S&P DJI ESG Score

Methodology

May 2024
S&P Dow Jones Indices: Index Methodology
Table of Contents
Introduction 2
S&P DJI ESG Scores 2
S&P DJI ESG Score Methodology 4
S&P Global Corporate Sustainability Assessment and ESG Data Collection 4
Media and Stakeholder Analysis (MSA) 4
Controversies: MSA Overlay 4
Anchor Universe 5
Score Calculation 5
Missing Data Treatment 6
Normalization 7
Total Score and Normalized Total Score 7
Probability Score, Final Score, and S&P DJI ESG Score 8
S&P DJI ESG Score Maintenance 9
S&P DJI ESG Score Timeline 9
S&P DJI ESG Score Governance 10
S&P DJI ESG Score Methodology Committee 10
Disclaimer 11
Performance Disclosure/Back-Tested Data 11
Intellectual Property Notices/Disclaimer 12
ESG Indices Disclaimer 14

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 1

Introduction
S&P DJI ESG Scores1

S&P Dow Jones Indices (S&P DJI), in association with S&P Global Sustainable1 Research, together
provide Environmental, Social, and Governance (ESG) scores, (collectively known as S&P DJI ESG
Scores), which robustly measure companies’ overall performance relating to financially material ESG
factors. The S&P Global ESG scores dataset contains a total company-level ESG score for one financial
year and consists of individual environmental (E), social (S), and governance (G) dimension scores,
beneath which are (on average) more than 20 industry-specific criteria scores that can be used as signals
of ESG risks and repercussions.

Source: S&P Global Sustainable1 ESG Research. Chart is provided for illustrative purposes

S&P DJI ESG Scores are based on S&P Global ESG Scores, which are derived from the S&P Global
Corporate Sustainability Assessment (CSA). The S&P Global CSA -- developed and enhanced since
1999 -- is a questionnaire-based analysis process focused on ESG factors: with the aim of identifying the
extent to which companies are equipped to recognize and respond to emerging sustainability
opportunities and challenges in the global market. The S&P Global CSA emphasizes financially material
and industry-specific sustainability issues, both of which have a link to long-term financial performance.

Companies are evaluated based on a range of financially relevant sustainability criteria, covering
environmental, social, and governance dimensions. Companies’ responses to questions are
assigned values, which are then aggregated into criteria, dimension, and total ESG scores, using an
industry-specific weighting scheme.

S&P Global Sustainable1 Research pursues an integrated approach to analyzing sustainability

performance. An interdisciplinary team of analysts designs, monitors, and refines the annual S&P Global
CSA: with the purpose of generating additional insights into companies’ value-creating and risk-mitigating

1
For a summary of differences between S&P DJI ESG Scores and S&P Global ESG Scores, please see the FAQ.

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 2

ESG potential. The assessment centers on sustainability criteria that are financially relevant to corporate
performance, valuation, and security selection.

For the purposes of the S&P Global CSA, companies are assigned to industries defined by S&P Global
Sustainable1 Research, and the assessment is largely specific to each industry. S&P Global
Sustainable1 Research uses the Global Industry Classification Standard (GICS®) as its starting point for
determining industry classification. At the industry group and sector levels, the industries match the
standard GICS classifications, but some nonstandard aggregations occur at the industry level. The S&P
Global CSA has separate questionnaires for each of its 61 industries. These industry-specific
questionnaires, which also consist of general questions, allow for both comparison of ESG performance
across industries and accountability for significant differences in materiality of ESG criteria across
industries.

To mitigate biases in the data used to determine S&P Global ESG scores, and thereby provide a stronger
signal of material ESG factors, S&P DJI collaborated with S&P Global Sustainable1 Research to further
refine the score construction methodology: by examining how the underlying data points collected via the
S&P Global CSA are managed and scored. The result is the final S&P DJI ESG Score, which more
accurately depicts companies’ ESG conversance relative to other companies categorized in the same
industry.

