Syria Screen - RiskMetrics Online Help Files - MSCI

Global Sanctions MethodologySyria ScreenNovember 2014msci.com

SYRIA SCREENGlobal Sanctions MethodologySyria ScreenNovember 2014MSCI ESG Research’s Global Sanctions Syria Screen is designed to serve investors interested in screeningtheir investments for companies that are or have been involved with Syria. The Syria Screen enablesMSCI clients to meet U.S. State legislated mandates specifically targeting publicly traded companies thatare involved or have had involvement with Syria, as well as those mandates focused on involvementwith countries designated as “State Sponsors of Terrorism” by the U.S. Department of State. Syria is onthe U.S. Department of State’s “State Sponsors of Terrorism” list. The Syria Screen can also be used tomeet general MSCI client interests in screening their investments for involvement with Syria.DEFINITIONSCoverage universe: Global equitiesSample of U.S. states with anti-terror mandates that include Syria: Arizona, Florida, Georgia,Indiana, Louisiana, Massachusetts, Michigan, New Jersey, and PennsylvaniaTYPES OF INVOLVEMENTMSCI ESG Research classifies a company’s involvement with Syria as one of the following types:Equity InvolvementDirect involvement with Syria, including:Operations with Syria, including sales officesInvestment in joint venture concerning key sectors of the Syrian economyOwnership of/by a company that meets the equity involvement criteriaNon-Equity InvolvementIndirect involvement with Syria, including:Imports good and services from SyriaSale of products to Syria directly or through agency, distribution, franchise, or licensingagreements with 3 rd partiesOwnership of/by a company that meets the non-equity involvement criteriaOther Involvement A company that meets the equity or non-equity involvement criteria, but has suspended therelated operationsNot IncludedCompanies whose involvement is strictly humanitarian or limited only to the provision ofgoods/services related to health, education, journalism, or religionNon-revenue generating activitiesIndirect revenue generating activitiesMSCI ESG Research© 2014 MSCI Inc. All rights reserved.Please refer to the disclaimer at the end of this document3 of 8msci.com

Global Sanctions MethodologySyria ScreenNovember 2014OWNERSHIPOwnership OF an Involved Company MSCI ESG Research notes if a company owns 20% or more of an involved companyOwnership BY an Involved Company MSCI ESG Research notes if an involved company owns 50% or more of another publicly tradedcompanyRESEARCH PROCESS OVERVIEWMONTHLY UPDATESResearch is conducted monthly to track previously uninvolved companies that have become involvedwith Syria. Initial public offerings, name changes, de-listings, and mergers & acquisitions are included inthis research process. Media sources are reviewed monthly in order to identify major entries to Syria bycompanies, as well as significant changes in involvement with the country.MSCI ESG Research will remove a company from a restricted list if MSCI ESG Research determinesconclusively that the company is no longer involved with Syria.Updates to screens are available in ESG Manager five business days before the end of the month duringwhich new information is processed, and on the first of the following month in data feeds.ANNUAL UPDATESResearch on companies found to be involved with Syria is updated once every calendar year. The annualupdate process involves confirming involvement and updating all companies with the most recent fiscalyear information. As necessary, MSCI ESG Research communicates directly with companies in order toconfirm involvement or discontinued operations.A new company search is conducted annually using proprietary web-crawling technology to identify anynew companies with involvement with Syria.MSCI ESG Research will remove a company from a restricted list if MSCI ESG Research determinesconclusively that the company is no longer involved with Syria.In addition, MSCI ESG Research will remove a company from a restricted list if after three years MSCIESG Research cannot confirm ongoing evidence of a company’s involvement with Syria.SOURCESMSCI ESG Research uses a wide range of information tools and sources to perform both annual andmonthly updates, including:Proprietary web-crawling technologyCompany websitesCompany Annual Reports and regulatory filing documentsMedia search servicesBusiness directoriesNGO reports and websitesMSCI ESG Research© 2014 MSCI Inc. All rights reserved.Please refer to the disclaimer at the end of this document4 of 8msci.com

