GUIDE FOR ISSUERS 
MSCI ESG Ratings 
FAQs for Corporate 
Issuers 
MSCI ESG Research LLC 
October 2022

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1. 
Introduction ............................................................................................................... 5 
2. 
MSCI ESG Ratings Overview .................................................................................... 5 
3. 
Frequently Asked Questions .................................................................................... 6 
GENERAL ESG RATINGS MODEL QUESTIONS ........................................................... 6 
3.1 
How are peer sets constructed? ................................................................. 6 
3.2 
How are Key Issues determined? ............................................................... 7 
3.3 
How are Key Issue weights determined? ................................................... 7 
3.4 
My company has a variety of businesses/my company’s business is 
different from our GICS sub-industry peers. How do you account for business 
specificities at a Key Issue level? ............................................................................ 7 
3.5 
How is risk exposure determined? ............................................................. 8 
3.6 
How is the WAKI score converted to the IAS? ........................................... 8 
3.7 
Our company’s weighted average Key Issue score (WAKI) has changed, 
but the Industry-Adjusted Score (IAS) remains the same. Why? ........................... 9 
KEY-ISSUE SPECIFIC QUESTIONS ........................................................................... 10 
3.8 
We don’t report carbon emissions data. Where did the emissions data 
come from? ............................................................................................................ 10 
3.9 
What is included in the R&D expenses for the Opportunities in Clean Tech 
Key Issue? ............................................................................................................... 10 
3.10 
What is the best practice for frequency in employee engagement 
surveys? .................................................................................................................. 11 
3.11 
Our company believes that not having a labor union is an indication of 
strength in our labor management, but MSCI ESG Research appears to score us 
negatively for our low unionization rate. Why is this? ......................................... 11 
3.12 
How is the score for tax transparency determined?............................... 11 
GENERAL CORPORATE GOVERNANCE QUESTIONS .............................................. 11 
3.13 
What makes up the Corporate Governance assessment? ..................... 11 
3.14 
How is the Corporate Governance assessment scored? ....................... 12 
3.15 
When do corporate governance updates take place? ............................ 13 
CORPORATE GOVERNANCE QUESTIONS: BOARD ................................................. 13 
3.16 
What are MSCI ESG Research’s director overboarding standards? ...... 13 
Contents

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3.17 
What is the process and criteria used to determine the  “Flagged Directors 
on Board” key metric?? Does this flagging have an expiration date? ................. 14 
3.18 
What criteria is used to determine if a board is considered entrenched?.. 
 
. ................................................................................................................... 14 
3.19 
Our company has had a majority voting policy in place for several years. 
Why is the company still flagged for this? ........................................................... 14 
3.20 
What is the required threshold and relevant time period that results in the 
flagging of the “Significant Votes Against Directors” Key Metric? What is 
considered “significant”? ....................................................................................... 14 
3.21 
What is the process and criteria used to determine whether a director is 
considered an industry expert? ............................................................................. 15 
3.22 
What is the process and criteria used to determine whether a director is 
considered a financial expert? .............................................................................. 15 
3.23 
What is the process and criteria used to determine whether a director has 
risk management experience? .............................................................................. 15 
3.24 
What is the process used to determine the director or executive’s age? . . 
 
 .................................................................................................................... 16 
3.25 
Director independence – can you share more information for the criteria 
used in assessing non-executive director independence? Specifically: ............ 16 
3.26 
Why is our company flagged for “leadership concerns”? What is the issue 
of concern? ............................................................................................................. 17 
3.27 
Do two-tier boards score lower? What if this structure is mandated by 
local corporate law? ............................................................................................... 17 
3.28 
Why is the “Related-Party Transactions” key metric flagged for my 
company? ............................................................................................................... 17 
CORPORATE GOVERNANCE QUESTIONS: PAY ...................................................... 19 
3.29 
What criteria are used to establish peer groups, and how often are they 
re-evaluated? .......................................................................................................... 19 
3.30 
Does the “Severance vesting” key metric include unvested equity awards, 
still eligible for vesting upon a CEO's termination, that were awarded pursuant to 
double-trigger termination provisions? ................................................................ 19 
3.31 
"Significant votes against pay practices" - what is the required threshold 
and relevant time period that results in the flagging of this key metric? What is 
considered "significant"? ....................................................................................... 20

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3.32 
Flag for executive pay non-disclosure. We disclose aggregate pay data in 
our public reporting. Why does the report state that we fail to disclose this? .. 20 
3.33 
What does “fraudulent” mean under the clawback policy in the ESG 
Ratings governance assessment/Corporate Governance Theme? .................... 20 
3.34 
Can you explain the “Pay Linked to Sustainability” key metric? ............ 20 
CORPORATE GOVERNANCE QUESTIONS: OWNERSHIP & CONTROL .................. 21 
3.35 
We are fully compliant with local laws/requirements in this area and 
believe our governance systems are in-line with local market expectations. MSCI 
ESG Research's governance assessment does not appear to reflect this reality 
and flags us for various practices that we do not feel are relevant or correct. . 21 
3.36 
MSCI governance data appear to be out-of-date or erroneous, particularly 
on board/director information. What is the process used to update the 
company’s board composition? ............................................................................ 21 
3.37 
Our largest shareholder does not hold more than 50% of the voting rights. 
Why is there a flag for having a controlling shareholder? ................................... 22 
4. 
How to Provide Feedback ..................................................................................... 22 
4.1 
How can I review and submit feedback on my company’s data? .............. 22 
4.2 
When will my data be updated once I submit feedback? ........................... 22 
5. 
Ongoing Monitoring & Update Cycle ..................................................................... 23 
5.1 
When will my report be updated? ................................................................. 23 
Appendix 1: MSCI ESG Key Issue Hierarchy ................................................................. 24 
Appendix 2: Corporate Governance Key Metrics Definitions ....................................... 25 
Key Issue: Ownership & Control – Key Metrics ........................................................ 25 
Key Issue: Board – Key Metrics ................................................................................. 32 
Key Issue: Pay – Key Metrics .................................................................................... 41 
Key Issue: Accounting – Key Metrics ....................................................................... 47 
Appendix 3: Corporate Behavior Key Metrics Definitions ............................................ 49 
Contact us ....................................................................................................................... 50 
Notice and disclaimer .................................................................................................... 51

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1. 
Introduction 
This guidance document provides a summary overview of the ESG Ratings 
methodology used by MSCI ESG Research and answers frequently asked questions 
(FAQs) about MSCI ESG Ratings and the underlying environmental, social and 
governance data. For questions pertaining to your ESG Research reports or our 
process for interacting with companies, please refer to our general FAQ for corporate 
issuers. A library of additional resources can be found on the ESG Issuer 
Communications Portal. ESG Issuer Communications is the main point of contact for 
companies in the MSCI ESG Research coverage universe.  
2. 
MSCI ESG Ratings Overview 
MSCI ESG Ratings are designed to help institutional investors identify Environmental, 
Social and Governance (ESG) risks and opportunities. Companies are assessed and 
rated on a ‘AAA’ to ‘CCC’ scale according to their exposure to industry-specific ESG 
risks and their ability to manage those risks relative to ESG Rating industry peers. We 
rate over 10,000 companies (15,000 issuers, including subsidiaries) and more than 
680,000 equity and fixed income securities globally.1 Below are the four key steps in 
providing an ESG Rating. 
Step 1: Evaluate Corporate Governance 
MSCI ESG Ratings analysis begins with an examination of corporate governance, 
including director-level data and governance events. Governance includes six 
universal Key Issues in the Corporate Governance and Corporate Behavior themes, 
which are evaluated for every company in our coverage universe. 
Step 2: Identify Key Issues by Industry 
The model adopts a quantitative approach to objectively identify financially relevant 
Key Issues (risks and opportunities) by industry. Once Key Issues are identified at the 
industry level, they are assigned to each company within the industry. MSCI ESG 
Ratings identifies six to ten key ESG issues for companies in the industry that currently 
generate large environmental or social externalities; these are issues that may force 
some companies to absorb unanticipated costs associated with those externalities in 
the future. 
Step 3: Score Key Issues (0-10) 
We assess thousands of data points across a total of 35 ESG Key Issues, focusing on 
the intersection between a company’s core business and the industry issues that can 
 
1 As of June 2022, MSCI ESG Research LLC

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create significant risks and opportunities for the company. However, our model 
focuses on risk exposure and not just corporate disclosure. To understand whether a 
company is adequately managing a key ESG risk, it is essential to understand both 
what management strategies it has employed and how exposed it is to the relevant 
risk. The MSCI ESG Ratings model measures both: risk exposure and risk 
management. All 35 Key Issues are listed in Appendix 1. 
Step 4: Final ESG Rating (AAA-CCC) 
To arrive at a final letter rating, the weighted averages of the Key Issue Scores (WAKI) 
are aggregated and companies’ scores are normalized by their industries. After any 
overrides are factored in, each company’s final Industry-Adjusted Score (IAS) 
corresponds to a letter rating from industry leader (AAA) to laggard (CCC). These 
assessments of company performance are not absolute but are explicitly intended to 
be relative to the standards and performance of a company’s industry peers. 
Please see question 3.1 for more information on the construction of peer sets by 
industry. 
3. 
Frequently Asked Questions 
Below is a curated list of the most common questions related to ESG Ratings 
methodology that are received by ESG Issuer Communications from global 
companies.  
GENERAL ESG RATINGS MODEL QUESTIONS 
3.1 
How are peer sets constructed? 
ESG Rating Industries are based on the Global Industry Classification Standard 
(GICS®)2, where applicable, which we group to form peer sets in which companies 
face relatively similar Key Issues. As a result, each ESG Rating Industry can be mapped 
to a GICS sub-industry, a GICS Industry, or several GICS sub-industries. The exception 
is supranationals and development banks, which are not covered in the GICS 
framework. 
Companies are assigned to ESG Rating Industries based on the company’s GICS 
classification (if available) or based on MSCI ESG Research’s determination if no GICS 
classification is available (e.g. private or unlisted companies).  
 
