MSCI ESG Ratings

1 MSCI ESG Ratings Providing institutional investors with a more robust ESG. integration tool designed to support ESG risk mitigation and long term value creation. MSCI ESG Ratings MSCI. Integrating MSCI ESG Ratings ESG Ratings into investment decision making More insight. More context. More informed decisions. MSCI ESG Ratings uses a rules-based methodology designed to measure a company's resilience to can help identify risks and long-term, industry material environmental, social and governance (ESG) risks. Leveraging Artificial opportunities that may not Intelligence (AI), machine learning and natural language processing augmented with our 200+.

2 Strong team of analysts, we research and rate companies on a A AA to CCC' scale according to their be captured by conventional exposure to industry-material ESG risks and their ability to manage those risks relative to peers. financial analysis Overview MSCI research has identified We have over 40 years of experience through our legacy that the ESG factor in MSCI ESG. companies collecting, cleaning, standardizing and Indexes, such as the ACWI ESG. Eric Moen modelling ESG data from thousands of sources to create Leaders Index shown below, has Managing Director, MSCI ESG Research a precision tool for a clear signal of ESG performance. contributed to outperformance.

3 200+ 1,500 1,700. ESG Analysts ESG Equity and ESG Research (Over 350 FTE2) Fixed Income Indexes3 Clients Worldwide MSCI ACWI ESG Leaders Index Cumulative index performance gross returns (USD) Sep 2007 Oct 2020. 200 100. MSCI ACWI. MSCI ACWI. 0 ESG Leaders SEP 2007. OCT 2008. DEC 2009. JAN 2011. FEB 2012. MAR 2013. APR 2014. MAY 2015. JUN 2016. JUL 2017. AUG 2018. SEP 2019. OCT 2020. 1. MSCI ESG Indexes during the coronavirus crisis 2. Source: MSCI ESG Research as of October 2020. Includes full time employees, employees of foreign affiliates providing investment advisory services to MSCI ESG Research LLC, and global allocated staff performing non-investment advisory tasks.

4 3. MSCI ESG Indexes and MSCI Analytics utilize information from, but are not provided by, MSCI ESG Research LLC. MSCI Indexes are products of MSCI Inc. and are administered by MSCI Limited. 2 3. MSCI ESG Ratings Key features and benefits Methodology Dynamic model to capture Robust data on boards and Daily updates ESG Rating of 8,500 companies (14,000 issuers, including subsidiaries). new and emerging risks directors Continuous evaluation of ESG risks, Frequent model recalibration to review Data on board size, tenure and director including daily monitoring of 3,400 and more than 680,000 equity and fixed income securities globally5. industry Key Issues and weights based election standards; director age and media publications and regular updates on the latest data and research as gender diversity; plus financial, industry of public documents and third-party well as input from our annual client and risk management expertise on key data sets.

5 Consultations. board committees. Global in-house team Our approach Market leading corporate Tech-enabled human insights Global, multilingual team of analysts governance insights We leverage AI to increase the timeliness and client service professionals Data Metrics Evaluation Rating For each company, we examine and precision of data collection and providing around the clock expertise key metrics that look at board, pay, analysis, and to check and validate data. and support to help clients find the No questionnaires S. tandardized I ndustry-specific K. ey ESG Issue ownership and control, and accounting best way to integrate ESG into their methodology to Key Issues are scores and weights We collect and practices.

6 Unique alternative data investment processes. standardize public data: assess company Risk scored (0-10) using combine to create Exposure and Risk a rules-based an overall ESG rating Alternative data helps minimize Gold standard data provider A. lternative data (AAA CCC) relative Industry material ESG risks reliance on voluntary corporate Management relative methodology including government, to industry peers to industry peers Over 13 years of live MSCI ESG Ratings disclosure to uncover potential risks MSCI ESG Research has been D. aily monitoring regulatory and NGO. data has helped refine our industry- and opportunities. recognized as a Gold Standard data M.

7 SCI's ESG issuer and weekly update R. atings are subject datasets provider' by the Deep Data Delivery communications of controversies to industry and specific Key Issues and weight setting C. ompany disclosure methodology to select the ESG risks Extensive coverage Standard. team engages with and events market-led documents companies for data checks and formal most material to an industry. 8,500 companies (14,000 total MSCI ESG Ratings and 3,400 media sources verification committee review issuers, including subsidiaries) and more than 680,000 equity and fixed ESG Indexes4. income securities globally. MSCI ESG Ratings forms the foundation of many of the 1,500 MSCI ESG Indexes.

8 Visit Outputs VALE (VALE3). Steel | BR. Tailing Dam Collapse at Feijao Mine Points to Systemic Safety Concerns LAST UPD. UPDAATE: October 02, 2019. Key issues ESG Rating history This chart highlights the company's positioning relative to the industry average for each Key Issue that contributed to its ESG Rating as of October 02, 2019. Positive ESG Rating history shows five most recent rating actions 50%. Industr Industryy Aver erage age ESG Rating distribution Negative Universe: MSCI ACWI Index constituents, Steel, n=33 60%. 75%. ility nce nd ent stab erna s&. ons & La agem on fety & In issi Gov issi ss ty & Sa Em Man tion Stre Use iversi ate Was c Em Company, Industry & Portfolio rbon rpor rrup lth er r te Biod Labo Toxi Hea Wat Co Co Ca Last ESG Rating action Key scores Rating action date: Januar Januaryy 30, 2019.

9 Vale has been downgraded to 'CCC' from 'B'. The tailings dam failure near Brumadinho Brazil was the second major tailings failure for Vale in about Industry-Adjusted Score Weighted-Average Key Issue Score Environmental Pillar Score Weight Scor 49%. Scoree (0-10). Thematic Reports Analytics Data Feeds Indexes three years. It raises questions of the stability of other dams and will increase Vale's penalties, liabilities Social Pillar Score 24% and risks of community opposition. Governance Pillar Score 27% Vale has undergone several major changes in the past two years related to its ownership structure, board, and executive management teams, and 2018 marked a successful year in not only reducing its debt in half but also completing its pollution prevention equipment upgrades at Sudbury, Canada.

10 Report table of contents However, while still facing potentially heavy liabilities with the Samarco disaster of 2015 and questions at other controversial operations such as Onca Puma, Vale experienced another major dam failure on ESG Rating tearsheet Data appendix January 25, 2019. The new incident may lead to Vale being severely handicapped in its capital Rating model details P02 Corporate governance P10. Additional insight into significant ESG risks and Available on: allocations for years to come. data Analyst: Samuel Block Recent developments P03 Key issue details P27. Corporate governance P04 Glossary P113. summary Analyst insights P05.