FTSE KLD 400 Social Index
Methodology
Index Construction
In selecting companies for the KLD400, KLD seeks to maintain the composition of Index holdings at approximately 250 FTSE All World USA companies, 100 additional large and mid cap companies chosen for sector diversification, and 50 smaller companies with exemplary social and environmental records.
Companies involved beyond specific thresholds in alcohol, tobacco, firearms, gambling, nuclear power and military weapons are not eligible for the KLD400. Companies that do not meet KLD’s financial screens (market capitalization, earnings, liquidity, stock price and debt to equity ratio) are also ineligible for inclusion.
KLD selects companies for the KLD400 that have positive social and environmental records based on the following issues: community relations, diversity, employee relations, human rights, and product quality and safety, environment and corporate governance. KLD evaluates companies in the context of their industry and sector as well as in relation to the broader market.
Index Maintenance
The KLD400 Committee maintains the Index at 400 companies at all times, adding a company at the same time that another is removed. Companies may be removed from the KLD400 due to corporate actions, violation of exclusionary screens or poor social or environmental performance. KLD endeavors to keep turnover on the Index at a rate consistent with turnover on the FTSE All World USA.
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