2 GICS, the global industry classification standard jointly developed by MSCI Inc and S&P Global Market Intelligence.

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Please note that the peers listed in the ESG Ratings report are the five largest MSCI 
ACWI Index peers by market cap in the ESG Rating Industry. It is only a subset of the 
peer set, not the full list. 
3.2 
How are Key Issues determined? 
ESG Key Issues are determined at the GICS sub-industry level by a quantitative model 
based on intensity factors that allow comparability of different companies’ core 
businesses. All Key Issues and their relevance are reviewed by industry analysts 
annually and are discussed with clients as part of the annual client consultation 
process, where appropriate. Environmental and Social Key Issues vary between GICS 
sub-industries, but companies are evaluated on the six Governance Key Issues. ESG 
Key Issues are selected based on the extent to which the business activities of the 
companies in each industry generate large environmental, social or governance-
related externalities. 
3.3 
How are Key Issue weights determined? 
Once Environmental and Social Key Issues have been selected for a GICS sub-industry, 
we set the weights that determine each Key Issue’s contribution to the overall rating. 
The weightings consider both the 1) contribution of the GICS sub-industry, relative to 
all other GICS sub-industries, to the negative or positive impact on the environment or 
society as well as the 2) timeline within which we expect the risk or opportunity for 
companies in the industry to materialize. This is illustrated conceptually below 
(excerpt from the ESG Ratings Methodology).  
Figure 1. Framework for Setting Key Issue Weights 
  
3.4 
My company has a variety of businesses/my company’s 
business is different from our GICS sub-industry peers. How 
do you account for business specificities at a Key Issue level? 
In some cases, a company may face a unique set of environmental, social or 
governance Key Issues that is not shared by other companies in its industry. This can

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arise from several scenarios, ranging from companies with unique or diversified 
business models to subsets of companies within an industry that face a unique set of 
risks. In these cases, a company-specific Key Issue is added to the analysis and the 
weights on the remaining Key Issues are reduced proportionally. 
3.5 
How is risk exposure determined? 
Most Key Issues, although not all, consist of two components: risk exposure and risk 
management. This dichotomy allows the model to adjust the strength of management 
systems required to achieve a given Key Issue score: companies that face higher risk 
exposure must have stronger management practices in place to mitigate their risks.  
On the risk side, MSCI ESG Research has developed a proprietary risk exposure model. 
Our assessment of exposure is comprised of three different areas of analysis, 
depending on the Key Issue:  
Business Segment Risk Exposure – analyzes the breakdown of a company’s business 
segments in terms of revenues, assets, or operations. 
Geographic Segment Risk Exposure – analyzes the breakdown of a company’s 
geographic segments in terms of revenues, assets, or operations. 
Company-Level Risk Exposure factors – such as number of employees, size, reliance 
on government contracts, or reliance on outsourced production, among others. 
We utilize a variety of sources to determine the risk exposure level/scores for each of 
these areas.  
Using the Labor Management Key Issue as an example, imagine Company X’s risk 
exposure is determined to be high based on the type of business it is involved in 
(percentage of operations in business segments with high labor intensity, as 
measured by average sales per employee) and the locations of its operations 
(percentage of operations in countries with high likelihood of labor unrest, based on 
historic precedent). The Key Issue also looks at additional factors, such as workforce 
size and recent restructuring. The exposure side of this assessment does not consider 
Company X’s track record in avoiding labor disputes or work stoppages. This would 
be a performance measure evaluated under the risk management side of the Key Issue 
assessment as an indication of the efforts the company undertakes to address its risk 
exposure. 
3.6 
How is the WAKI score converted to the IAS? 
The Industry-Adjusted Score (IAS) is defined by the Weighted Average Key Issue score 
(WAKI) and normalized based on score ranges set by the companies in the ESG Rating

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Industry peer set. The following criteria is applied in setting the industry top and 
bottom benchmark values:  
• 
The top benchmark value (“industry maximum score”) falls between the 
95th and 100th percentile of modeled weighted average key issue scores 
(WAKIS) within an ESG Rating Industry.  
• 
The bottom benchmark value (“industry minimum score”) falls between the 
0th and 5th percentile of modeled weighted average key issue scores (WAKIS) 
within an ESG Rating Industry.  
Percentiles are calculated based on the full universe of companies with ESG Ratings 
(~10,000 companies).  
These assessments of company performance are not absolute but are explicitly 
intended to be relative to the standards and performance of a company’s ESG Rating 
Industry peers.3 
 
3.7 
Our company’s weighted average Key Issue score (WAKI) has 
changed, but the Industry-Adjusted Score (IAS) remains the 
same. Why? 
The Weighted Average Key Issue score is dynamic, reflecting changes in any 
underlying scores as of the “Last Update” date, while the Industry-Adjusted (relative) 
Score is relatively static and corresponds to the “Rating action date.” To reduce rating 
volatility, the IAS is not automatically recalculated unless a full analyst review has 
taken place. In cases where a company’s Weighted Average Key Issue Score is 
significantly impacted by these updates, i.e., if its Preliminary Industry Adjusted Score 
surpasses the midpoint of the next letter-rating range, it may be queued for a full 
review and potential re-rating.  
For more about score update timing, please refer to 3.1 in our general FAQ for 
corporate issuers. 
 
3 The ESG Issuer Communications team cannot discuss the assessments of a company’s peers. However, if you are 
interested in our peer benchmarking product, you may contact our Corporate Sales team: esg_corporate_sales@msci.com

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KEY-ISSUE SPECIFIC QUESTIONS 
3.8 
We don’t report carbon emissions data. Where did the 
emissions data come from? 
Where companies do not report this information, MSCI ESG Research provides 
estimates based on our proprietary carbon estimation methodology. If your company 
does report carbon emissions data publicly, we encourage you to submit this 
information through the ESG Issuer Communications Portal, including the source link 
to where this information can be found in the public domain. We will review and make 
the necessary updates, replacing the estimates where appropriate.  
You can provide this feedback on our Issuer Communications Portal under MY DATA 
→ Carbon. 
3.9 
What is included in the R&D expenses for the Opportunities in 
Clean Tech Key Issue? 
In general, we capture R&D expense data from the consolidated financial statements 
disclosed by the company in its annual report. If the company reports a breakdown of 
its R&D expenses that separates out Capitalized R&D from R&D expenses recognized 
as costs, we exclude the capitalized amount and report the remaining figure. We do 
not consider R&D capitalized cost as part of the Research and Development expenses 
at this point in time. Capitalized cost is considered to be an asset, and thus not 
included in R&D expense. 
Furthermore, we report the figures disclosed by the company in its annual report for 
that specific fiscal year. If the company restated its expenses based on any changes 
in accounting principles, we would not restate historical figures since it would not 
accurately reflect the amount reported by the company in the previous years. Likewise, 
if the restatement was due to a corporate event (e.g., an acquisition or spin-off), we 
would not restate historical figures, since it would not accurately reflect the amount 
of R&D expenses that the company had at the time. 
We use USD as the main currency. If the company reports R&D expenses in local 
currency, this is converted to USD using the exchange rate date as of the fiscal year 
end date of the company. Any discrepancies between the numbers might be caused 
by foreign exchange rate differences. We do not typically update minor discrepancies 
on an ad-hoc basis.

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3.10 What is the best practice for frequency in employee 
engagement surveys? 
General best practice in terms of frequency of employee surveys is annual. Per our 
scoring, a company that conducts engagement surveys at any other regular frequency 
(e.g., every two years) will typically be assessed as “sporadically.” While we are always 
looking to refine our indicators, this is currently the standardized scoring level. 
3.11 Our company believes that not having a labor union is an 
indication of strength in our labor management, but MSCI ESG 
Research appears to score us negatively for our low 
unionization rate. Why is this? 
MSCI ESG Research does not have an official position on merits of unionization. 
However, for our Labor Management Key Issue, we use unionization rate as a proxy 
for the presence of basic employee rights and benefits. Therefore, in this context, a 
higher unionization rate would score more positively for this indicator. Having said 
that, a company with a low or no unionization rate could still receive a higher 
management score if it demonstrated strong performance on all other metrics. 
3.12 How is the score for tax transparency determined? 
Companies are evaluated on their estimated corporate tax gap (i.e., gap between 
Estimated Corporate Effective Tax Rate and Estimated Statutory Tax Rate), level of 
revenue-reporting transparency, and their involvement in tax-related allegations and 
controversies. 
A company’s estimated tax gap will impact the Corporate Behavior Theme Score and 
Governance Pillar Score when there is an ongoing tax controversy. The maximum 
score deduction from the Corporate Behavior Theme Score is 2.0. A maximum 
deduction will occur when the tax gap is greater than 10 percentage points. 
GENERAL CORPORATE GOVERNANCE QUESTIONS 
3.13 What makes up the Corporate Governance assessment? 
As mentioned in the ‘MSCI ESG Ratings Overview’ above, companies are assessed on 
governance issues. MSCI ESG Ratings provide corporate governance research and 
data on approximately 10,000 public companies worldwide.4 The assessment model 
 
4 As of March 2022, MSCI ESG Research LLC

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is based on a set of unique metrics organized into four individual scoring Key Issues 
(Ownership & Control, Board, Pay and Accounting). 
• 
Ownership & Control: The ownership structure of an issuer represents one of 
the most fundamental dimensions of governance risk. A clear understanding 
of the relative strengths and weaknesses of the various ownership models 
and control structures presented by issuers can help identify the most 
relevant governance concerns faced by investors. The most common 
principal-agent concerns are applicable primarily to widely held companies 
with highly dispersed ownership. For closely held companies, however, 
governance risk is more often a function of the identity and degree of control 
wielded by the company’s dominant shareholders. 
• 
Board: The Board Key Issue is scored primarily based on the board’s 
independence from management, and on various measures of board skills 
and diversity, and overall board effectiveness. Negative impact governance-
related events such as delisting threats or bankruptcies, securities litigation 
or regulatory investigations, or malfeasance or fraud involving individual 
executives or directors, are also included in this section. While not generally 
applicable to most companies, and thus not assigned a separate component 
ranking, such event-based metrics can have a significant impact on a 
company’s overall governance scoring. 
• 
Pay: CEO and other executive pay practices are evaluated for companies, 
including, where disclosed, specific pay figures. Pay is scored primarily 
based on how well incentives have been linked to performance, and on levels 
of pay relative to peers, as well as specific key features of a company’s 
overall pay plan design. 
• 
Accounting: The Accounting Key Issue is focused on the audit firm and their 
independence and tenure, the content of the auditor report, as well as certain 
events which may raise concerns as to the quality of the accounting and 
audit processes such as restatements, accounting investigations late filings. 
Goodwill writedowns and other special charges are also assessed here, as a 
management quality factor. 
You may see Appendix 2 for additional details and key metric definitions. 
3.14 How is the Corporate Governance assessment scored? 
The Corporate Governance score is an absolute assessment of a company’s 
governance strength or weakness, using a 0-10 point scoring scale. Each company 
starts with a “perfect 10” overall score, to which scoring deductions are applied based

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on the assessment of a proprietary set of individual key metrics, which are organized 
into four Key Issues (Ownership & Control, Board, Pay and Accounting). 
Similarly, calculated 0-10 scores are also provided for each of these four Key Issues, 
but these scores are calculated independently of the overall Corporate Governance 
Score, which is based on the total number of scoring deductions for all four Key Issues, 
as shown in the scoring deductions table provided in each company’s report. 
The corporate governance scoring process is fully automated and applied consistently 
to companies. Input data is collected and reviewed on an ongoing basis throughout 
the year, automatically updating the key metrics that drive our overall assessments 
and scores. Data flows into the model are subject to different timings, depending on 
the nature of the data, but are generally well-aligned with corporate disclosure and 
news. 
You may see Appendix 2 in this document for additional details. 
3.15 When do corporate governance updates take place? 
Corporate governance data updates are made independently from Environmental and 
Social data updates. At the time of the ESG Ratings Review, the ratings analyst team 
references whatever governance data is available at that time. Any subsequent 
changes or updates will flow to the respective assessment(s). Issuers may also 
provide feedback at any point throughout the year via the Issuer Communications 
Portal. 
CORPORATE GOVERNANCE QUESTIONS: BOARD 
3.16 What are MSCI ESG Research’s director overboarding 
standards? 
MSCI ESG Research’s criteria references global best practices and may be stricter 
than local regulatory requirements or a company’s own definitions. Per MSCI ESG 
Research methodology, there are two standards: 
An executive director is considered overboarded if they serve on a total of three or 
more boards (including the rated company) of companies included in the MSCI ESG 
Research coverage universe, including both equity and debt issuers. 
A non-executive director is considered overboarded if they serve on a total of four or 
more boards (including the rated company) of companies included in the MSCI ESG 
Research coverage universe, including both equity and debt issuers.