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 3

S&P DJI ESG Score Methodology
S&P Global Corporate Sustainability Assessment and ESG Data Collection

Annually, S&P Global issues invitations to companies, providing the opportunity to respond directly to the
CSA. The S&P Global CSA uses proprietary industry classifications, derived from GICS, to analyze
companies using CSA industry-specific questionnaires. The questionnaires evaluate a range of financially
relevant sustainability criteria, including a Media & Stakeholder Analysis (MSA) component, which tracks
ongoing negative controversies to which companies are exposed. Analysis of the CSA results in an ESG
score for each company.

Companies that fail to respond to the CSA can still be assessed and receive ESG Scores. For these
companies, S&P Global Sustainable1 Research analysts make assessments using available data and
form scores based on public information about the company. Companies that do not respond to initial
invitations to complete CSAs have the opportunity to engage with S&P Global and review their scores at
a later stage.

For more information on the S&P Global CSA process, please refer to this website:
https://www.spglobal.com/esg/csa/.

Media and Stakeholder Analysis (MSA)

Although the S&P Global CSA is a tool used every year to collect fresh data on corporate sustainability
practices, the reported results of the CSA are supplemented with an MSA, which examines more recent
findings that have surfaced via the media and other channels. The MSA monitors a company’s
sustainability performance on an ongoing basis by assessing current controversies that could potentially
threaten a company’s reputation or financial health. The MSA is an additional overlay used to modify
criteria scores downward: based on evidence ranging from deliberate involvement in -- and
mismanagement of -- controversial incidents to negligent lapses in oversight.

For more information on the Media & Stakeholder Analysis component, please refer to this document:
https://portal.csa.spglobal.com/survey/documents/MSA_Methodology_Guidebook.pdf.

Controversies: MSA Overlay

S&P Global uses RepRisk, a leading data science company, for daily filtering, screening, and analysis of
ESG risk incidents and controversial activities affecting companies2.

S&P Global releases a Media and Stakeholder Analysis (MSA) which includes a range of issues such as
economic crime and corruption, fraud, illegal commercial practices, human rights issues, labor disputes,
workplace safety, catastrophic accidents, and environmental disasters.

For more information on RepRisk, please refer to www.reprisk.com.This service is not considered a direct
contribution to the index construction process.

2
RepRisk, an ESG data science company, leverages the combination of AI and machine learning with human intelligence to
systematically analyze public information in 23 languages and identify material ESG risks. With daily data updates across 100+
ESG risk factors, RepRisk provides consistent, timely, and actionable data for risk management and ESG integration across a
company’s operations, business relationships, and investments.

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 4

Anchor Universe

The S&P Global CSA is performed on a universe of companies on an annual basis. Included in this
universe are the constituents of the S&P Global LargeMidCap Index and S&P Global 1200 as of the
Monday after the third Friday in September. The combination of the constituents of these indices
determines the “anchor universe” used as a benchmark, or “reference universe,” during the normalization
processes of S&P DJI ESG Score calculation. The composition of the anchor universe remains constant
until the subsequent September, when ESG scores are calculated anew.

Score Calculation

During the CSA process, ESG indicators are calculated for each company covering various sustainability
topics. Within each industry, each indicator has a different weight in the total company-level ESG score
calculation, which is the weighted sum of all underlying indicators.

The equation for the S&P DJI ESG scores is as follows:

𝑁

T𝑖𝑡 = ∑ 𝑤𝐼(𝑖)𝑗𝑡 𝑐̃𝑖𝑗𝑡

𝑗=1

In the above equation, the notations represent the following:

𝑖 = 1, 2, ⋯, : denotes the companies in the anchor universe

𝑡 = 1, 2, ⋯, : denotes the assessment years
𝑗 = 1, 2, ⋯ , 𝑁: denotes the question level indicators
𝑐̃𝑖𝑗𝑡 = the adjusted indicator j for company i for year t. The adjustment is described below in the
normalization section, and is calculated based on the question level indicators 𝑐𝑖𝑗𝑡

𝑐𝑖𝑗𝑡 = the indicator j at question level for company i, i.e., the S&P Global ESG Score from the
CSA.

