7Bloomberg ESG A Bloomberg Professional Services Offering Environmental and Social Scores – Methodology Industry Guide – Coal Mining Bloomberg Terminal Methodology and Field Information 1 ESG Governance Scores BI Issue Priority Outline Contents Introduction .................................................................................................................................................................. 3 Approach to Bloomberg Corporate Governance Scores.................................................................................................. 3 Score Framework and Structure ..................................................................................................................................... 4 Research and Analysis................................................................................................................................................. 4 Data Collection ............................................................................................................................................................. 6 Scoring Methodology ................................................................................................................................................... 7 Firm Age Estimate .......................................................................................................................................................... 7 Field Pre-processing ....................................................................................................................................................... 7 Field Scoring .................................................................................................................................................................. 7 Aggregation .................................................................................................................................................................. 13 Conditional Field Scoring and Aggregation ................................................................................................................... 15 Endnotes ...................................................................................................................................................................... 16 Figure 1 Scoring Curve on Field “Percent of Board Members that are Women” ..................................................... 8 Figure 2 Scoring Curve on Field “Number of Board Positions CEO Holds (at other firms)” ................................... 9 Figure 3 Board Balance Score ................................................................................................................................... 11 Figure 4 Independent Director Score ........................................................................................................................ 12 Version Release Date April 2022 2 Description Methodology for Governance Scores BI Issue Priority Outline Introduction Environmental, social, and governance (ESG) data has become essential for financial decision making — the 2008 financial crisis and numerous accounting scandals have resulted in an increased focus on the role of corporate governance in providing proper leadership and oversight and aligning corporate strategy with all relevant stakeholders. As Bloomberg L.P. founder Mike Bloomberg is fond of saying: “If you can’t measure it, you can’t manage it.” In that spirit, we will demonstrate that gaining an understanding of the dynamics of corporate governance by using quantitative data and scoring can help investors in identifying both governance risks and opportunities. Approach to Bloomberg Corporate Governance Scores As part of Governance scoring, Bloomberg L.P. has developed Governance scores for approximately 5,500 global companies across all sectors and regions that are part of the Bloomberg ESG Score Universe (BESGSCO Index). Combining data from the Bloomberg Terminal® with insights from Bloomberg Intelligence (BI) and Bloomberg Law, Bloomberg Governance scores offer quantitative, transparent analyses. Under the Governance pillar, the themes of Board Composition, Executive Compensation, Shareholder Rights, and Audit touch on a number of core ESG Issues that can have material impact on company performance, as research shows. These Issues can be further divided into a set of distinct sub-issues, leading to a clear taxonomy for data fields. In the analytical process,