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3.17 What is the process and criteria used to determine the  
“Flagged Directors on Board” key metric?? Does this flagging 
have an expiration date? 
The Flagged Directors on Board Key Metric identifies directors whose prior board 
service includes a company that was involved in a corporate bankruptcy or other major 
loss of shareholder value. Directors are only flagged if their board service began at 
least one full year prior to the triggering event. As the flagging of a director is intended 
to be focused on a directors’ track record, it does not have an expiration date. 
3.18 What criteria is used to determine if a board is considered 
entrenched? 
There are four different scenarios which trigger this key metric. 
• 
More than 35% of the board has a tenure greater than 15 years; 
• 
More than 22% of the board has a tenure greater than 15 years and more than 
15% of the directors are over 70; 
• 
There are more than four directors whose tenure is greater than 15 years; 
• 
There are more than four directors who are over 70. 
3.19 Our company has had a majority voting policy in place for 
several years. Why is the company still flagged for this? 
MSCI ESG Research has a strict standard for majority voting policies in director 
elections that flag plurality, plurality plus resignation, and majority plus resignation 
standards as falling short of MSCI’s minimum standards. MSCI criteria requires that a 
director who does not receive a majority of votes cast depart from the board 
immediately. 
3.20 What is the required threshold and relevant time period that 
results in the flagging of the “Significant Votes Against 
Directors” Key Metric? What is considered “significant”? 
This key metric is flagged if one or more directors receive a “negative” or “withheld” 
shareholder vote equal to or in excess of 10% at the most recently reported election 
by a company (or in certain markets on the discharge of the directors). A “negative 
vote” includes against, withhold or abstain votes.

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3.21 What is the process and criteria used to determine whether a 
director is considered an industry expert? 
In general, a board member’s biography must disclose that they currently or previously 
served as an executive at a company with the same Global Industry Classification 
Standard (GICS) industry code as the one they serve on (this may at be the company 
itself). 
3.22 What is the process and criteria used to determine whether a 
director is considered a financial expert? 
In general, a board member’s biography must disclose that they have financial or 
accounting expertise. MSCI ESG Research looks for designations such as CFO, CPA, 
etc., and also reviews the director’s previous and current positions and duties. 
3.23 What is the process and criteria used to determine whether a 
director has risk management experience? 
In general, a board’s member prior experience must include a specific reference to risk 
management in the director’s published bio. See general criteria below: 
• 
Risk Officer/Manager - Public or private company or a division/subsidiary of 
such firm 
• 
Executive with Risk Management – Executive (such as CFO, Managing 
Director) tasked with specific risk management duties  
• 
Insurance Company CEO 
• 
Risk Consultant - Principal, executive or partner or consultant in a risk 
consulting firm or practice 
• 
Public Sector Risk Management 
• 
Risk Academic 
• 
Executive Level Risk Committee Member - this must not be a board-level 
committee, but rather a committee that operationally manages risks at the 
executive level  
Professions Not Acceptable as Sole Consideration: 
• 
CEO or CFO, in general 
• 
Membership on a board-level risk committee or risk subcommittee of another 
company

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• 
Membership on an advisory risk committee of a profit or non-profit 
organization 
• 
Senior military positions and senior political positions 
• 
Professorships in business, finance, or economics 
• 
Director described as having risk expertise or who is described as a ‘risk 
consultant’ 
• 
Executive-level position in accounting 
3.24 What is the process used to determine the director or 
executive’s age? 
The director or executive’s age is based on the date of birth as per company 
disclosure. If only the birth year is provided, the default birth date is the first of January. 
If only the individual’s age is disclosed, the document’s publication year is used to 
determine and assign an estimated year of birth. 
3.25 Director independence – can you share more information for 
the criteria used in assessing non-executive director 
independence? Specifically: 
• 
What are your criteria in assessing the independence of non-executive directors 
who have been appointed by specific shareholders? 
Non-executive directors who sit on the board as shareholder appointees are 
marked as not Independent of other interests (special shareholder 
representatives). These individuals remain independent of management 
unless the shareholder being represented holds 30% or more voting rights in 
the company and the non-executive director has either effective control of or 
is an executive of that same majority shareholder. 
• 
What are the criteria used in assessing the independence of former executives? 
A “cooling-off” period is not applied to former executives. They remain 
permanently non-independent, per MSCI ESG Research methodology. 
• 
What are the criteria used for assessing directors as non-independent due to 
issuer assessment? 
This criteria is used for cases when the company classifies the director as non-
independent of management’s interests but does not disclose a specific 
reason for such classification.

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• 
How are employee representatives assessed for independence? 
Employee representatives are assessed as Independent of Management but 
not Independent of Other Interests. In the assessment of key metrics relating 
to board and committee independence they are therefore considered to be 
independent.  
• 
Which key metric apply both independence assessments (ie of management 
and of other interests? 
Given the nature of the Nomination Committee, Chairman and Lead 
Independent Director roles, the associated Key Metrics are assessed using 
both Independent of Management and Independent of Other Interests criteria. 
3.26 Why is our company flagged for “leadership concerns”? What 
is the issue of concern? 
This key metric is flagged when there are concerns that a leader has extraordinary 
influence over a board. This includes situations where, for example (but this is not an 
exhaustive list): 
• 
An Executive Chairman serves alongside a CEO, 
• 
The Chairman is a former CEO or CFO, 
• 
The Founder remains on the board but not as Chair or CEO, or 
• 
There are unregistered directors providing leadership direction. 
3.27 Do two-tier boards score lower? What if this structure is 
mandated by local corporate law? 
Our methodology does not penalize two-tier boards, which are common in Germany, 
Austria, Netherlands, Poland and France. Our scoring methodology is explicitly 
designed to provide a fair comparison between companies regardless of board 
structure. 
 
3.28 Why is the “Related-Party Transactions” key metric flagged for 
my company? 
The Related-Party Transaction (RPT) Key Metric is assessed using a common 
framework. This framework was developed by MSCI ESG Research based on a review

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of research published by the OECD and with reference to the International Financial 
Reporting Standards. 
Related Parties may include:  
• 
Directors and Officers, and their family members;  
• 
Any entities that control or are under common control with the company, 
including executives of such entities and members of their families;  
• 
Significant shareholders (10% or more), including members of their families; 
and  
• 
Management companies, managing partners and other entities to whom the 
management or operations of the company have been delegated.  
• 
Non-wholly owned subsidiaries may be considered Related Parties if the other 
shareholder in the subsidiary is one of the parties noted in the list above.  
 
Related-party transactions can vary widely by type, reflecting the variety of 
transactions generally undertaken by companies, and may be either one-off or 
recurring in nature. Transaction Types may include:  
• 
Revenue; 
• 
Expense;  
• 
Sale or Purchase of Assets;  
• 
Loan to / from company; and  
• 
Loan guarantee.  
Any loans to executive directors, other senior executives, company founders or their 
family members will be regarded as related-party transactions in all cases. Loans to 
other non-executive directors by companies will be regarded as related-party 
transactions, except in cases where the company is operating in the financial sector 
in the normal course of business. Transactions between a company and non-executive 
director that exceed the thresholds under our MSCI ESG Ratings methodology will 
result in the director being classified as not Independent of Management and the 
transactions will be regarded as related-party transactions.

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CORPORATE GOVERNANCE QUESTIONS: PAY 
3.29 What criteria are used to establish peer groups, and how often 
are they re-evaluated? 
The Pay Peer Groups are utilized in certain key metrics for comparative and 
benchmarking purposes. These groupings are regenerated every quarter, and 
companies are assigned to a Pay Peer Group based on three criteria:  
1. Industry – determined based on the company’s GICS industry classification; 
2. Market Capitalization – based on the size references in the below table, which are 
updated annually; and 
 
3. Peer Market – divides companies into one of three regional peers on the basis of 
their Home Market designation:  
• 
Developed Americas; 
• 
Other Developed Markets; and  
• 
Emerging Markets. 
3.30 Does the “Severance vesting” key metric include unvested 
equity awards, still eligible for vesting upon a CEO's 
termination, that were awarded pursuant to double-trigger 
termination provisions? 
Yes – this key metric is flagged if upon the termination of the CEO’s employment there 
are unvested equity awards which would then become eligible for vesting.

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3.31 "Significant votes against pay practices" - what is the required 
threshold and relevant time period that results in the flagging 
of this key metric? What is considered "significant"? 
This key metric is flagged if the company’s pay policies and/or practices received a 
“negative” or “withheld” shareholder vote equal to or in excess of 10% at the 
company’s most recently reported election. A “negative vote” includes against, 
withhold or abstain votes. 
3.32 Flag for executive pay non-disclosure. We disclose aggregate 
pay data in our public reporting. Why does the report state that 
we fail to disclose this? 
Per MSCI ESG Research’s methodology, we are seeking granular disclosure of 
individual pay components, including: salary, short-term incentives, long-term 
incentives, pensions, other miscellaneous benefits such as perquisites and any one-
off payments (e.g. retention awards), for the company’s CEO, and for each executive 
member of the board of directors. The reporting of aggregate totals alone does not 
meet this standard. 
3.33 What does “fraudulent” mean under the clawback policy in the 
ESG Ratings governance assessment/Corporate Governance 
Theme? 
With respect to clawback types, pursuant to MSCI’s methodology, “fraudulent” is taken 
to mean that the clawback policy can only be applied to individuals who were found 
responsible for the actions that resulted in a material restatement. Performance-
linked clawback policies are considered to be stronger, per MSCI’s standards because 
they give the board the discretion needed to recoup awards given to an individual 
regardless of whether they were personally involved. 
3.34 Can you explain the “Pay Linked to Sustainability” key metric? 
This key metric is based on a review of the company’s variable pay performance 
metrics for the inclusion of one or more sustainability-linked performance metrics. In 
general, the analyst team looks for publicly reported evidence of one of the 
performance measures disclosed in the compensation report for either the annual or 
long-term incentive plans being a metric that links directly to sustainability 
performance.

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CORPORATE GOVERNANCE QUESTIONS: OWNERSHIP & 
CONTROL 
3.35 We are fully compliant with local laws/requirements in this 
area and believe our governance systems are in-line with local 
market expectations. MSCI ESG Research's governance 
assessment does not appear to reflect this reality and flags us 
for various practices that we do not feel are relevant or correct. 
Our corporate governance assessments are designed to highlight governance risks 
that investors are potentially exposed to when they invest. Our scoring methodology 
is more than a simple, “check-the-box” compliance exercise, and is intended to be 
globally applied, as many large institutional investor portfolios hold large numbers of 
regionally- and industry-diverse companies. It is intended to identify outliers on various 
governance risk factors that go beyond company practices alone, and may even fall 
outside of the company’s direct control. For example, this might include:  
• 
Market-specific ownership structure limitations (not something the company 
can control), 
• 
The quality of local regulations (not something the company can control), 
• 
Peer performance, as part of our pay assessments (not something the 
company can necessarily control), and 
• 
The track record of individuals on the board (including their performance at 
other companies). 
Please note that the above examples are for illustrative purposes and should not be 
considered an exhaustive list. 
3.36 MSCI governance data appear to be out-of-date or erroneous, 
particularly on board/director information. What is the process 
used to update the company’s board composition? 
MSCI ESG Research may conduct multiple governance data updates throughout the 
year, including: 1) an annual review which is generally published before the company’s 
annual general meeting; 2) voting result updates that reflect post-AGM director 
changes (typically updated in the second half of the calendar year); and 3) ad-hoc 
board updates to reflect board movements that are reported by third-party news 
sources and company filings, (in the US these would be 8-Ks (Items 5.02 and 5.07)) 
that are automatically fed to our queue for review.

