There are three part need to be done, and they are all separate.
1. Identify an industry of interest to your fund and find a CFRA Industry Surveys report (see A12 in the Article List for the source). Read Executive Summary and Industry Snapshot
· Key Industry Drivers
· Industry Trends
· Porter’s Five Forces
· How the Industry Operates
· How to Analyze a Company in this Industry
· You only need to bullet list the three points and follow with a very
ief explanation under each point.
2. See Bell industry-report
· What is the company’s overall ESG rating and what does it mean relative to its industry? Any specific downside? (ESG Ratings Report)
· Are there any ESG controversies and if yes, are they significant enough that investors should be made aware of them? (ESG Controversies Report)
3. Study the Alberta Heritage Fund, including investment policy, strategy, and performance. Here is a news article FYI. https:
www.cbc.ca/news/canada/edmonton/alberta-heritage-trust-fund-review XXXXXXXXXX
· Provide one observation or critique of the investment policy. It can be a surprise to you or a constructive critique XXXXXXXXXXExplain very
iefly.
· Provide one piece of advice to the Minister of Finance with respect to the strategy or operation of the fund XXXXXXXXXXExplain
iefly.
Industry Report | Metals & Mining, Non-Precious
MSCI ESG Research LLC
Industry Report | Metals & Mining, Non-Precious | October 2020
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Industry Report | Metals & Mining, Non-Precious
October 2020
• Climate change presents both opportunities and risks for companies in this peer set1. Several
companies including Coal India, Glencore, Teck, and Anglo American still own substantial coal
eserves with a total of 111 billion tonnes of potential CO2 emissions (~17x total US emissions in
2018). Some companies are moving toward positions as key suppliers for new energy
technologies. For instance, BHP, South 32, Anglo American, Nornickel, and Sumitomo Metal
Mining are all producers of nickel, a metal with growing importance for renewable batteries.
• Failures in environmental protection, however, may undercut new energy technology opportunities.
Nornickel, long one of the most polluting companies with SOx emission intensities that were more
than 20 times higher than the industry average (as of 2019), had another setback in 2020 when it
spilled 21,000 tonnes of diesel oil in the Arctic. Russian regulators have estimated the costs to be
over USD 2 billion.
• Biodiversity and conservation are growing in importance to investors, as evidenced by the
formation in 2020 of the Task Force on Nature-related Financial Disclosures (TFND) and by
investor pressure pushing Rio Tinto’s CEO to step down as part of the fallout from the company’s
destruction of two historic indigenous caves in 2020. Mines in biodiversity hotspots may face
some of the highest risks of stakeholder pushback (see Exhibit 1).
• Exhibit 1: Map of Mines Owned by Industry Companies in Biodiversity Hotspots
1 The Metals & Mining, Non-Precious Industry peer set comprised 52 companies that were constituents of MSCI ACWI Index as of
August 27, 2020; Source: MSCI ESG Research LLC,.
Rating momentum
Issuer communication
Report content
Key issues modelling
Key issues snapshot
Corporate Governance
Toxic Emissions & Waste
Biodiversity & Land Use
Health & Safety
Labor Management
Water Stress
Ca
on Emissions
Co
uption & Instability
Appendices and scores
Author
Samuel Block | Vice President
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MSCI ESG Research LLC
Industry Report | Metals & Mining, Non-Precious | October 2020
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Key Issues Modelling:
Corporate Governance
WEIGHT: 15%
Good corporate governance practices
support the long-term sustainability of a
company and balance of the economic
and social interests of its different
stakeholder groups. As such, corporate
governance is a default key issue for all
companies, regardless of industry.
• We do not measure exposure on
this key issue
• Board
• Board independence, effectiveness,
leadership, skills & diversity; audit & pay
oversight;
• Pay figures & performance alignment, equity
plan dilution, severance & change of control;
• Ownership structure, one share one vote,
control mechanisms, shareholder rights,
director elections, takeover provisions;
• Accounting risk & events
•
Toxic Emissions & Waste
WEIGHT: 10- 18%
Metal mining and refining have high risks of
pollution and contamination. Massive spills,
tailings
eaches, leaks, acid mine drainage,
and heavy air emissions are high risk due to
the volumes of waste and inherent
properties. Continuous and vigilant
management is required to mitigate risks.