𝑤𝐼(𝑖)𝑗𝑡 = the weight of indicator j for company i on assessment year t, where the sum of all weights
for a specific company in a specific year is one:
𝑁

∑ 𝑤𝐼(𝑖)𝑗𝑡 = 1 , ∀ 𝑖, 𝑡.
𝑗=1

𝐼(𝑖) ∈ {1, … , 𝑛} = the industry of company i from the 𝑛 S&P Global industries.
Because of the ESG Methodology’s industry-specific approach (as defined by S&P Global Sustainable1
Research), the weights 𝑤𝐼(𝑖)𝑗𝑡 are dependent on a company’s particular S&P Global CSA Industry.
Therefore, the weights for each indicator j vary across industries. Some ESG indicators are used in all
industries, whereas some are industry-specific. If an indicator is irrelevant to a specific industry, the
corresponding industry weight is zero.
Weights are defined in the CSA based on S&P Global Sustainable1 Research’s review of the financial
materiality of each topic to the specific industry. The weightings of each topic, and consideration of
potentially new topics, are reviewed annually before the next CSA research cycle commences in early
spring.
For up-to-date information on S&P Global’s CSA Timeline, please refer to CSA Timeline | S&P Global
(spglobal.com).

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 5

Missing Data Treatment

The foundation for the S&P Global CSA is company information available in the public domain. Publicly
available information is drawn from financial filings, sustainability reports, corporate policies, investor
presentations, and other such unrestricted sources. Through direct engagement with S&P Global,
companies have the option of furnishing additional information to enhance their public disclosures.
Company-disclosed information is supported by the ongoing MSA process, which leverages data from
RepRisk and tracks companies’ exposure to, and subsequent management of, controversies.

Information gaps may exist as a result of additional disclosures being provided directly by some
companies through the CSA vs. data collected by S&P Global Sustainable1 Research analysts;
information gaps can also be attributed to differences in transparency found in corporate sustainability
reporting. To account for these disparities, a framework is used to quantify missing data in answers to
questions for which publicly available information is scarce. The public information used to assess
companies includes reports, websites, or other online content found in the public domain. This information
must be available to all stakeholders and valid at the time of the review of the CSA by S&P Global
Sustainable1 Research. Because portions of the CSA solicit company data not commonly accessible to
the public, the aforementioned framework is only applied to companies assessed by S&P Global
Sustainable1 Research outside of the invitational CSA process (i.e., companies that do not furnish input
and submit to assessments based solely on publicly available company information).

Generally, CSA questions are deemed mandatory if analysts are able to find information to answer such
questions for more than 50% of companies screened. Based on the fundamental importance of some
CSA questions, S&P Global Sustainable1 industry experts have discretion to categorize specific
questions as mandatory, regardless of the response rate. Conversely, S&P Global Sustainable1 industry
experts may deem CSA questions non-mandatory even if response rate for these questions is greater
than 50%.

During the 2017 and 2018 yearly CSA methodology reviews, changes were made, with an added
emphasis on questions requiring publicly available information from all companies, including participating
companies. The changes were prompted by expanding investor expectations with regard to corporate
transparency and fundamental public disclosure requirements for companies. As part of this review, the
“public” questions were added to the list of mandatory questions used in the CSA methodology. As a
result, the mandatory questions from 2018 onwards are based on both the 50% rule previously described,
as well as all “public” questions (if not already selected as part of the 50% rule). Another result of this
change is the S&P Global CSA’s minimum set of mandatory questions across all three Dimensions
(environmental, social, and governance), and, to preserve each dimension’s overall weight in each
industry, respondents are prohibited from marking any dimension “not applicable.”

If a mandatory question is left unanswered, a score of zero is assigned to that question, and the total
score for that company is -- calculated inclusive of the zero. Thus, companies are penalized for a lack of
reporting.