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3.37 Our largest shareholder does not hold more than 50% of the 
voting rights. Why is there a flag for having a controlling 
shareholder? 
Pursuant to MSCI ESG Research’s methodology, the voting rights threshold to be 
considered a controlling shareholder is 30% or more. There is, however, no scoring 
deduction for the Controlling Shareholder Key Metric at either level. 
4. 
How to Provide Feedback 
4.1 
How can I review and submit feedback on my company’s data? 
You may review and submit feedback on your company’s data at any point throughout 
the year. Once you are logged into MSCI ESG Research’s dedicated online Issuer 
Communications Portal, you can find underlying datapoints located under the MY 
DATA tab.  
You can submit feedback by clicking the pencil icon next to the data 
fields. This will open the data verification pop-up box, where you can 
provide input on values, share your comments, and indicate 
associated public sources. 
If you do not yet have an Issuer Communications Portal account, please email ESG 
Issuer Communications (esgissuercomm@msci.com).  
4.2 
When will my data be updated once I submit feedback? 
The feedback review process follows a standard data review cycle. Any new data or 
feedback submitted will be reviewed by analysts in accordance with MSCI ESG 
Research methodology. The turnaround time for review may fluctuate throughout the 
year depending on the volume of feedback that analysts receive. Please visit the Issuer 
Communications Portal for the current average estimated review time forfeedback 
submitted.  
 
Once you have received notification that any accepted comments have been 
published, please note that some MSCI ESG & Climate assessments rely on 
calculations and models that update on an independent cycle. Data updates in the 
Issuer Communications Portal may not immediately result in an update to final 
assessments. We greatly appreciate your patience as we work through large volumes 
of data submitted daily.

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5. 
Ongoing Monitoring & Update Cycle 
5.1 
When will my report be updated? 
Companies are monitored on a systematic and ongoing basis, including daily 
monitoring of controversies and governance events. New information is reflected in 
reports on a weekly basis and significant changes to scores trigger a full analyst 
review and re-rating. 
Companies also receive an in-depth review, typically annually. There are times when 
MSCI ESG Research may extend the rating review period beyond twelve months from 
the prior ESG Rating Action Date, for example: 
- To reduce rating volatility following major methodology changes and to allow for 
more complex analyst reviews,  
- To incorporate new issuer feedback,  
- To accommodate more complex reviews, 
- To align the timing of ratings updated to company reporting cycles.

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Appendix 1: MSCI ESG Key Issue Hierarchy

MSCI ESG Ratings FAQs for Issuers |
Appendix 2: Corporate Governance Key Metrics 
Definitions 
Key Issue: Ownership & Control – Key Metrics 
Key Issue 
Category 
Key Metric 
Definition 
Scope 
Ownership 
& Control 
Ownership 
Structure 
Controlling 
Shareholder 
Does any shareholder or shareholder bloc control more than 
30% of the voting shares, or is able to elect more than 50% of 
the company’s board? 
Flagged if yes. 
Where the Governance Reference Entity is not an equity issuer, 
this evaluation is based on the ultimate owner. 
All 
issuers 
Ownership 
& Control 
Ownership 
Structure 
Controlling 
Shareholder 
Concerns 
Does the company’s ownership structure or governance 
arrangements indicate special concerns for minority public 
shareholders?  
Flagged if yes. 
This can be triggered by the presence of one or more criteria, 
including where: 
• 
Any of the following Key Metrics (KM) are also flagged: 
o 
No Independent Directors (KM_009); Leadership 
Concerns (KM 011); Undersized Board (KM 035); 
Cross Shareholdings (KM_066); or Poison Pill 
(KM_073) 
• 
Or any of the following apply: 
o 
The issuer has issued Golden Shares;  
o 
The issuer is controlled via a stock pyramid; 
o 
The issuer incorporated as a Partnership Limited by 
Shares; or 
o 
The largest shareholder holds more than 75% of the 
total voting rights. 
All 
issuers 
Ownership 
& Control 
Ownership 
Structure 
Dispersed 
Ownership 
Concerns  
Is the company so widely held that there are no principal 
shareholders or other large bloc holders? 
Flagged if yes.  
This test eliminates family or founder firms, companies with a 
10% or greater principal shareholder, and companies where the 
aggregate 5%+ holdings exceed 30%.  
This metric is intended to capture companies where there is a 
disconnect between ownership and management. In the 
absence of the constraining influence of informed and involved 
bloc holders, there is a greater risk of the CEO and board 
asserting a degree of power and authority more commonly 
associated with controlled companies. 
All 
issuers

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Key Issue 
Category 
Key Metric 
Definition 
Scope 
Ownership 
& Control 
Ownership 
Structure 
Cross-
Shareholdings 
Is the company involved in a series of cross-shareholdings with 
other (related or unrelated) companies? 
Flagged if yes.  
This metric is intended to capture cross-shareholdings intended 
for non-investment purposes. Cross-shareholdings for the 
purpose of this Key Metric include direct, indirect (via subsidiary 
companies), circular or more complex cross-shareholding 
networks. 
All 
issuers 
Ownership 
& Control 
Ownership 
Structure 
Tracking 
Stock 
Is the company being traded as a tracking stock or similar 
trading-based entity?  
Flagged if yes.  
Tracking stocks are treated as an indicator of potential 
governance weakness. 
All 
issuers 
Ownership 
& Control 
Ownership 
Structure 
Variable 
Interest 
Entities 
Does at least 5% of the Group's revenues come from VIEs where 
the company has no/minimal voting stake? 
Flagged if yes. 
A variable interest entity (VIE) is a special purpose vehicle in 
which the issuer holds a controlling interest in an operating 
company that is not based on a majority of the voting rights. Via 
structured contracts, the issuer is typically the primary 
beneficiary of the VIE. 
All 
issuers 
Ownership 
& Control 
One Share, 
One Vote 
Multiple 
Equity Classes 
with Different 
Voting Rights 
Has the company issued more than one class of equity shares 
and do these classes carry unequal voting rights? 
Flagged if yes.  
The inequality in the voting rights may be manifested via 
different votes per share, different votes per unit of nominal 
value or through the ability to vote only on certain matters, or 
on the election of certain directors, or grant special rights (such 
as the exclusive right of nomination of directors). 
When a share class termed as “preference,” “preferred” or 
similar, is classified in the annual accounts under accounting 
standards as an equity security rather than a liability, then it will 
be considered as an equity class for the purposes of this metric. 
Share classes that do not carry special rights but have unequal 
voting rights may not be flagged if the number issued is not 
material. 
All 
issuers 
Ownership 
& Control 
One Share 
One Vote 
Single Equity 
Class with 
Different 
Voting Rights 
Does the capital structure include a single share class where the 
voting rights vary based on the duration of ownership (or extra 
voting rights are granted via “loyalty shares”)?  
Flagged if yes.  
In some literature these may also be referred to as tenured 
voting shares. 
All 
issuers

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Key Issue 
Category 
Key Metric 
Definition 
Scope 
Ownership 
& Control 
One Share, 
One Vote 
Voting Rights 
Limits Shares 
Held 
Are voting rights capped at a certain percentage, no matter how 
many shares the investor owns?  
Flagged if yes.  
This may refer to either an “ownership ceiling” or a “voting 
rights ceiling,” in which ownership and/or voting rights limits are 
applied to some or all shareholders. 
This metric is derived from a company’s corporate charter and 
bylaws, or on the basis of applicable corporate regulation. 
All 
issuers 
Ownership 
& Control 
One Share, 
One Vote 
Voting Rights 
Limits 
Residency 
Are voting rights different for foreign or non-resident 
shareholders?  
Flagged if yes.  
This provision sets limits on the ability of foreign or non-resident 
parties to vote on corporate matters, regardless of the number 
or type of shares held, and includes cases in which foreign 
shareholders are prohibited from voting. This may refer either to 
an aggregate limit on shares or voting rights held by 
shareholders of a stated nationality or to a limit on holdings of 
one shareholder based on that shareholder’s nationality. 
This metric is derived from a company’s corporate charter and 
bylaws, or on the basis of applicable corporate regulation. 
All 
issuers 
Ownership 
& Control 
One Share, 
One Vote 
Government 
Intervention 
Concerns 
Do the company’s capital and ownership structures include a 
“golden shares” provision, are there an equivalent provision in 
national or state laws, or does the government have the right to 
nominate Government Representatives to the board? 
Flagged if yes. 
A “golden shares” provision allows a single large shareholder, 
usually a national government, to override all other shareholder 
voting rights on certain decisions.  
All 
issuers 
Ownership 
& Control 
Control 
Mechanisms 
Poison Pill 
Has the company adopted a takeover defense such as a poison 
pill, shareholder rights plan, or equivalent provision? 
Flagged if yes. 
A takeover defense may shield management and the board from 
accountability (board entrenchment). Takeover defenses may 
include a formal shareholder’s rights plan, poison pill, protective 
preference shares or equivalent provision. 
All 
issuers 
Ownership 
& Control 
Shareholder 
Rights 
Bylaws 
Amendments 
Does the board have the unilateral right to amend the 
company’s bylaws / Articles of Association without shareholder 
approval?  
Flagged if yes.  
Most U.S. companies grant the board unilateral control of the 
bylaws, so most U.S. companies are flagged for this metric, but 
in other regions this remains a helpful indicator of governance 
strength. This metric is derived from a company’s corporate 
Equity 
issuers

