The ethical index FTSE4Good drew much criticism when it was launched this summer. Details of which companies were in made the “outs” look like a FTSE4Bad, it was said. That was no way to encourage them to improve.

Others, far from disliking the exclusion approach, wanted more of it. Environmental lobbyists were particularly dismayed to see BP and Shell in there, which they regard as big polluters, regardless of their progress on social and environmental issues.

FTSE might console itself with the thought that even bad publicity is still publicity. Tom Woollard at ERM, an environmental consultancy that advises half the blue chips in Britain, says many companies felt it was one of the ethical developments they could least afford to ignore.

FTSE4Good was very much the pet project of Mark Makepeace, chief executive of FTSE. Although the company and its flagship “footsie” index is owned jointly by the Financial Times and the London Stock Exchange, it operates independently.

Strictly speaking, FTSE4Good is a benchmark which the small but fast growing ethical investment industry can use as a marketing tool for launching new funds. FTSE says the index is a response to growing demand from this sector.

As such, it is having a slow start. Just two groups have so far launched funds, Close Brothers and UBS Warburg. This compares with some 30-plus now using the Dow Jones Sustainability Group Index, which started in 1999.

The DJ index is different in that it divides companies up into a large number of sectors, selecting the best 10 per cent of each according to sustainability criteria.

But Mr Makepeace has made it clear from the start that he was aiming not only at a benchmark but also “an aspirational framework for change”. This is tricky ground. Some of the stick that FTSE got was simply because of the value-loaded name. Dow Jones has avoided this with its more neutral branding, at the cost of being less eyecatching.

But companies also point out tetchily that there are already a plethora of benchmarks and rating systems taking up their time. Mr Woollard says: “They have been facing a barrage of questionnaires in the last 18 months.” Some are dismissed as shallow and uninformed.

To create FTSE4Good the ethical research agency Eiris was employed. They were responsible for sending out questionnaires to 1,500 companies (FTSE4Good has four indices – UK, Europe, US and Global). They made judgments about ins and outs using the criteria chosen by an advisory panel. For the UK index, about 300 of the 750 companies in the FTSE All Share made it.

One of the main reasons companies failed was not their poor ethical record but simply a lack of information. Many proved unable to supply the details in time on the three main areas – environmental, stakeholder issues and human rights policies. FTSE has already reviewed the constituents since July, adding another 37 names in September.

There is no doubt the pressure is increasing on companies not only to supply more information but also to raise their ethical targets, and achieve them. Craig MacKenzie of Friends Ivory & Sime, one of FTSE’s advisory panel, said the ambition is to keep setting the barrier ever higher. The index will be a moving target.

He also hopes that the criteria for inclusion will become more sophisticated as their experience grows. One of the most difficult areas to measure is social issues.

The pressure from index companies is being added to in the UK by the Association of British Insurers. In October, the Association of British Insurers issued guidelines to its members on social responsibility. While there will be no naming and shaming, companies will be asked to supply more information.

The ABI says its initiative differs from the index providers because it offers the chance to engage with all comers. ABI members between them control something like a quarter of the UK stock market through their shareholdings.

The ABI move is part of a domino effect. Its guidelines are the direct result of a similar development for pension fund managers last year, when a change in the law obliged pension funds to disclose what they are doing about socially responsible investing.

Another source of change comes from the Turnbull committee, a successor to the Cadbury, Greenbury and Hampel bodies on UK corporate governance. Last year Turnbull introduced guidelines for risk management that extended to environmental risk.

Tom Woollard at ERM points out that while the tempo might have increased, many of the ideas have been around for a while. Business in the Environment, a campaign group, was already lobbying companies five years ago, while the companies themselves often have a record of awareness going back much further.

Chief executives may be irritated at FTSE4Good, but they find it difficult to ignore. Before its launch, Richard Harvey at insurer CGNU was reported to be anxiously checking with his ethical fund managers to see if they would be in. They were.