Infographic: Inside ESG Ratings - How Companies are Scored
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Inside ESG Ratings: How Companies are Scored

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The following content is sponsored by MSCI.


ESG Ratings

Inside ESG Ratings: How Companies are Scored

Back in 1972, environmental, social, and governance (ESG) investing had a long way to go.

At the time, ESG research was a nascent field, but it paved the way for the booming investment strategy. Now, it is estimated that one in every three investments in the world will be ESG-mandated by 2025—with assets projected to reach $53 trillion.

This infographic from MSCI shows what’s behind a company’s ESG rating, and where the expansive universe of data comes from.

The ESG Data Universe

Drawing on over 1,000 data points, MSCI ESG Research collects data from a variety of sources:

  • Company filings: Proxy reports, sustainability reports, shareholder results, voluntary company ESG disclosures
  • NGOs: Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), UN Sustainable Development Goals
  • Government: U.S. Environmental Protection Agency, European Central Bank, EU Taxonomy
  • Media sources: Major headlines
  • Alternative data: Geo mapping, water scarcity data, flood risk analysis

Across the expansive data frontier, these are just some of the sources that are drawn on. Typically, a significant amount of data goes beyond what a company will voluntarily provide.

ESG Ratings: The Two Fundamental Questions

During this process, there are two key questions that underlie ESG ratings:

  1. Which ESG issues could cause harm to investors?
  2. Which ESG issues may create opportunities, relative to their peers?

To answer these, MSCI uses a combination of technology and ESG analysts.

Calculating Ratings

Next, a company-specific score is calculated based on three pillars. Here is a snapshot of some of the key issues that fall within each of the E, S, and G pillars:

EnvironmentalSocialGovernance
Climate Change
  • Carbon emissions

  • Product footprint
Human capital
  • Labor management

  • Health & safety
Corporate governance
  • Board

  • Pay
Pollution & Waste
  • Toxic emissions & waste

  • Packaging material and waste

Stakeholder opposition
  • Controversial sourcing

  • Community relations
Corporate behavior
  • Business ethics

  • Tax transparency
Environment opportunities
  • Clean tech

  • Green building
Social opportunities
  • Access to communication

  • Access to finance

So how does this break down for a specific company?

Case Study: Oil & Gas Company

Harnessing artificial intelligence, an ESG analyst looks at a petroleum company to assess its impact on sustainability through a top-down approach. They focus on the most relevant issues including:

EnvironmentalSocialGovernance
Climate change:

Tons of CO2 emitted/$ million annual sales
Community relations:

Indigenous Rights Policy
Pay:

Executive compensation structure
Pollution & waste:

Tons of CO2 emitted/$ million annual sales
Supply-chain labor standards:

Partnering with a diverse set of suppliers on sustainability issues
Business ethics:

Spills, notice of violations, compliance fines

Importantly, this shows just a snapshot of the process, while ESG analysts do the heavy-lifting.

The ESG Ratings Scorecard

Finally, based on a thorough analysis of the most relevant themes and issues facing a company, a final score is assigned. Companies are grouped according to three primary tiers:

LaggardsAverageLeaders
CCC, BBB, BBB, AAA, AAA

These scores can influence investor decisions on many levels:

  • Investors can prioritize a company’s resilience to unanticipated and financially damaging ESG risks.
  • Ratings provide a launching point for shareholder engagement on ESG performance and how investment products are created.
  • Investors can find opportunities in new and existing markets.
  • Investors can make informed ESG decisions in the medium and long term.

Why Do ESG Ratings Matter?

Today, investor demand is one of the chief drivers of ESG investing.

Alongside this, reputational benefits and higher risk-reward tradeoff are playing a larger role in how investors think about sustainability and their investments. But of course, ESG ratings alone are not the entire picture.

By combining ESG ratings and traditional financial analysis, investors can put together a more discerning picture of a company’s risks and opportunities.

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Visualizing the Rise of Cryptocurrency Transactions

As cryptocurrency transactions rise, merchants are looking to position themselves to take advantage of this new wave of crypto spenders.

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daily crypto transactions

Visualizing the Rise of Cryptocurrency Transactions

After Bitcoin and cryptocurrency’s wild bull run in late 2020 and early 2021, many holders are now using cryptocurrencies for their intended purpose: payments.

Every day, approximately $12 billion are transferred across the Bitcoin, Ethereum, and Litecoin blockchains, with millions of people using cryptocurrency for payments daily.

This graphic sponsored by CoinPayments looks at the rising transactions of the Bitcoin, Ethereum, and Litecoin networks.

Cryptocurrency Transactions are Rising in Value and Number

While prices are often the focus when crypto is in the spotlight, transaction counts show how much a network is being used as a medium of exchange. In just over five years, daily transactions across the Bitcoin, Ethereum, and Litecoin networks increased sixfold, from just 250,000 to more than 1.5 million transactions a day.

In mid-2017, Ethereum overtook Bitcoin in daily transactions as ETH was necessary to participate in ICOs (initial coin offerings), which fueled much of the speculation in the 2017 price run. With Ethereum still hosting thousands of ERC-20 and ERC-721 tokens on its blockchain today, its transaction counts have grown to be much higher compared to Bitcoin and Litecoin’s.

Along with crypto’s rising transaction numbers, the average USD value per transaction has increased by a minimum of 4x over the past five years.

YearAverage Value per Bitcoin TransactionAverage Value per Ethereum TransactionAverage Value per Litecoin Transaction
2016$2,426$588$1,357
2021$32,943$19,139$5,458

Source: Coin Metric
2021 figures as of July 13th, 2021

Crypto Spenders are Searching for Merchants

As transaction counts and values rise, merchants play a vital part in pushing forward the adoption of digital currencies for payments.