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Key Issue 
Category 
Key Metric 
Definition 
Scope 
charter and bylaws, or on the basis of applicable corporate 
regulation. 
Ownership 
& Control 
Shareholder 
Rights 
Shareholder 
Rights to 
Convene 
Meeting 
Do shareholders lack the right to requisition an extraordinary 
general meeting (EGM) or does the threshold required to 
request an EGM exceed 10% of the voting rights?  
Flagged if yes.  
Some companies may apply a different threshold to append a 
resolution to the agenda of an existing meeting – see 
Shareholder Rights Concerns. 
Equity 
issuers 
Ownership 
& Control 
Shareholder 
Rights 
Shareholder 
Rights 
Concerns 
Are shareholders limited in their ability to make changes at the 
company due to the nature of provisions in the governing 
documents? 
Flagged if yes. 
Does a change to the governing documents require a vote in 
favor from more than 67% of the total capital or from more than 
75% of the votes cast? Are shareholders both unable to act by 
written consent in a majority vote AND where the threshold 
required to request inclusion of a shareholder proposal at the 
annual general meeting (AGM) exceeds 1% (or is not permitted)? 
Equity 
issuers 
Ownership 
& Control 
Shareholder 
Rights 
Say-on-Pay 
Policy 
Has the company failed to implement regular Say-on-Pay votes?  
Flagged if yes.  
Shareholders should be granted a vote on either the policies 
themselves, the amounts paid pursuant to these policies, or on 
the report of the pay committee that sets out these items, i.e. 
this should be a broad-based vote on policy or total pay, and not 
just a vote on the policy or total amount of one component of 
pay. The scope of the “say-on-pay” vote must include any 
executive directors on the board of directors, or the most senior 
executive, if there is no executive director on the board. The vote 
may be in respect of all the executive directors collectively or by 
separate votes for each executive director individually. Votes 
should be held on a regular basis, at intervals of no more than 
three years. 
The Key Metric will not be flagged if there are no executives (e.g. 
for investment trusts).  
Equity 
issuers 
Ownership 
& Control 
Shareholder 
Rights 
Confidential 
Voting 
Has the company failed to implement confidential voting, 
barring reasonable exceptions?  
Flagged if yes.  
Confidential voting is intended to protect the anonymity of 
shareholders who wish to vote against management, or against 
a particular director, but who may be concerned about the 
possibility of redress. This metric is derived from a company’s 
corporate charter and bylaws, or on the basis of applicable 
corporate regulation. 
Equity 
issuers

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Key Issue 
Category 
Key Metric 
Definition 
Scope 
For the U.S. and Canada, this metric is flagged unless the 
required evidence to confirm confidential voting is in place. For 
other markets, this metric is only flagged if specific evidence is 
identified to indicate the absence of confidential voting. 
Ownership 
& Control 
Director 
Elections 
Proxy Access 
Does the company not allow qualified shareholders to nominate 
directors for election at the annual meeting, such nominees as 
to be included in the meeting agenda circulated by the company 
to its shareholders? 
Flagged if yes.  
Proxy access is a measure of the shareholder’s ability to 
influence the composition of the company’s board. This metric is 
derived from a company’s corporate charter and bylaws, or on 
the basis of applicable corporate regulation. 
Equity 
issuers 
Ownership 
& Control 
Director 
Elections 
Annual 
Director 
Elections 
Do any shareholder elected directors stand for re-election at 
intervals greater than one year?  
Flagged if yes.  
This metric captures both classified boards, where director re-
election is staggered, and boards where all directors stand 
simultaneously for re-election albeit less often than annually. 
Boards undergoing declassification over an extended period are 
treated as classified until this process has been completed – i.e. 
until all of the board members are being re-elected annually. The 
metric does not refer to employee-appointed directors, being 
specifically focused on shareholder-elected directors. 
Equity 
issuers 
Ownership 
& Control 
Director 
Elections 
Strong 
Classified 
Board 
Combination 
Does the company have a classified or staggered board in 
combination with other limitations on shareholder rights that 
further limit shareholders ability to affect the make-up of the 
board?  
Flagged if yes.  
A company has a strong classified board combination if, in 
addition to having a Classified Board, any of the following are 
true: 
• 
Director Removal for Cause Only is Yes, and Shareholder 
Can Fill Board Vacancies is No and the Bylaw Vote 
Percent is = 0% or > 51%; 
• 
Director Removal for Cause Only is Yes, and Shareholder 
Can Fill Board Vacancies is No and the Effective Classified 
Board is Yes; 
• 
Director Removal without Cause Vote % > 51%, and 
Shareholder Can Fill Board Vacancies is No and Bylaw 
Vote Percent is = 0% or > 51%; and 
• 
Director Removal Without Cause Vote % > 51%, and 
Shareholder Can Fill Board Vacancies is No, and Effective 
Classified Board is yes. 
Equity 
issuers

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Key Issue 
Category 
Key Metric 
Definition 
Scope 
Ownership 
& Control 
Director 
Elections 
Majority 
Voting 
Has the company failed to use or adopted binding majority 
voting in the election of directors (with immediate resignation, 
if the director does not receive a majority of the votes cast)? 
Flagged if yes. 
MSCI ESG Research uses a strict majority standard for this 
metric, flagging plurality, plurality plus resignation and majority 
plus resignation standards. Where a director fails to achieve a 
majority of the votes cast, this standard requires the director to 
immediately depart (unless the company would have below the 
legal minimum number, in which case they remain only briefly 
pending a new appointment). Implementation of majority 
voting is a measure of the shareholder’s ability to influence the 
composition of the board. 
Equity 
issuers 
Ownership 
& Control 
Director 
Elections 
Cumulative 
Voting 
Does the company with a controlling shareholder use a plurality 
vote standard for director elections, yet does not allow 
cumulative voting (whether as the default election standard or 
at the request of shareholders)?  
Flagged if yes.  
A method of election of the board of directors whereby a 
stockholder may cast as many votes for directors as he or she 
has shares of stock, multiplied by the number of directors to be 
elected. The purpose of cumulative voting is to facilitate the 
representation of minority stockholders on the board. The 
stockholder may cast all of his or her votes for one or more, but 
not all, of the directors on the ballot, which therefore promotes 
representation of small shareholders. 
Equity 
issuers 
Ownership 
& Control 
Director 
Elections 
Director 
Removal 
Without 
Cause 
Do shareholders lack the right to remove individual directors 
without cause? 
Flagged if yes.  
If director removal without cause is permitted, a bidder that is 
hostile to current management may seek to remove existing 
directors and replace them with the bidder’s nominees. 
Where there is no evidence of this right, from either national or 
stock exchange regulation or from the company’s documents, 
the Key Metric will be flagged. 
Equity 
issuers 
Ownership 
& Control 
Takeover 
Provisions 
Constituency 
Provision 
Does the company have a constituency provision or is it subject 
to constituency protection under applicable law?  
Flagged if yes.  
Constituency provisions allow a board to take into account 
interests other than those of shareholders in making corporate 
decisions, including decisions about changes of control. Typical 
Equity 
issuers

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Key Issue 
Category 
Key Metric 
Definition 
Scope 
other constituencies would include employees, communities, 
customers, suppliers and the environment. 
The Key Metric will be flagged where there is explicit evidence of 
this provision from either national or stock exchange regulation 
or from the company’s documents. 
Ownership 
& Control 
Takeover 
Provisions 
Business 
Combination 
Provision 
Does the company have a business combination provision in 
place or is it subject to business combination protection under 
applicable law?  
Flagged if yes.  
A business combination provision requires that a company not 
engage in a transaction with a shareholder holding a certain 
percentage (usually dubbed an “Interested shareholder”) for a 
period of time after the shareholder went over the threshold, or 
that such a transaction be approved by a higher-than-usual 
percentage of shares. A different variation of a “business 
combination” may also list a higher-than-usual percentage of 
shares for approving a merger but not list a time period during 
which a merger would be prohibited. 
Equity 
issuers 
Ownership 
& Control 
Takeover 
Provisions 
Fair Bid 
Treatment 
Provisions 
Does the company not have a fair price provision (with a 
mandatory bid requirement which does not exceed 33.3%) in 
place or is it not subject to fair price protection under applicable 
law? 
Flagged if yes.  
These terms generally involve all holders being entitled to 
receive the same price for their shares, the price being within 
some range of the average market price over some period of 
time prior to the offer, the offer remaining open for a minimum 
amount of time, and similar protections. In the U.S., this is 
generally presented as an exception to the business combination 
provision’s prohibition or higher vote requirement that applies 
when an acquisition offer contains certain terms designed to 
ensure fairness and eliminate the possibility that shareholders 
will feel coerced to agree to the offer. 
Equity 
issuers

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Key Issue: Board – Key Metrics  
Key Issue 
Category 
Key Metric  
Definition 
Scope 
Board 
Board 
Leadership 
Independent 
Chair 
Is the non-executive chair classified as not independent of 
management or not independent of other interests (links to 
employees, government or major owners), based on MSCI ESG 
Research criteria? 
Flagged if yes.  
This metric refers to the Board of Directors or (in a two-tier board 
structure) to the Supervisory Board. 
All 
issuers 
Board 
Board 
Leadership 
Combined 
CEO/Chair 
Does the company have a combined CEO/Chair? 
Flagged if yes.  
While the practice of combining the CEO and Chairman positions 
on the Board of Directors is common enough to minimize its 
significance as a standalone metric, when combined with other 
key indicators this practice may be an indicator of potential 
governance weakness. 
All 
issuers 
Board 
Board 
Leadership 
Leadership 
Concerns 
Are there concerns that there is a leader with excessive 
influence, including where there is an Executive Chairman 
serving alongside a CEO, where the Chairman is a former CEO or 
CFO, where a Founder or Co-Founder remains on the Board but 
not as Chair or CEO, or where there are unregistered directors 
providing leadership direction? 
Flagged if yes.  
All 
issuers 
Board 
Board 
Leadership 
Chair Not 
Independent 
& No 
Independent 
Lead Director 
For companies with a non-independent chair, has the company 
failed to designate an individually named non-executive lead 
director or independent deputy chairman who is classified as 
both independent of management and independent of other 
interests (links to employees, Government or major owners), 
based on MSCI ESG Research criteria? 
Flagged if yes.  
This metric refers to the Board of Directors or (in a two-tier board 
structure) to the Supervisory Board. 
For purposes of evaluating this metric, MSCI ESG Research 
excludes any lead directors who have not been individually 
designated as such by the company. This standard explicitly 
excludes lead director assignments based on rotating committee 
chairperson assignments or similar practices that may weaken 
the role and effectively counter its intended purpose. 
All 
issuers

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Key Issue 
Category 
Key Metric  
Definition 
Scope 
Board 
Board 
Independe
nce 
Board 
Majority 
Independent 
of 
Management 
Are less than a majority of directors independent of 
management, as defined by MSCI ESG Research?  
Flagged if yes.  
This metric flags issuers when less than 51% of the board is 
independent of management.  
For issuers with a two-tier board structure, this Key Metric 
assesses the supervisory board.  
All 
issuers 
Board 
Board 
Independe
nce 
Board 
Majority 
Independent 
of Other 
Interest 
Are less than a majority of directors independent of other 
interests, as defined by MSCI ESG Research?  
Flagged if yes.  
This metric assesses what percentage of directors are affiliated 
with interests (other than those of management) that may 
diverge from the interests of minority investors. Issuers are 
flagged when less than 51% of the board is independent of other 
interests.  
For issuers with a two-tier board structure, this Key Metric 
assesses the supervisory board. 
All 
issuers  
 
Board 
Board 
Independe
nce 
Executives on 
Board 
Does 30% or more of the Board of Directors comprise executive 
directors or does the Management Board include eight or more 
executive directors? 
Flagged if yes. 
All board member bios are reviewed to determine current titles 
and positions. 
All 
issuers 
Board 
Board 
Independe
nce 
No 
Independent 
Directors 
Is the board composed entirely of directors who do not meet the 
MSCI 
ESG 
Research 
criteria 
for 
independence 
from 
management?  
Flagged if yes.  
This metric tests for those extreme cases where there is not a 
single member of the Board of Directors or Supervisory board 
who can be considered fully independent of management. 
All 
issuers 
Board 
Board 
Independe
nce 
Related-Party 
Transactions 
Has there been any disclosed related-party transactions (RPTs) in 
respect of either of the two most recently reported financial 
years?  
Flagged if yes. 
All 
issuers 
Board 
Board 
Effectivene
ss  
Flagged 
Directors on 
Board 
Are any of the board members Flagged Directors, as defined by 
MSCI ESG Research? 
Flagged if yes. 
For issuers with two-tier board structures, members of either the 
Supervisory Board or the Management Board may be flagged. 
All 
issuers