Global Sanctions MethodologySyria ScreenNovember 2014Government agencies and disclosureFinancial data providersDirect communication with companyQUALITY ASSURANCEMSCI ESG Research maintains robust quality assurance programs, including full reviews of research bysenior analysts, and a methodology committee that approves all changes to the research methodologyand enforces a consistent implementation.GLOBAL SANCTIONS RESEARCH FACTORS: SYRIAIn addition to classifying the general type of a company’s involvement with Syria, MSCI ESG Researchidentifies a number of factors detailing the nature of the company’s involvement. These factors arediscrete data fields in MSCI ESG Research’s Global Sanctions database and, therefore, can be used tocreate customized lists of companies involved with Syria. These factors include both common criteriaacross all or most target countries covered by MSCI ESG Research’s Global Sanctions product, andfactors unique to Syria.Clients that subscribe to ESG Manager and/or ESG Data Feeds will have access to these research factors.The following provides the research factor name, the column header under which that factor will beidentified, and the description of that research factor.CREATING A RESTRICTED LIST: SYRIAStep 1Step 2The first step in creating a restricted list consists of determining the involvement type. All companies onMSCI ESG Research’s Syria list meet one of the three involvement types, Equity, Non-Equity, or Other.Factor Name Column Header DescriptionSyria - InvolvementTypeSYRIA_TIEType of involvement - Equity, Non-Equity, or OtherThe second step, if necessary, is to identify further levels of the company’s involvement with Syria. Thefollowing list of research factors are available to build a restricted list concerning companies involvedwith Syria, and are designed to be able to meet the criteria of various mandates. The factors are listedalphabetically by Column Header.Factor Name Column Header DescriptionSyria - GovernmentTieSYRIA_BUS_GOVTCompany with a business tie to the Syriangovernment.Syria - Military Tie SYRIA_BUS_MILITARY Company with a business tie to the Syrian military.Syria - Issue CreditLoanSYRIA_CREDIT_LOANCompany issues credit or loans to Syria.MSCI ESG Research© 2014 MSCI Inc. All rights reserved.Please refer to the disclaimer at the end of this document5 of 8msci.com

Global Sanctions MethodologySyria ScreenNovember 2014Syria - Domiciled SYRIA_DOMICILED Company's headquarters are located in Syria(regardless of nation of incorporation).Syria - Totalinvestment in Syriagreater than USD20million in one yearSyria - Involvement inMineral ExtractionSyria - Involvement inNatural Gas /Petroleum SectorSyria - Involvement inPower ProductionActivitiesSyria - Pay for Mineral/ Energy rightsSyria - PropertyOwnershipSYRIA_INV_GREATER_20SYRIA_INV_MIN_EXTSYRIA_INV_NAT_GASSYRIA_INV_POW_PRODSYRIA_PAY_GOVT_MIN_ENERGYSYRIA_PROPERTYThe company's total investment in Syria is greaterthan USD $20 million in one year.Company is involved in mineral extraction activities,including, but not limited to: exploring, extracting,processing, and transporting.Company is involved in the natural gas or petroleumsector, including, but not limited to: exporting,extracting, producing, refining, processing, exploringfor, transporting, selling, or trading oil.Company is involved in power production activitieswhose purpose is to facilitate power generation inand/or and delivery from Syria. Activities include,but are not limited to: establishing power-generatingplants or hydroelectric dams, and selling or installingcomponents for such projects.Company pays the Syrian government for accessrights to mineral or energy resources.Company owns/controls property in Syria.Syria - State Owned SYRIA_STATE_ OWNED Syrian government, or any government-ownedentity, owns a 5% or greater stake in the company.Step 3The third step, if necessary, is to exclude companies from restricted lists if they have certain positive oroff-setting involvement in Syria. MSCI ESG Research tracks the following positive factors:Factor Name Column Header DescriptionSyria - PromoteHealth, Education,Journalism, Religion(Positive Indicator)Syria - Humanitarianefforts (PositiveIndicator)SYRIA_HLTH_ED_JL_RELSYRIA_ HUMANITARIANCompany whose primary operations in Syria relate tothe transfer of information (including, but not limitedto: books, newspapers and the Internet), the provisionof medicine/healthcare, or the propagation of anyreligious or philosophical belief system.Company whose primary operations in Syria arerelated to food/medicine/human services, all of whichare provided to the population with minimal or nocost.MSCI ESG Research© 2014 MSCI Inc. All rights reserved.Please refer to the disclaimer at the end of this document6 of 8msci.com

Global Sanctions MethodologySyria ScreenNovember 2014Syria - InactiveOperationsSYRIA_INACTCompany that maintains property, or renewal rights toa property, that had previously operated for thepurpose of generating revenue but is currently notbeing used for that purpose.Step 4Finally, MSCI ESG Research provides a narrative summary of a company’s involvement with Syria, whichclients can choose to include in their lists for reference:Factor Name Column Header DescriptionSyria - CompanyProfileSYRIA_PROFILEProfile of company's involvement with Syria.MSCI ESG Research© 2014 MSCI Inc. All rights reserved.Please refer to the disclaimer at the end of this document7 of 8msci.com

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