If a non-mandatory question is left unanswered, the question is disregarded in the total score calculation.
The weight of the indicator is redistributed among the weights of all other indicators.
Following the notation above, the process followed in the case of missing information is the following for
company i and question j at time t:
• If question j is mandatory, then 𝑐𝑖𝑗𝑡 = 0 and the total score is calculated as usual.
• If question j is not mandatory, then 𝑤𝐼(𝑖)𝑗𝑡 = 0 and the weights are redistributed among the
other questions in the same criteria/dimension pertaining to the company’s CSA industry. The
new weights for the other questions k in that criteria/dimension for company i are defined as
follows:

𝑤𝐼(𝑖)𝑘𝑡
𝑤′𝐼(𝑖)𝑘𝑡 = , ∀𝑖 and ∀𝑘 ≠ 𝑗 in that criteria/dimension
1 − 𝑤𝐼(𝑖)𝑗𝑡

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 6

Normalization

In addition to the missing data biases, there are other industry specific biases in the data gathered in the
CSA. Some questions are harder than others to score well on, resulting in a lower average score. Some
questions also have multiple outliers or present most of the scores concentrated in a small range of
values.

In order to eliminate these biases, S&P DJI normalizes the ESG indicators. The normalized figures
measure the difference between a specific value and the industry mean, accounting for the standard
deviation of values for the industry.

For example, in an industry where most companies score between 60 and 70, a company scoring 80 is
very good, and will receive a high score. In an industry where most of the companies score between 90
and 100, a score of 80 is quite low. This will lead to a lower score for the company compared to peers. If
95% of the companies in an industry score between 80 and 90, a company scoring 95 is far above the
peers. In an industry where the score range is between 50 and 90, then a score of 95 is further above.
The normalization is performed by a sigmoid-function on a standard z-score:

𝑐𝑖𝑗𝑡 − 𝑐̅𝐼(𝑖)𝑗𝑡
𝑐̃𝑖𝑗𝑡 = ∑ ( )
𝜎𝐼(𝑖)𝑗𝑡

where:
𝑐̅𝐼(𝑖)𝑗𝑡 = the average for indicator 𝑐𝑖𝑗𝑡 within the peer group I(i)
𝜎𝐼(𝑖)𝑗𝑡 = the corresponding standard deviation
2
∑(𝑥) = − 1 = the sigmoid function, which smooths the final indicator is in the range (−1,1)
1+𝑒 −𝑥

The average and the standard deviation are calculated only among the anchor universe within industries.
Additional companies which are assessed in following months use the same normalization parameters to
normalize the indicators. Consequently, their score will not modify the parameters.

Total Score and Normalized Total Score

The Total Score of a company is the weighted sum of the normalized indicators. The aggregation is done
on different levels (criteria level, dimension level, and ESG level), with each company receiving one score
for each criterion to which its industry is assigned: three, dimension level scores (Environmental Score,
Social Score, and Governance Score) and one Total ESG Score. The weights used in the sum depend on
the company’s industry and the aggregation level.

For example, the Total Score at the criteria level is calculated as a weighted sum of the scores of each
question in that criterion, while the dimension level Total Score is the weighted sum of scores of all the
criteria in that dimension. The Total ESG Score is the weighted sum of scores of all dimensions. The
Total Score is defined as:

T𝑖𝑡 = ∑ 𝑤𝐼(𝑖)𝑗𝑡 𝑐̃𝑖𝑗𝑡

𝑗=1

where:
𝑗 = 1, 2, ⋯ , 𝑁 are the set of indicators considered at the specific aggregation level.

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 7

Total Scores can still be biased, as some industries tend to have better Total Scores than others. As a
result, the Total Scores are also normalized. The Normalized Total Score for each company i at year t is
below:

𝑇𝑖𝑡 − 𝑇̅𝐼(𝑖)𝑡
𝑇̃𝑖𝑡 =
𝜎𝐼(𝑖)𝑡

where:
𝑇̅𝐼(𝑖)𝑡 = the average of the total scores for industry I to which company i belongs and assessment
year t,
𝜎𝐼(𝑖)𝑡 = the corresponding standard deviation

When Z-scores are calculated, the average and the standard deviation are calculated only among the
anchor universe within Industries. Additional companies which are assessed by S&P Global in the
following months use the same normalization parameters to normalize the indicators. Consequently, their
score will not modify the parameters.