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Key Issue 
Category 
Key Metric  
Definition 
Scope 
Board 
Board 
Effectivene
ss  
Overboarded 
Non-Exec 
Directors 
Do any of the company’s non- executive board members serve 
on the boards of three or more additional issuers (i.e. four total 
boards, including the rated company) in MSCI ESG Research’s 
corporate governance research universe (whether included as an 
equity or debt issuer)? 
Flagged if yes.  
Board membership counts reference the Board of Directors or (in 
a two-tier board structure) to the Supervisory Board and the 
Management Board. 
All 
issuers 
Board 
Board 
Effectivene
ss  
Overboarded 
Exec 
Directors 
Do any of the company’s executive board members serve on the 
boards of two or more additional issuers (i.e. three total boards, 
including the rated company) in MSCI ESG Research’s corporate 
governance research universe (whether included as an equity or 
debt issuer)? 
Flagged if yes.  
This is of particular significance in the case of the company’s CEO. 
Board membership counts reference the Board of Directors or (in 
a two-tier board structure) to the Supervisory Board and the 
Management Board. 
All 
issuers 
Board 
Board 
Effectivene
ss  
Significant 
Votes Against 
Directors 
Are there one or more directors on the board who received a 
negative or withheld shareholder vote in excess of 10% in the 
most recently reported election?  
Flagged if yes.  
This metric refers to the Board of Directors or (in a two-tier board 
structure) to the Supervisory Board and the Management Board. 
Even a negative vote of 5% indicates an unusually high vote 
against a particular individual director at most companies. This 
metric is triggered by a negative vote of over 10% against any 
directors in the most recently reported election (or in certain 
markets on the discharge of the directors). A “negative vote” 
includes any of against, withhold or abstain votes. 
All 
issuers 
Board 
Board 
Effectivene
ss  
Oversized 
Board 
Does the total number of directors on the board of directors or 
supervisory board exceed local or regional standards?  
Flagged if yes.  
This is currently set to flag at 20 directors or more for most 
countries, and refers to either the board of directors or 
supervisory board. 
All 
issuers

MSCI ESG Ratings FAQs for Issuers | June 2022
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Key Issue 
Category 
Key Metric  
Definition 
Scope 
Board 
Board 
Effectivene
ss  
Undersized 
Board 
Are there four or fewer directors on the board of directors or 
supervisory board?  
Flagged if yes.  
Boards comprising so few individuals may lack the diversity of 
view and experience needed to provide effective oversight over 
most public companies, particularly when it comes to assigning 
resources to the board’s standing committees. 
This metric refers to either the board of directors or supervisory 
board. 
All 
issuers 
Board 
Board 
Effectivene
ss  
Board 
Attendance 
Failures 
Did any members of the board fail to attend at least 75% of all 
board and committee meetings held during the last reported 
period?  
Flagged if yes.  
This metric refers to the Board of Directors or (in a two-tier board 
structure) to the Supervisory Board and the Management Board. 
Excessive board attendance failures have been linked to other, 
less visible board problems or weaknesses. 
All 
issuers 
Board 
Board Skills 
& Diversity 
Entrenched 
Board 
Does the percentage of long-tenured, aging directors suggest a 
problem with board entrenchment?  
Flagged if yes.  
This metric is based on an assessment of multiple factors, 
including director age and tenure in the following combinations:  
• 
More than 35% of the board has a tenure of 15 years or 
greater;  
• 
More than 22% of the board has a tenure of 15 years or 
greater and more than 15% of the directors are aged 70 or 
over;  
• 
There are more than four directors who have a tenure of 
15 years or greater; or  
• 
If there are more than four directors who are aged 70 or 
over. 
This metric extends to the Board of Directors and Supervisory 
Board. 
The strength of this metric as an indicator of potential 
governance problems is greatly increased at companies whose 
recent performance has consistently lagged their peers. 
All 
issuers

MSCI ESG Ratings FAQs for Issuers | June 2022
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Key Issue 
Category 
Key Metric  
Definition 
Scope 
Board 
Board Skills 
& Diversity 
CEOs on 
Board 
Is more than 30% of the board composed of currently active 
corporate CEOs from other companies?  
Flagged if yes.  
This metric extends to the Board of Directors and Supervisory 
Board. 
To be included in this category the individual must be a currently 
active CEO at another publicly traded corporation; the CEO of the 
company being rated is excluded. Based on information 
contained in each individual’s bio, or his or her designation as a 
current company CEO in the MSCI director database. 
All 
issuers 
Board 
Board Skills 
& Diversity 
No Female 
Directors 
Does the composition of the board fail to include any female 
directors?  
Flagged if yes. 
This metric extends to the Board of Directors and Supervisory 
Board. 
All 
issuers 
Board 
Board Skills 
& Diversity 
Not 30% 
Female 
Directors 
Does the composition of the board fail to include at least 30% 
female directors?  
Flagged if yes. 
This metric extends to the Board of Directors and Supervisory 
Board. 
All 
issuers 
Board 
Board Skills 
& Diversity 
Risk 
Management 
Expertise 
Does the board lack at least one non-executive member of the 
board who has general expertise in risk management, based on 
MSCI’s ESG Ratings standards?  
Flagged if yes.  
This metric extends to the Board of Directors and Supervisory 
Board. 
All 
issuers 
Board 
Audit 
Oversight 
Audit Board / 
Committee 
Independenc
e 
Has the company failed to establish an audit committee (or audit 
board) comprising only directors who are independent of 
management based on MSCI ESG Research’s criteria? 
Flagged if yes. 
All 
issuers 
Board 
Audit 
Oversight 
Executives on 
Audit Board / 
Committee 
Are there company executives serving on the Audit Committee 
or Audit Board?  
Flagged if yes.  
All 
issuers 
Board 
Audit 
Oversight 
Audit 
Committee 
Financial 
Expert 
Does the audit committee lack at least one non-executive 
member with general expertise in accounting or financial 
management, based on the MSCI’s ESG Ratings criteria?  
Flagged if yes. 
All 
issuers

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Key Issue 
Category 
Key Metric  
Definition 
Scope 
Board 
Audit 
Oversight 
Audit 
Committee 
Industry 
Expert 
Does the audit committee lack at least one non-executive 
member who has substantial industry knowledge, based on the 
MSCI’s ESG Ratings criteria?  
Flagged if yes. 
All 
issuers 
Board 
Audit 
Oversight 
Overboarded 
Audit 
Committee 
Members 
Do any of the independent members of the audit committee 
serve on the boards of three or more additional companies (i.e. 
four total boards, including the rated company) in MSCI ESG 
Research’s corporate governance research universe (whether 
included as an equity or debt issuer)? Or do any of the non-
independent members of the audit committee serve on the 
boards of two or more additional companies? 
Flagged if yes.  
This metric further emphasizes the link between overboarding 
and board effectiveness by testing for its presence on this 
committee. 
All 
issuers 
Board 
Pay 
Oversight 
Pay 
Committee 
Independenc
e 
Where the company has established a pay committee, are there 
directors serving on the committee who are not independent of 
management based on MSCI ESG Research’s criteria? 
Flagged if yes. 
All 
issuers 
Board 
Pay 
Oversight 
Executives on 
Pay 
Committee 
Are there company executives serving on the pay committee? 
Flagged if yes.  
In addition to evaluating the independence of its non-executive 
members, MSCI’s ESG Ratings scoring model also takes into 
consideration the presence of current company executives on this 
standing committee. 
All 
issuers 
Board 
Pay 
Oversight 
No Pay 
Committee & 
Execs on 
Board 
Does the company lack a standing pay committee, and are 
current company executives serving on its board?  
Flagged if yes.  
This metric is flagged for boards that lack a formally named pay 
committee yet include among its members one or more current 
company executives, including the CEO. 
All 
issuers 
Board 
Pay 
Oversight 
Pay 
Committee 
Concerns 
Does the composition of the pay committee raise concerns in 
relation to the presence of active CEOs on the committee or in 
relation to the past record of the pay committee chair?  
Flagged if yes.  
This metric is triggered by the majority of pay committee or the 
committee chair being active CEOs, where the pay committee 
chair also chairs other pay committees and the latest annual say-
on-pay vote was defeated, or where the pay committee chair is a 
former listed company CEO and during his CEO tenure the say-on-
pay vote was defeated. 
All 
issuers

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Key Issue 
Category 
Key Metric  
Definition 
Scope 
Board 
Nomination 
Process 
Oversight 
No 
Nomination 
Committee 
Does the company lack a standing nomination committee?  
Flagged if yes.  
This metric flags issuers that have not disclosed a formal 
nomination committee. A committee with the responsibility to 
nominate directors for election to the board will generally be 
considered a nomination committee, regardless of its name or 
other roles.  
All 
issuers 
Board 
Nomination 
Process 
Oversight 
Nomination 
Committee 
Chair 
Independenc
e 
Is the nomination committee chair not independent of 
management or other interests, as defined by MSCI ESG 
Research? 
Flagged if yes. 
We consider it a best practice for key committees to be led by 
members who are independent of management, and, in some 
markets, nomination committees may include a high proportion 
of stakeholder representatives whose interests may diverge from 
those of minority investors. Therefore, this metric assesses the 
committee chair’s independence from both management and 
other interests. 
This metric is not evaluated for companies that lack a nomination 
committee. 
All 
issuers 
Board 
Nomination 
Process 
Oversight 
Nomination 
Committee 
Independenc
e 
Are less than a majority of nomination committee members 
independent of management and other interests, as defined by 
MSCI ESG Research? 
Flagged if yes. 
We consider it a best practice for key committees to be 
independent of management, and, in some markets, nomination 
committees may include a high proportion of stakeholder 
representatives whose interests may diverge from those of 
minority investors. Therefore, this metric assesses what 
percentage of the committee is independent of both 
management and other interests.  
This metric is not evaluated for companies that lack a nomination 
committee.  
All 
issuers 
Board 
Strategic 
Oversight 
Bankruptcy 
or 
Liquidation 
Is the company, or a material subsidiary, currently in 
receivership, under bankruptcy protection, or facing liquidation?  
Flagged if yes. The flag will be removed once the case is assessed 
as concluded. 
This Key Metric focuses on negative credit events including 
Bankruptcy 
Protection, 
Administration, 
Receivership, 
Curatorship, and Liquidation. 
All 
issuers