Many cryptocurrency users consider merchant adoption as a key barometer of success for crypto adoption. While companies like AT&T, Namecheap, and Overstock already accept crypto payments, there are still many businesses around the world which don’t offer cryptocurrency as a method of payment.

In a survey of over 8,000 U.S. consumers, 66.7% of crypto owners and 54.2% of non-owners said that not enough merchants accept cryptocurrency. Along with this, 47% of crypto owners said they seek out merchants that accept crypto for purchases, indicating clear demand for more crypto-accepting businesses.

How Can Merchants Make the Most of the Crypto Boom?

As the world embraces crypto, merchants need the in-store and online tools to be part of this next wave of commerce. Accepting crypto opens merchants up to an untapped audience of new consumers, eager to spend their crypto.

CoinPayments makes it easy to start accepting crypto payments at online checkout and with POS systems, with features like auto-coin conversion and over 2,000 coins supported.

Find out more about how the crypto market is growing, adapting to consumer needs, and the opportunity it presents to merchants around the world.

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Visualizing the Economic Impact of British Columbia’s Golden Triangle

British Columbia’s Golden Triangle generates massive revenue and investments for the province, but where did it all begin?

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BCRMA Golden Triangle

The Economic Impact of British Columbia’s Golden Triangle

At the heart of British Columbia’s mining industry lies the Golden Triangle. This region has helped transform the province’s mining industry into a significant source of revenue and investment.

In 2020, the Golden Triangle accounted for roughly 44% of the $422 million in mineral exploration expenditures in British Columbia. In 2019, the Red Chris and Brucejack mines contributed around $1 billion to the province’s estimated annual gross mining revenues.

This infographic is sponsored by the B.C. Regional Mining Alliance (BCRMA) which brings the best of this region to the world through a partnership between indigenous groups, industry, and provincial government representatives.

Here is how the Golden Triangle began.

The Golden Triangle’s Unique Geology

Between 220 and 175 million years ago, the Golden Triangle’s wealth was forming deep in the Earth for the world to discover. Most metal deposits form from superheated water that cycle over many kilometers, collecting metal atoms as they rise to the surface of the Earth’s crust and settle into deposits.

Industry, government, and university geologists have worked for over a century to understand the Golden Triangle’s unique geology to uncover its mineral wealth. This unique geology cradles the world-class deposits that define the legendary “Golden Triangle” of British Columbia.

A History of Discovery and Mining in the Golden Triangle

Historical gold rushes brought mining to the area, but the region’s vast copper deposits will deliver the key mineral for B.C.’s green future. More than 150 mines have operated in the area since prospectors first arrived at the end of the 19th century.

  • 1861: Alexander Choquette kicked off the Stikine Gold Rush after finding gold at the confluence of the Stikine and Anuk Rivers.
  • 1918 – 1952: The first big discovery in the Golden Triangle was at the Premier Gold Mine, which started operations in 1918. It produced 2 million ounces of gold and 45 million ounces of silver. Today, Ascot Resources is re-starting processing from this gold mine.
  • 1964: The Snip Mine was discovered by Cominco but the deposit stayed dormant until 1986. The mine produced approximately 1 million ounces of gold from 1991 until 1999. Today, Skeena Resources is advancing the Snip Project.
  • 1994: Eskay became Canada’s highest-grade gold mine and the world’s fifth largest silver producer, with production above 3 million ounces of gold and 160 million ounces of silver. Skeena Resources is also bringing the Eskay mining back into production.
  • 2009: The discovery of the Brucejack gold and silver deposit led to the development of an underground mine. The mine has produced 1,230,644 ounces of gold since it began operations in 2017.
  • 2013: The KSM Project is one of the largest undeveloped gold projects in the world. A Preliminary Feasibility Study estimates proven and probable reserves total 38.8 million ounces of gold and 10.2 billion pounds of copper.
  • 2015: The Red Chris shipped its first load of copper concentrate. In 2020 metals production was 88.3 million pounds copper and 73,787 ounces gold. Imperial Metals and Newcrest jointly operate the mine.

This long tradition of discovery and mining is laying the foundations for the next generation of investment.

Today’s Golden Age for Exploration and Development

Continued exploration is necessary for new discoveries and advancing projects to new mines. More importantly, the minerals discovered today will be needed in the low carbon economy and British Columbia—in particular, the Golden Triangle will play its part in delivering metals for renewable technology.

 British ColumbiaNorthwest Mining RegionThe Golden Triangle
2020 Projects2596726
Total Expenditures$422M$255M$184M
Drilling (meters)991,319470,058352,247
Average Expenditure Per Project$1.6M$3.4M$7.09M

Source: Based on data collected for the EY LLP, 2020 British Columbia Mineral and Coal Exploration Survey

Gold and copper account for most of the exploration in the Golden Triangle, but other commodities for the low-carbon economy such as silver, nickel, and zinc also attract interest. A strong exploration industry is the beginning for future investment, new jobs, and community development.

A Bright Future: Investing in Community

The Golden Triangle continues to attract exploration activity as infrastructure and community development lays the success for future generations and industries.

Community:

  • Agreements with First Nations (Tahltan and Nisga’a Nations)
  • 38% of expenditures stays in the region
  • 97% stays in British Columbia
  • 150+ communities benefit

Infrastructure:

  • The paving of the Stewart-Cassiar highway
  • The opening of ocean port facilities for concentrate export at Stewart
  • The completion of a $700-million high-voltage transmission line bringing power into the region

This is a new beginning for the continued economic impact of British Columbia’s Golden Triangle.

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