Blog | What Alternative Energy’s slump tells us about industry classification

At first glance, industry classification may appear to be a straightforward exercise in identifying like companies and grouping them together. But the question of how to do this can be a nuanced one, and classification decisions—either making them or delaying them—can have a material impact on index composition. 

We transitioned FTSE Russell indexes to an expanded and improved ICB structure last year—and these enhancements included a change in how we classify Alternative Energy companies. The Alternative Energy sector has since underperformed considerably, shedding light on how classification decisions affect an index’s ability to effectively measure an industry. 

You can now read the full whitepaper at the link below