MSCI ESG Ratings FAQs for Issuers | June 2022
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Key Issue 
Category 
Key Metric  
Definition 
Scope 
Board 
Strategic 
Oversight 
Debt 
Covenant 
Concerns 
Has the company, or a material subsidiary, recently breached the 
terms of its debt covenants, had a test of its debt covenant terms 
deferred or waived, or been reported to be in danger of 
breaching its debt covenants? 
Flagged if yes. The flag will be removed once the case is assessed 
as concluded. 
This Key Metric focuses on negative credit events including failure 
to repay (or defer paying) capital or interest on the debt, 
breaching terms (or waiving or deferring the testing) of the debt 
covenants such as exceeding borrowing limits or breaches of 
technical provisions. 
All 
issuers 
Board 
Strategic 
Oversight 
Financing 
Difficulties 
Have concerns been identified by the board or been reported in 
the press in relation to the going-concern assumption, or is there 
other evidence that the company, or a material subsidiary, may 
be facing financing difficulties? 
Flagged if yes. The flag will be removed once the case is assessed 
as concluded. 
This Key Metric seeks to identify where there is a risk of a negative 
credit event. A successful outcome such as an equity raising or 
renegotiated credit terms may resolve this concern, and forms 
part of the severity assessment criteria. 
All 
issuers 
Board 
Strategic 
Oversight 
Capital 
Management 
Concerns 
Have concerns been raised as to the treatment of security 
holders in relation to the raising and/or return of capital? 
Flagged if yes. The duration of the flag is dependent on the 
severity assessment. 
Circumstances which may be flagged include where investors 
face high potential equity dilution through the new issue of 
shares, where there has been unfair treatment of existing 
investors in capital raisings, or where there are concerns as to 
share buyback activity. 
All 
issuers 
Board 
Strategic 
Oversight 
Securities 
Violations 
Has the company faced allegations that investors have not been 
given access to certain basic facts about the company, whether 
in the process of issuing new securities or following issuance? Or 
has the company faced substantive allegations of breaches of 
investor protection requirements (including in relation to offers 
it makes for third parties)? 
Flagged if yes. The duration of the flag is dependent on the 
severity assessment. 
Note: Items which relate specifically to Accounting and Audit 
issues are covered in the Accounting Key Metrics. 
All 
issuers

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Key Issue 
Category 
Key Metric  
Definition 
Scope 
Board 
Strategic 
Oversight 
Threat of 
Delisting 
Is the issuer currently in breach of its continuing obligations that 
apply to the listing of its securities, which may threaten the 
continued listing or trading of those securities? 
Flagged if yes. The flag will be removed once the case is assessed 
as concluded. 
All 
issuers 
Board 
Strategic 
Oversight 
Executive 
Misconduct 
Has a current or recent member of the board or a senior 
executive of the company (and while serving at this company) 
allegedly failed to act with honesty and integrity, engaged in 
actions contrary to the interests of the company and its 
shareholders, breached trust or confidence, engaged in criminal 
actions or engaged in actions that caused damage to the 
company’s reputation? 
Flagged if yes. The duration of the flag is dependent on the 
severity assessment. 
This metric refers to current or former members of the board of 
directors, management board (in a two-tier structure) and 
executive committee.  
All 
issuers 
Board 
Strategic 
Oversight 
Other High- 
Impact 
Governance 
Events 
Has the company faced situations that may distract the board 
from focusing on business operations and strategic matters; have 
major questions been raised as to the quality of past board 
decisions; or is there evidence of governance failures at the 
company? 
Flagged if yes. The duration of the flag is dependent on the 
severity assessment. 
All 
issuers

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Key Issue: Pay – Key Metrics 
Key 
Issue 
Category 
Key Metric 
Definition 
Scope 
Pay 
Pay 
Performance 
Alignment 
CEO Equity 
Policy  
Does the CEO hold shares with a value below 5x salary and has 
the company failed to adopt either effective stock ownership 
guidelines or an equity retention policy for the CEO?  
Flagged if yes. 
This metric is triggered where there is no evidence of a 
shareholding policy or guideline for the CEO requiring them to 
build and maintain a holding of at least 5x salary or an equity 
retention policy requiring at least 50% of vested equity 
incentives to be retained until the 5x salary level is achieved. 
Equity 
issuers 
Pay 
Pay 
Performance 
Alignment 
CEO Equity 
Changes  
Has the number of shares held by the CEO (after adjustment 
for any corporate actions) decreased year over year by 10% or 
more?  
Flagged if yes. 
This metric excludes CEOs with less than two years’ tenure. 
All 
issuers 
Pay 
Pay 
Performance 
Alignment 
Long-Term 
Pay 
Performance  
Does the CEO’s equity pay fail to reflect the company’s total 
shareholder return (TSR) performance over the last three and 
five years?  
Flagged if yes.  
This is flagged if any vested stock and option gains reported for 
the company’s CEO are greater than zero during a year when 
the company is showing negative 3-yr and 5-yr TSR. 
All 
issuers 
Pay 
Pay 
Performance 
Alignment 
Long-Term 
Pay 
Performance 
Versus Peers  
Does the CEO’s equity pay fail to reflect the company’s TSR 
performance over the last three and five years relative to their 
Pay Peer Group?  
Flagged if yes.  
This is flagged if any vested stock and option gains reported for 
the company’s CEO are greater than zero during a year when 
the company’s 3-yr and 5-yr TSR fall below the median for their 
Pay Peer Group. 
All 
issuers

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Key 
Issue 
Category 
Key Metric 
Definition 
Scope 
Pay 
Pay 
Performance 
Alignment 
Short-Term 
Pay 
Performance  
Did the CEO’s annual incentives fail to rise or fall in line with 
annual performance for the last reported period?  
Flagged if yes. 
The four test metrics used are Net Income, Basic Normalized 
earnings per share (EPS), Total Revenue and Total Assets. This 
metric is flagged if : 
• CEO’s reported total short-term incentive is greater than 
zero and two or more of the four test metrics listed above 
have decreased year-on-year, OR:  
• Total short-term incentive increased and only one metric 
increased year-on-year OR;  
• Total short-term incentive increased year-on-year and all 
four metrics decrease OR;  
• Total short-term incentive remains the same (for non-zero 
amounts) and two or three metrics decreased year-on-
year. 
“Total short-term incentive” for the purpose of this Key Metric 
includes any Bonus (in the US including “Non-Equity Incentive 
Compensation”), whether delivered in the form of cash, shares, 
shares subject to a holding period prior to release, bonus 
waived into pension or other form of delivery. 
All 
issuers 
Pay 
Pay 
Performance 
Alignment 
Pay Linked to 
Sustainability  
Has the company, if designated as having either a high 
environmental or social impact, failed to incorporate links to 
sustainability performance in its current incentive pay policies?  
Flagged if yes. 
This metric is based entirely on the company’s own reporting, 
and is strictly focused on the specific inclusion or not of such 
metrics in the determination of variable pay components and 
does not take into consideration their effectiveness. 
High Environmental Impact: If any of the following ESG Ratings 
Key Issues carries more than a 5% weight: Carbon Emissions, 
Water Stress, Toxic Emissions & Waste, Product Carbon 
Footprint, Raw Material Sourcing, Packaging Material & 
Waste, Electronic Waste, Biodiversity & Land Use, Energy 
Efficiency. 
High Social Impact: If any of the following ESG Ratings Key 
Issues carries more than a 5% weight: Labor Management, 
Health & Safety, Product Safety & Quality, Supply Chain Labor 
Standards, Human Capital Development. 
All 
issuers

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Key 
Issue 
Category 
Key Metric 
Definition 
Scope 
Pay 
Pay 
Performance 
Alignment 
Clawbacks & 
Malus 
Where the company offers variable or incentive pay, has the 
company failed to adopt a clawback policy, applicable to both 
the annual and long-term incentives, that would recoup 
incentive pay based on accounts that were restated at a later 
date?  
Flagged if yes. 
The absence of a formal clawback policy may weaken the 
board’s legal standing in cases where senior executives have 
been granted incentive awards on the basis of fraudulent or 
simply erroneous data. 
All 
issuers 
Pay 
Pay 
Performance 
Alignment 
Golden 
Hellos  
Has there been public criticism from stakeholders of golden 
hellos provided by the company to its CEO or other senior 
executives?  
Flagged if yes. The duration of the flag is dependent on the 
severity assessment.  
A golden hello is considered to be any first-year pay award for 
external hires in excess of one year’s total remuneration in 
normal circumstances, regardless of form.  
The scope of this key metric extends to any CEO; any member 
of the Management Board in a two-tier board structure; any 
executive member of the Board of Directors in a unitary board 
structure or where a board of directors/board of auditors 
structure is in place; or any of the top 5 executives (US – named 
executive officers). 
All 
issuers 
Pay 
Pay 
Performance 
Alignment 
Pay 
Controversy 
Have the company’s pay policies or practices attracted adverse 
public comment from stakeholders (including shareholders, 
government, regulators, etc.)? 
Flagged if yes. The duration of the flag is dependent on the 
severity assessment. 
All 
issuers 
Pay 
Pay 
Performance 
Alignment 
Significant 
Vote Against 
Pay Practices  
For the most recently reported period, did the company 
receive a negative vote in excess of 10% on its pay policies and 
practices?  
Flagged if yes. 
This metric is intended to measure shareholder dissatisfaction 
with the company’s executive pay practices. A “negative vote” 
includes any of against, withhold or abstain votes. 
All 
issuers

MSCI ESG Ratings FAQs for Issuers | June 2022
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Key 
Issue 
Category 
Key Metric 
Definition 
Scope 
Pay 
Pay Figures 
Executive Pay 
Disclosure 
Has the company failed to disclose specific pay totals for its top 
executives, including the CEO?  
Flagged if yes. 
This is the most basic test in this area, and as such, carries 
considerable weight when invoked, as it must serve in the place 
of several of the other metrics normally applied in this area. 
Disclosure must include, at minimum, pay for all executive 
members of the Board of Directors (or Management Board for 
companies with a two-tier board structure) on an 
individualized basis or in cases where there are no executive 
members, the CEO. The individualized disclosure should include 
separate information on the amount of each of the following 
(where such a component is provided): Salary, Short-term 
Incentives, Long-term Incentives, Pensions, Benefits, one-off 
payments (such as recruitment or retention awards). 
All 
issuers 
Pay 
Pay Figures 
CEO Pay 
Total 
Realized 
Does the most recently reported total realized CEO pay figure 
fall into an extreme range relative to the company’s peers?  
Flagged if yes.  
Flagged if CEO Total Actual Pay falls within the top decile of 
CEO Realized Pay values for the company’s pay peers. Because 
companies file their proxies at different times throughout the 
year, a company could see this metric change due to changes 
in reported figures for its peers. 
All 
issuers 
Pay 
Pay Figures 
CEO Pay 
Total 
Awarded 
Does the most recently reported total awarded CEO pay figure 
fall into an extreme range relative to the company’s peers? 
Flagged if yes.  
Flagged if CEO Total Awarded Pay falls within the top decile of 
CEO Total Awarded Pay values for the company’s pay peers. 
Because companies file their proxies at different times 
throughout the year, a company could see this metric change 
due to changes in reported figures for its peers. 
All 
issuers 
Pay 
Pay Figures 
CEO Pay 
Total Fixed 
Does the most recently reported Total Fixed CEO Pay figure fall 
into an extreme range relative to the company’s peers?  
Flagged if yes. 
Flagged if CEO Total Fixed Pay falls within the top decile of CEO 
Total Fixed Pay values for the company’s pay peers. Because 
companies file their proxies at different times throughout the 
year, a company could see this metric change due to changes 
in reported figures for its peers. 
All 
issuers

