Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
What Is the FTSE4Good Index? A Simple Guide for Ethical Investors (2025)
Ruby Layram
8th Dec 2025
If you’ve been dipping your toes into ethical investing lately, you’ve almost certainly come across the FTSE4Good Index. It’s one of the longest-running “responsible investing” indices in the world, and a favourite for investors who want their money to support companies with stronger environmental, social and governance (ESG) practices.
But what actually is FTSE4Good? How does it work? And should you invest in it in 2025?
What Is the FTSE4Good Index?
The FTSE4Good Index Series is a family of indices created by FTSE Russell back in 2001 to track companies that meet specific ESG standards.
- It’s a list of companies that tick certain “responsible business” boxes.
- If a company’s ESG practices slip, they can be removed.
- If they improve, they can be added.
This makes FTSE4Good a dynamic list, constantly updated to reflect the best ESG performers across global markets.
There are several versions of the index (UK, Europe, Global etc.), but the goal is always the same:
reward companies that behave responsibly and make it easier for investors to back them.
What Makes a Company Qualify for FTSE4Good?
FTSE Russell uses its own ESG scoring model to assess thousands of companies across:
Environmental factors
- Carbon emissions
- Renewable energy use
- Pollution and waste management
- Climate risk strategy
Social factors
- Worker rights
- Health & safety
- Human rights in the supply chain
- Community impact
Governance factors
- Board structure
- Anti-corruption policies
- Executive pay transparency
- Shareholder rights
Each company receives a score. If they meet the threshold, they stay in the index. If they don’t… they’re out.
Think of it like the Premier League, but for corporate ethics!
Why Does FTSE4Good Matter for Ethical Investors?
If you’re trying to invest according to your values, it can feel overwhelming.
Greenwashing is everywhere. ESG labels can mean wildly different things. And not everyone has time to read corporate sustainability reports.
The FTSE4Good Index is useful because it does the hard work for you.
Here’s why it’s popular:
- Clear ESG criteria, not perfect, but transparent
- Regular reviews keep companies accountable
- It includes large, stable companies, not just niche green firms
- You can invest through ETFs or index funds easily
- It gives you a broad, diversified ethical portfolio in one go
It’s one of the simplest ways to make your investing more socially conscious without sacrificing diversification.
How Has the FTSE4Good Index Performed?
ESG indices don’t always outperform traditional benchmarks, but they do tend to be more resilient in unstable markets.
Historically, FTSE4Good has delivered:
- Steady long-term performance
- Lower exposure to industries like oil, tobacco, and weapons
- More focus on tech, healthcare, and consumer goods
Performance varies across regions, but overall, returns have been broadly similar to non-ESG benchmarks. So you don’t have to give up growth to invest ethically.
How Can You Invest in the FTSE4Good Index?
You can’t buy the index directly (it’s not a stock), but you can buy funds that mirror it.
Here’s how to get started:
1. Choose a platform
Some popular ones include:
- Vanguard
- Hargreaves Lansdown
- AJ Bell
- Trading 212
- Freetrade
2. Search for FTSE4Good funds
Look for ETFs or index funds with names like:
- “FTSE4Good UK ETF”
- “FTSE4Good Global Tracker”
- “FTSE4Good Developed Fund”
Some funds are accumulation (reinvest dividends) and others are income (pay dividends out). Choose whichever suits your strategy.
3. Decide how much to invest
You can start with as little as £1 with fractional share platforms.
Your money is at risk.
4. Invest regularly
Setting up a monthly automatic investment is one of the easiest ways to grow your portfolio without thinking about it.
What Are the Downsides?
No ESG index is perfect, and FTSE4Good is no exception.
Possible drawbacks:
- It still includes some oil/gas companies if they meet ESG thresholds
- Critics say ESG scoring can be subjective
- Not all “ethical” investors agree with the criteria
- It may miss smaller, highly innovative green companies
It’s ethical-ish, rather than perfectly ethical, but it’s a strong step in the right direction for mainstream investors.
Is the FTSE4Good Index Right for You?
FTSE4Good is a great fit if you want:
- A simple way to make your portfolio more responsible
- A diversified basket of well-known global companies
- ESG screening without losing out on mainstream market growth
It’s probably less ideal if you want:
- Zero exposure to controversial industries
- A fund focused solely on renewable energy
- High-risk, high-growth sustainable start-ups
Final Thoughts
Ethical investing doesn’t have to be confusing or exclusive. The FTSE4Good Index gives everyday investors an accessible way to align their money with their values, without sacrificing performance or taking on complicated research.
If you’re looking to green up your portfolio in 2025, a FTSE4Good ETF or index fund can be a brilliant, low-stress place to start. It’s not perfect, but it’s practical, and for most people, that’s exactly what matters.
Do you want to learn more about investing? Sign up for our fortnightly MoneyMagpie Investing Newsletter. It’s free and you can unsubscribe at any time.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
Leave a Reply