casemark/scoring-esg-factors

Scoring ESG Factors

Structures ESG scoring methodology across environmental, social, and governance pillars, producing a weighted composite score with pillar-level breakdowns suitable for investment screening, portfolio analytics, or sustainability reporting.

When To Use

• Scoring a company or asset against ESG criteria for investment due diligence
• Building or calibrating an ESG scoring framework for a fund or portfolio
• Comparing ESG performance across peer companies or sectors
• Preparing ESG score cards for LP reporting, impact disclosures, or regulatory filings
• Evaluating alignment with frameworks such as SASB, GRI, TCFD, UN PRI, or EU SFDR

Inputs To Gather

• Entity identifier: Company name, ticker, ISIN, or fund/asset name
• Sector and geography: GICS/ICB sector classification and domicile jurisdiction
• Data sources: Sustainability reports, CDP disclosures, proxy statements, third-party ESG data feeds (MSCI, Sustainalytics, ISS, Bloomberg)
• Framework selection: Which standard(s) to align scores with (SASB materiality map, GRI indicators, TCFD pillars, EU Taxonomy)
• Weighting scheme: Equal-weight across pillars, materiality-adjusted, or client-specified weights
• Scoring scale: Numeric range (e.g., 0–100), letter grades (AAA–CCC), or quintile buckets
• Reporting period: Fiscal year or trailing 12-month window for data

Workflow

1. Define scope and framework alignment

   • Confirm which ESG framework(s) govern the scoring methodology
   • Select material indicators per sector using the SASB materiality map or equivalent [VERIFY sector-specific materiality indicators against the latest SASB standards]
   • Establish the scoring scale, weighting scheme, and any override rules

2. Score the Environmental pillar

   • Assess: GHG emissions (Scope 1, 2, 3), carbon intensity, science-based targets, energy mix, water usage, waste/circularity, biodiversity impact
   • Score each indicator on the defined scale; note data gaps
   • Flag any self-reported metrics lacking third-party assurance

3. Score the Social pillar

   • Assess: workforce diversity and inclusion, employee health & safety (TRIR/DART), labor practices, supply chain standards, community impact, data privacy, product safety
   • Evaluate controversies: strikes, discrimination lawsuits, product recalls
   • Apply penalties or adjustments for unresolved material controversies

4. Score the Governance pillar

   • Assess: board independence and diversity, executive compensation alignment, audit committee effectiveness, shareholder rights, anti-corruption policies, related-party transactions, ESG oversight at board level
   • Review proxy voting history and any governance-related shareholder proposals
   • Check for regulatory enforcement actions or restatements

5. Calculate composite score

   • Apply pillar weights (e.g., E: 40%, S: 30%, G: 30% — or materiality-adjusted)
   • Compute weighted composite score
   • Assign overall rating on chosen scale
   • Run sensitivity analysis: show how composite changes if pillar weights shift ±10%

6. Benchmark and contextualize

   • Compare entity score against sector peers and index median
   • Identify top-quartile and bottom-quartile indicators driving the score
   • Highlight momentum (improving/declining trends over 2–3 reporting periods)

Output

Produce a structured ESG Score Card containing:

• Summary table: Entity name, sector, reporting period, composite score, pillar scores (E / S / G)
• Pillar detail sections: Each pillar with indicator-level scores, data sources, and flags
• Materiality heat map: Which indicators carry the most weight for this sector
• Controversy overlay: Material controversies with severity rating and score impact
• Peer comparison: Composite and pillar scores vs. sector peer group (table or rank)
• Sensitivity analysis: Composite score under alternative weighting scenarios
• Data quality notes: Indicators with missing data, self-reported only, or stale data marked [VERIFY]
• Methodology appendix: Framework version, weighting rationale, scoring scale definitions

Quality Checks

• Every indicator score traces to a named data source and reporting period — no unsourced scores
• Pillar weights sum to 100%; composite math is replicable from pillar scores
• Sector-specific material indicators are included; immaterial indicators for the sector are excluded or down-weighted
• Controversies are cross-referenced against at least two sources (news, regulatory filings, NGO reports)
• Scores distinguish between "zero/low risk" and "no data available" — missing data is never treated as a positive signal
• [VERIFY] Alignment claims against specific frameworks (SFDR Article 8/9, EU Taxonomy eligibility) are confirmed against current regulatory definitions
• Sensitivity analysis is included so users understand score stability under different assumptions