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Key 
Issue 
Category 
Key Metric 
Definition 
Scope 
Pay 
Pay Figures 
CEO Pay 
Perks & 
Other Pay 
Does the most recently reported CEO perquisites and other 
pay figure exceed the stated MSCI ESG Research thresholds? 
Flagged if yes.  
Flagged if the perks reported exceed:  
• 
USD 200k for companies with market cap 
exceeding USD 100 billion 
• 
USD 150k for companies with market cap between 
USD 10 billion & 100 billion 
• 
USD 120k for companies with market cap between 
USD 4 billion & 10 billion 
• 
USD 90k for companies with market cap between 
USD 340 million & 4 billion 
• 
USD 75k for companies with market cap below 
USD 340 million 
All 
issuers 
Pay 
Pay Figures 
CEO Pay 
NQDC 
Is the pension contribution rate (defined contribution amount 
(CEO NQDC) divided by salary) made by the company on behalf 
of the CEO excessive relative to peers?  
Flagged if yes.  
Flagged if the CEO’s pension contribution rate falls within the 
top decile of all such values for the company’s pay peer group. 
Because companies file their proxies at different times 
throughout the year, a company could see this metric change 
due to changes in reported figures for its peers. 
All 
issuers 
Pay 
Pay Figures 
CEO Pay 
Pension 
Is the most recently reported CEO accumulated pension figure 
(divided by the number of years of pensionable service) 
excessive relative to peers?  
Flagged if yes.  
Flagged if the CEO’s (total accumulated pension/years served) 
figure falls within the top decile of all such values for the 
company’s pay peer group. Because companies file their 
proxies at different times throughout the year, a company 
could see this metric change due to changes in reported figures 
for its peers. 
All 
issuers 
Pay 
Pay Figures 
Internal Pay 
Equity 
Does the CEO’s total awarded pay for the last reported period 
exceed the median pay for the other named executive officers 
by more than 3X?  
Flagged if yes. 
Another coarse measure of pay alignment and effectiveness, 
this metric is used to identify any anomalies in overall executive 
pay practices that might favor the CEO over the rest of the 
company's senior management team. 
All 
issuers

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Key 
Issue 
Category 
Key Metric 
Definition 
Scope 
Pay 
Severance & 
Change of 
Control  
Golden 
Parachutes 
Does the CEO’s potential cash severance pay exceed five times 
their annual pay?  
Flagged if yes.  
All 
issuers 
Pay 
Severance & 
Change of 
Control  
Severance 
Vesting 
Are unvested equity awards still eligible for vesting when the 
CEO's employment is terminated?  
Flagged if yes.  
This metric is designed to help in evaluating the board’s 
effectiveness in aligning the interests of the CEO and other 
senior executives with those of the company’s investors. 
All 
issuers 
Pay 
Equity Plan 
Dilution  
Dilution 
Concerns 
Is the potential dilution in the company’s traded shares 10% or 
greater?  
Flagged if yes.  
Dilution is defined as the percentage of company shares the 
board has set aside for use in granting incentive awards. The 
10% dilution threshold is used regardless of company size. 
All 
issuers 
Pay 
Equity Plan 
Dilution  
Run Rate 
Concerns 
Is the company’s current run rate 2% or more? 
Flagged if yes.  
Run rate is defined as the percentage of company shares 
actually granted as incentive awards during the most recently 
reported period. The 2% run rate threshold is used regardless 
of company size. 
All 
issuers 
Pay 
Non-
executive 
Director Pay  
Director 
Equity Policy 
Has the company failed to adopt specific stock ownership 
guidelines for non-executive directors?  
Flagged if yes.  
Another relatively coarse but effective indicator, this metric 
does not evaluate the effectiveness of such standards, but 
simply whether the company has formally announced a policy 
in this area. 
Equity 
issuers

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Key Issue: Accounting – Key Metrics  
Key 
Issue 
Category 
Key Metric 
Definition 
Scope 
Accounting 
Accounting 
Events 
Accounting 
Investigations  
Has the company announced an internal investigation into its 
accounting or come under investigation from a regulatory 
body, or been subject to fine, settlement or conviction for 
issues related to its accounting practices? Or has the 
company’s auditor come under investigation for issues related 
to its work on the audit of the company? 
Flagged if yes. The duration of the flag is dependent on the 
severity assessment. 
All 
issuers 
Accounting 
Accounting 
Events  
Auditor 
Report 
Concerns  
Has the company’s independent auditor expressed a qualified, 
adverse or disclaimer of opinion, expressed concerns via an 
emphasis of matter paragraph, have concerns been identified 
in respect of the auditor’s ability to present an independent 
opinion, or has the auditor been changed in a manner that 
may raise concerns for investors?  
 
Flagged if yes within the past year.  
This metric is based on the report of the external auditor 
disclosed in the annual financial statements and highlights any 
qualified auditor opinion or concerns raised in an emphasis of 
matter inserted by the auditor. Purely informational emphasis 
of matter paragraphs is not flagged. This metric is also 
evaluated on the basis of news reports or regulatory filings, 
including those that relate to interim or quarterly financial 
statements in which the auditors have raised concerns.  
All 
issuers 
Accounting 
Accounting 
Events  
Internal 
Controls  
Has there been evidence of material weakness in the 
company’s internal control systems?  
Flagged if yes. The duration of the flag is dependent on the 
severity assessment.  
The event tags or categories used to create this flag include 
the following: Material Weakness in Internal Controls or SOX 
404 Violations. Outside of the U.S., this metric is evaluated 
based on the assessment of the audit committee in relation to 
the effectiveness of the internal controls.  
All 
issuers 
Accounting 
Accounting 
Events  
Restatements 
or Special 
Charges  
Has the company had to restate previously published financial 
statements due to fraud, error or the mis-application of 
accounting standards?  
Or has the company announced or reported special charges or 
write-offs that might raise questions as to the stewardship of 
the company by the board?  
Flagged if yes. The duration of the flag is dependent on the 
severity assessment. 
All 
issuers 
Accounting 
Accounting 
Events  
Late Filings  
Is the company currently experiencing a reporting delay or is 
it late in the filing of its quarterly, half-year (or interim) or 
All 
issuers

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Key 
Issue 
Category 
Key Metric 
Definition 
Scope 
annual reports, or its annual proxy/notice of annual meeting 
of shareholders?  
Flagged if yes. The flag will be removed once the case is 
assessed as concluded. 
Accounting 
Auditor 
Independence  
Auditor 
Independence 
Did the company pay its external audit firm less for audit and 
audit-related services than for other services in the last fiscal 
year?  
Flagged if yes.  
This metric uses auditor fees schedules to flag companies 
where such independence may have been compromised. 
All 
issuers 
Accounting 
Auditor 
Independence 
Auditor 
Tenure 
Is there evidence to identify that the external audit firm has 
served in excess of 20 years?  
Flagged if yes. 
All 
issuers

MSCI ESG Ratings FAQs for Issuers | June 2022
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Appendix 3: Corporate Behavior Key Metrics 
Definitions 
 
Key Issue 
Category 
Key Metric 
Definition 
Scope 
Business 
Ethics 
Policies & 
Practices 
Oversight of 
Ethics Issues 
Indicates the company's executive body (board-level 
committee, C-suite or executive committee, or special task 
for or risk officer) responsible for oversight of business ethics 
and corruption issues  
All 
issuers 
Business 
Ethics 
Policies & 
Practices  
Bribery and 
Anti-
corruption 
Policy 
Indicates if the company has a policy on bribery and anti-
corruption in place and the scope of that policy.  
All 
issuers 
Business 
Ethics 
Policies & 
Practices  
Anti-
Corruption 
Policy for 
Suppliers  
Indicates the scope of the bribery and anti-corruption policy 
in place for suppliers.  
State-
Owned 
Enterpris
es 
Business 
Ethics 
Policies & 
Practices  
Whistleblower 
Protection  
Indicates 
whether 
the 
company 
has 
disclosed 
a 
whistleblower policy that provides whistleblowers with 
protection from retaliation.  
All 
issuers 
Business 
Ethics 
Policies & 
Practices 
Employee 
Training on 
Ethical 
Standards 
Indicates the scope of employee training on anti-corruption 
and business ethics standards.  
All 
issuers 
Business 
Ethics 
Policies & 
Practices 
Regular Audits 
of Ethical 
Standards 
Indicates the frequency and scope of audits related to anti-
corruption and business ethics.  
All 
issuers 
Business 
Ethics 
Policies & 
Practices 
Anti-Money 
Laundering 
(AML) Policy 
Indicates the scope of a company's policy on anti-money 
laundering and know your customer. 
Financial
s, Casinos 
and 
compani
es 
involved 
in money 
transfer 
Business 
Ethics 
Risks & 
Controversies 
Corruption 
Risk Exposure 
& 
Controversies 
Indicates the company’s exposure to business activities or 
geographies facing a higher incidence of corruption and 
involvement in ongoing corruption-related controversies. 
All 
issuers 
Business 
Ethics 
Risk & 
Controversies 
Business 
Ethics 
Controversies 
Indicates the company’s involvement in anticompetitive and 
business ethics controversies. 
All 
issuers 
Tax 
Transparency 
Controversies 
Tax 
Controversies 
Indicates the company’s involvement in ongoing tax-related 
controversies. 
All 
issuers

MSCI ESG Ratings FAQs for Issuers |
AMERICAS 
 
Americas 
1 888 588 4567 * 
Atlanta  
+ 1 404 551 3212 
Boston  
+ 1 617 532 0920 
Chicago 
+ 1 312 675 0545 
Monterrey 
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New York 
+ 1 212 804 3901 
San Francisco + 1 415 836 8800 
São Paulo 
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Toronto 
+ 1 416 628 1007 
 
EUROPE, MIDDLE EAST & AFRICA 
 
Cape Town 
+ 27 21 673 0100 
Frankfurt 
+ 49 69 133 859 00 
Geneva  
+ 41 22 817 9777 
London  
+ 44 20 7618 2222 
Milan  
+ 39 02 5849 0415 
Paris 
 
0800 91 59 17 * 
 
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China North 
10800 852 1032 * 
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Hong Kong 
+ 852 2844 9333 
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+ 91 22 6784 9160 
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00798 8521 3392 * 
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800 852 3749 * 
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+ 61 2 9033 9333 
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Thailand 
0018 0015 6207 7181 * 
Tokyo  
+ 81 3 5290 1555 
 
* = toll free 
 
 
About MSCI 
MSCI is a leading provider of critical 
decision support tools and services for 
the global investment community. With 
over 50 years of expertise in research, 
data and technology, we power better 
investment decisions by enabling clients 
to understand and analyze key drivers of 
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research-enhanced 
solutions that clients use to gain insight 
into and improve transparency across 
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About MSCI ESG Research Products and 
Services  
MSCI ESG Research products and 
services are provided by MSCI ESG 
Research LLC, and are designed to 
provide in-depth research, ratings and 
analysis of environmental, social and 
governance-related business practices 
to companies worldwide. ESG ratings, 
data and analysis from MSCI ESG 
Research LLC. are also used in the 
construction of the MSCI ESG Indexes. 
MSCI ESG Research LLC is a Registered 
Investment Adviser under the Investment 
Advisers Act of 1940 and a subsidiary of 
MSCI Inc. 
 
To learn more, please visit 
www.msci.com.
 
 
Contact us 
esgclientservice@msci.com

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