• Toxicity and volume of pollution by
usiness segment, asset-weighted
• Environmental management systems,
targets, auditing, pollution prevention
equipment
• Performance
comparison(weight
evenue): SOx, NOx,
PM, and tailings
• Pollution and land impact controversies
Health & Safety
WEIGHT: 12-14%
Mining is a hazardous activity with high rates of
fatalities and injuries. Causes of incidents include
explosions, fires, rock falls, entrapment,
landslides, and equipment-related accidents.
Occupational diseases such as silicosis or noise
induced hearing loss are also prevalent. H&S
incidents can lead to disruptions, liabilities, and
poor labor relations.
• Business segments with high injury rates,
such as underground coal mining
• Operations in areas with high injury rates
• H&S policies and implementation
mechanisms across the supply chain,
training, operations and contractors’
performance auditing, certification under
OHSAS 18001, setting up improvement
targets
• Injury and fatality rate trends
Biodiversity & Land Use
WEIGHT: 12-14%
Disruptions to local natural resources
and traditional ways of life increase risks
of community opposition and protests,
which escalates risks of losing a license
to operate. The losses to companies in
these scenarios can be substantial.
• Level of likely distu
ance from
usiness segments
• Location of operations and
associated conservation value
• Policies on environmental
preservation, community relations,
human rights, resource conservation
• Community and environmental
impact assessments – scope and
methodology, land rehabilitation
• Community and environmental
impact controversies
RISK EXPOSURE INDICATORS
RISK MANAGEMENT INDICATORS
*Weights are determined at the GICS sub-industry level. The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of MSCI and Standard & Poor’s. “Global
Industry Classification Standard (GICS®)” is a service mark of MSCI and Standard & Poor’s
MSCI ESG Research LLC
Industry Report | Metals & Mining, Non-Precious | October 2020
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Key Issues Modelling:
Labor Management
WEIGHT: 12-14%
Dissatisfied workers can be a drain on
the company’s value creation over the
medium to long term, risking weakened
productivity and raising risks of labor
strikes. With economic disruptions from
COVID-19, strong labor management is
important to maintain morale.
• Frequency of labor unrest in countries of
operation, asset-weighted
• Workforce size
• Layoffs
• •
• Employee compensation & benefits such
as training, education, and ESOPs
• Engagement surveys; percentage of
total workforce covered by collective
agreements
• Labor-related controversies
• •
Water Stress
WEIGHT: 12-14%
Water scarcity may increase costs to
secure water supply. Insufficient water
supply may lead to operational
disruptions, a risk escalating with
climate change.
• Water input of the business lines
• Operations located in high water
stress areas such as Australia
• Water optimization program in own
operation, risk assessment
• Programs with local communities
• Water reduction program with
agricultural suppliers
• Water efficiency performance
Co
uption & Instability
WEIGHT: 12-14%
Co
uption degrades civil society that
can lead to violence and human rights
violations. The fines for poor behavior
and disruptions to operations may have
high financial impact. Sustainable
development requires shared benefit
and protection of human rights
• Co
uption perception of countries
of operation
• Political instability and government
effectiveness
• Anti-Co
uption and Human Rights
Protection Policies and programs
• Programs to ensure compliance to
ethical standards
• Quality and extent of community
development programs
• Record of co
uption,
ibery,
human rights abuse
Ca
on Emissions
WEIGHT: 9-13%
Pressure to regulate ca
on emissions is
uilding with many in the industry even
supporting increased regulations in order
to limit uncertainty and reap further
enefits from energy efficiency.
• Ca
on emission intensity of
operations
• Strength of regulations or
commitments to reducing ca
on
emissions
•
•
• GHG reduction targets and
implementation mechanisms
• Process adjustments (i.e. waste
heat, top gas recovery), furnace
efficiency initiatives, alternative iron
making technology
• Performance: Ca
on emissions
intensity (tCO2/sales) and trend
RISK EXPOSURE INDICATORS
RISK MANAGEMENT INDICATORS
*Weights are determined at the GICS sub-industry level. The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of MSCI and Standard & Poor’s. “Global
Industry Classification Standard (GICS®)” is a service mark of MSCI and Standard & Poor’s
MSCI ESG Research LLC
Industry Report | Metals & Mining, Non-Precious | October 2020
MSCI.COM | PAGE 4 OF 27 © 2020 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.
Key Issues Snapshot
Corporate Governance: Performance Overview
We rate 9% of the MSCI ACWI Index Non-Precious Metals and Mining peer set as being worst in class for corporate governance relative