Analysis via internal models rather than third-party models

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Reference no: EM134033691

Question

You have been recently hired as an ESG Specialist for a fund management company. The firm forms its investment thesis and analysis via internal models rather than 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 prepare a scorecard for are Materials, Energy, Information Technology, and Consumer Staples.

Part One

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 must identify ESG factors and issues relevant to the sector and identify a relevant weight and indicator to measure each factor. Your initial research on developing a scorecard gives you the following steps to consider.

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

2. Breakdown Issues into several 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)

Part Two

Once you have developed your scorecard for each sector, please use the Materials sector scorecard to establish a rating for Lynas (LYC-AU) and Evolution (EVN-AU) listed on the ASX.

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 better sustainability practices.

Reference no: EM134033691

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