\\ Weekly Insights \\
Merry Christmas subscribers from Nossa Data’s team and our surprise elf visitor from one of our favourite ESG Standards - The Workforce Disclosure Initiative. This will be the last issue of 2022.
For the end of the year, I wanted to feature an article that Bloomberg published digging into MSCI ESG Scores and factors that helped companies receive upgraded scores.
What was looked at: 155 ESG Ratings MSCI awarded to S&P 500 companies from early 2020 to mid 2021.
Environmental Factors are the most deceptive when it comes to rating upgrades: MSCI looks at Environmental upgrades based on the “Potential impact of the world on the company, not the company’s impact on the world.” Ex: An MSCI view of Water Stress looks at: Does a local community have enough water for a company, not does a company stress a local water supply. Emissions are similar. Of 155 companies who received an upgrade, only one stated a cut in emissions.
Upgrades based on doing nothing: 50% of upgrades were thanks to re-weighting / methodology changes made by MSCI, not the companies.
Topics creating most improvement: Employment Practices, Data Protection and Board of Directors structure had this biggest impact in ratings improvements. Nearly 50% of upgrades included one or more of those initiatives.
10 companies highlighted and why they got an MSCI score upgrade:
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Target: AA - Why? Corporate Behaviour change in MSCI methodology awarded the company for an emphasis on ethics management and corruption.
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Citi Group: A - Why? Loan Portfolio, better data on commercial versus residential lending. Introduction of Whistleblower protection policies.
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General Motors: B - Why? Increase in electric vehicle sales.
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Interpublic: A - Why? Improved employment practices.
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NASDAQ: BBB - Why? Introduced an ESG Committee at board level, carbon neutrality achieved.
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FEDEX: BBB - Why? Board Structure and Emissions Reduction Strategy.
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Gartner: BBB - Why? Improvement on data protection.
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Carmax: BBB - Why? Employment Practices - Introduced annual employment survey. Data Protection improvement.
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Perrigo: A - Why? Board Structure, Employment Practices - Educational program, performance appraisal
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Disney: A - Why? Data Protection
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