are now committed to SRI, in the wake of government regulations introduced in 2000.

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