Probability Score, Final Score, and S&P DJI ESG Score

The Normalized Total Score gives a measure of the performance of each company compared to its CSA
Industry peers. However, it is not indicative of how the company is positioned in percentile terms at GICS
sector or industry group levels. The Probability Score represents what percentage of an infinitely large
population each company would be better than. The Probability Score is defined as the normal
cumulative density function (𝐹) with mean 0 and standard deviation 1 calculated on the Normalized Total
Score for company i and assessment year t as defined in the equation below:

P𝑖𝑡 = 𝐹𝑡 (𝑇̃𝑖𝑡 )

Probability Scores are then multiplied by 100, resulting in a Final Score.

This Final Score is calculated on different levels: criteria level, dimension level, and ESG level.

For each company, the Final, company-level ESG Score is called the S&P DJI ESG Score.

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 8

S&P DJI ESG Score Maintenance
S&P DJI ESG Score Timeline

S&P DJI ESG Scores are updated on an annual basis in multiple batches. The initial batch, updated in
September using input data gathered from that year’s S&P Global CSA, includes the top 3,500 stocks in
the coverage universe by float-adjusted market capitalization. All remaining stocks in the coverage
universe are assessed between September and March of the following year, and their S&P DJI ESG
Scores are calculated on a monthly basis, including any updates as a result of MSA cases and other
score revisions. S&P DJI ESG Scores are only made available for use in index selection after the final
batch is reviewed and approved by the S&P DJI ESG Score Committee, effective at the start of May.

The mean and standard deviation used in the S&P DJI ESG Score standardization are derived from the
covered companies in the anchor universe in batch one annually in September. Companies in the anchor
universe that are scored as part of batch two are normalized using the mean and standard deviation from
the past September.

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 9

S&P DJI ESG Score Governance
S&P DJI ESG Score Methodology Committee

The S&P DJI ESG Score methodology and structure fall under the overall supervision of the S&P DJI
ESG Score Committee. All committee members are full-time professionals of both S&P DJI and S&P
Global Sustainable1 Research. The Committee meets regularly. At each meeting the Committee reviews
the scoring methodology to ensure the methodology is accurate, transparent, and complete in the
description of how S&P DJI ESG Scores are calculated. In addition, the Committee may revise the
methodology process if the committee determines a change is needed to better implement the intent of
the scoring process.

S&P Dow Jones Indices’ Committees reserve the right to make exceptions when applying the
methodology if the need arises. In any scenario where the treatment differs from the general rules stated
in this document or supplemental documents, clients will receive sufficient notice, whenever possible.

In addition to the daily governance of the S&P DJI ESG scores and maintenance of the S&P DJI ESG
Score methodology, at least once within any 12-month period, the Committee reviews the methodology to
ensure the methodology continues to achieve its purpose, and that the data and calculation process
remain effective.

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 10

Disclaimer
Performance Disclosure/Back-Tested Data

Where applicable, S&P Dow Jones Indices and its index-related affiliates (“S&P DJI”) defines various
dates to assist our clients by providing transparency. The First Value Date is the first day for which there
is a calculated value (either live or back-tested) for a given index. The Base Date is the date at which the
index is set to a fixed value for calculation purposes. The Launch Date designates the date when the
values of an index are first considered live: index values provided for any date or time period prior to the
index’s Launch Date are considered back-tested. S&P DJI defines the Launch Date as the date by which
the values of an index are known to have been released to the public, for example via the company’s
public website or its data feed to external parties. For Dow Jones-branded indices introduced prior to May
31, 2013, the Launch Date (which prior to May 31, 2013, was termed “Date of introduction”) is set at a
date upon which no further changes were permitted to be made to the index methodology, but that may
have been prior to the Index’s public release date.

