You have been recently hired as an ESG Specialist for a fund management company. The firm forms

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Question:

You have been recently hired as an ESG Specialist for a fund management company. The firm forms its investment thesis and analysis via its own internal models rather than relying on third-party models. You have been tasked to develop an ESG Scorecard to analyse companies listed on the ASX200. The purpose of this scorecard is to review the companies listed on the ASX200 from an ESG perspective. Within the ASX200 - there are more than 10 sectors represented. The 4 Sectors that you will review and make a scorecard for are Materials, Energy, Information Technology and Consumer Staples. Part One (60%) Your report must include a review of four sectors, where you will identify ESG specific factors relevant to each sector and assign a weighting to each factor in developing your scorecard. You will have to identify ESG factors and issues that are relevant to the sector and identify a relevant weight and indicator to measure each factor. Your initial research on how to develop a scorecard provides you with the following steps to consider.

1. Identify sector specific ESG items (you can look at existing rating models for ideas)

2. Breakdown Issues into a number of indicators (to measure specific ESG items, i.e. data/financial ratios etc and disclosure metrics)

3. Determine a scoring system based on what good/best practice looks like for each indicator/issue.

Examples of some factors are provided below (identify 7-10 factors minimum for each sector scorecard)

	Factors	Indicators
Environmental	Climate Change	Carbon Emissions
Social	Health and Safety	Accidents and Fatalities in the work force
Governance	Business Ethics	Negative media about management/supply chain in the past 12-24 months

Once you have developed your scorecard for each sector, please use the scorecard prepared for the Materials sector, to establish a rating for Nickel Mines Ltd (ASX: NIC) and IGO Ltd (ASX: IGO).

1. Calculate and add scores at dimension level (E, S or G) or total the score level (depending on the relevant weight of each issue)

2. Assess each company and give it a total score

3. Identify, which company faces higher risk exposure from ESG factors, and which company has the better sustainability practices.

Note: reference and provide supporting data from financial statements, company sustainability reports and news releases that has been used as inputs for your ratings scorecard and ESG analysis