Please refer to the methodology for the Index for more details about the index, including the manner in
which it is rebalanced, the timing of such rebalancing, criteria for additions and deletions, as well as all
index calculations.

Information presented prior to an index’s launch date is hypothetical back-tested performance, not actual
performance, and is based on the index methodology in effect on the launch date. However, when
creating back-tested history for periods of market anomalies or other periods that do not reflect the
general current market environment, index methodology rules may be relaxed to capture a large enough
universe of securities to simulate the target market the index is designed to measure or strategy the index
is designed to capture. For example, market capitalization and liquidity thresholds may be reduced. In
addition, forks have not been factored into the back-test data with respect to the S&P Cryptocurrency
Indices. For the S&P Cryptocurrency Top 5 & 10 Equal Weight Indices, the custody element of the
methodology was not considered; the back-test history is based on the index constituents that meet the
custody element as of the Launch Date. Also, the treatment of corporate actions in back-tested
performance may differ from treatment for live indices due to limitations in replicating index management
decisions. Back-tested performance reflects application of an index methodology and selection of index
constituents with the benefit of hindsight and knowledge of factors that may have positively affected its
performance, cannot account for all financial risk that may affect results and may be considered to reflect
survivor/look ahead bias. Actual returns may differ significantly from, and be lower than, back-tested
returns. Past performance is not an indication or guarantee of future results.

Typically, when S&P DJI creates back-tested index data, S&P DJI uses actual historical constituent-level
data (e.g., historical price, market capitalization, and corporate action data) in its calculations. As ESG
investing is still in early stages of development, certain datapoints used to calculate certain ESG indices
may not be available for the entire desired period of back-tested history. The same data availability issue
could be true for other indices as well. In cases when actual data is not available for all relevant historical
periods, S&P DJI may employ a process of using “Backward Data Assumption” (or pulling back) of ESG
data for the calculation of back-tested historical performance. “Backward Data Assumption” is a process
that applies the earliest actual live data point available for an index constituent company to all prior
historical instances in the index performance. For example, Backward Data Assumption inherently
assumes that companies currently not involved in a specific business activity (also known as “product
involvement”) were never involved historically and similarly also assumes that companies currently
involved in a specific business activity were involved historically too. The Backward Data Assumption
allows the hypothetical back-test to be extended over more historical years than would be feasible using
only actual data. For more information on “Backward Data Assumption” please refer to the FAQ. The
methodology and factsheets of any index that employs backward assumption in the back-tested history

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 11

will explicitly state so. The methodology will include an Appendix with a table setting forth the specific
data points and relevant time period for which backward projected data was used. Index returns shown
do not represent the results of actual trading of investable assets/securities. S&P DJI maintains the index
and calculates the index levels and performance shown or discussed but does not manage any assets.

Index returns do not reflect payment of any sales charges or fees an investor may pay to purchase the
securities underlying the Index or investment funds that are intended to track the performance of the
Index. The imposition of these fees and charges would cause actual and back-tested performance of the
securities/fund to be lower than the Index performance shown. As a simple example, if an index returned
10% on a US $100,000 investment for a 12-month period (or US $10,000) and an actual asset-based fee
of 1.5% was imposed at the end of the period on the investment plus accrued interest (or US $1,650), the
net return would be 8.35% (or US $8,350) for the year. Over a three-year period, an annual 1.5% fee
taken at year end with an assumed 10% return per year would result in a cumulative gross return of
33.10%, a total fee of US $5,375, and a cumulative net return of 27.2% (or US $27,200).

Intellectual Property Notices/Disclaimer

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S&P Dow Jones Indices: S&P DJI ESG Score Methodology 12

EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF
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Credit-related information and other analyses, including ratings, research and valuations are generally
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S&P DJI reserves the right to vary or discontinue any index at any time for regulatory or other reasons.
Various factors, including external factors beyond S&P DJI’s control might necessitate material changes
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In addition, S&P Dow Jones Indices provides a wide range of services to, or relating to, many
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may recommend, rate, include in model portfolios, evaluate, or otherwise address.

Some indices use the Global Industry Classification Standard (GICS®), which was developed by, and is
the exclusive property and a trademark of, S&P Global and MSCI. Neither MSCI, S&P DJI nor any other
party involved in making or compiling any GICS classifications makes any express or implied warranties
or representations with respect to such standard or classification (or the results to be obtained by the use

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thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy,
completeness, merchantability, or fitness for a particular purpose with respect to any of such standard or
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ESG Indices Disclaimer

S&P DJI provides indices that seek to select, exclude, and/or weight index constituents based on, but not
limited to, certain environmental, social or governance (ESG) indicators, or a combination of those
indicators, including the following: environmental indicators (including the efficient use of natural
resources, the production of waste, greenhouse gas emissions, or impact on biodiversity); social
indicators (such as, inequality and investment in human capital); governance indictors (such as sound
management structures, employee relations, remuneration of staff, tax compliance, respect for human
rights, anti-corruption and anti-bribery matters), specific sustainability or values-related company
involvement indicators (for example, production/distribution of controversial weapons, tobacco products,
or thermal coal), or controversies monitoring (including research of media outlets to identify companies
involved in ESG-related incidents).

S&P DJI ESG indices use ESG metrics and scores in the selection and/or weighting of index constituents.
ESG scores or ratings seek to measure or evaluate a company’s, or an asset’s, performance with respect
to environmental, social and corporate governance issues.

The ESG scores, ratings, and other data used in S&P DJI ESG indices is supplied directly or indirectly by
third parties (note these parties can be independent affiliates of S&P Global or unaffiliated entities) so an
S&P DJI ESG index’s ability to reflect ESG factors depends on these third parties’ data accuracy and
availability.

ESG scores, ratings, and other data may be reported (meaning that the data is provided as disclosed by
companies, or an asset, or as made publicly available), modelled (meaning that the data is derived using
a proprietary modelling process with only proxies used in the creation of the data), or reported and
modelled (meaning that the data is either a mix of reported and modelled data or is derived from the
vendor using reported data /information in a proprietary scoring or determination process).

ESG scores, ratings, and other data, whether from an external and/or internal source, is based on a
qualitative and judgmental assessment, especially in the absence of well-defined market standards, and
due to the existence of multiple approaches and methodologies to assess ESG factors and
considerations. An element of subjectivity and discretion is therefore inherent in any ESG score, rating, or
other data and different ESG scoring, rating, and/or data sources may use different ESG assessment or
estimation methodologies. Different persons (including ESG data ratings, or scoring providers, index
administrators or users) may arrive at different conclusions regarding the sustainability or impact of a
particular company, asset, or index.

Where an index uses ESG scores, ratings or other data supplied directly or indirectly by third parties, S&P
DJI does not accept responsibility for the accuracy of completeness of such ESG scores, ratings, or data.
No single clear, definitive test or framework (legal, regulatory, or otherwise) exists to determine ‘ESG’,
‘sustainable’, ‘good governance’, ‘no adverse environmental, social and/or other impacts’, or other
equivalently labelled objectives. In the absence of well-defined market standards and due to the existence
of multitude approaches, the exercise of judgment is necessary. Accordingly, different persons may
classify the same investment, product and/or strategy differently regarding ‘ESG’, ‘sustainable’, ‘good
governance’, ‘no adverse environmental, social and/or other impacts’, or other equivalently labelled

S&P Dow Jones Indices: S&P DJI ESG Score Methodology 14

objectives. Furthermore, the legal and/or market position on what constitutes an ‘ESG’, ‘sustainable’,
‘good governance’, ‘no adverse environmental, social and/or other impacts’, or other equivalently labelled
objectives may change over time, especially as further regulatory or industry rules and guidance are
issued and the ESG sustainable finance framework becomes more sophisticated.

Prospective users of an S&P DJI ESG Index are encouraged to read the relevant index methodology and
related disclosures carefully to determine whether the index is suitable for their potential use case or
investment objective.

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