Japan’s Financial Services Agency Code of Conduct for ESG Ratings and Data Products Providers

Principle 1 – Securing Quality

ESG evaluation and data providers should strive to ensure the quality of ESG evaluation and data they provide. The basic procedures necessary for this purpose should be established.

Guideline 1: Bloomberg continues to enhance its relevant written policies and procedures to help ensure the issuance of high quality Sustainable Products.

Guideline 2: Bloomberg applies quantitative, rules-based and data-driven methodologies for its proprietary Sustainable Products. Where available, methodologies may be provided to our customers and Companies in accordance with our published Procedures of Engagement. As used in this Statement of Compliance, “Companies” refer to companies that have been assessed by Bloomberg.

Guidelines 3 and 5: Bloomberg’s Sustainable Product methodologies set out the frequency of the periodic review. Any changes made to the methodology will be incorporated into that document.

Guideline 4: Bloomberg intends to review and update, as appropriate, its Sustainable Products on a periodic basis to ensure they are computed in accordance with the relevant methodologies.

Guideline 6: Outsourcing to third parties (“Outsourced Vendors“) may include collection of as-reported and, in some cases, derived inputs to develop Sustainable Products. Bloomberg does not currently verify Outsourced Vendors’ compliance with ESG Code requirements.

Principle 2 – Human Resources Development

ESG evaluation and data providers should secure necessary professional human resources to ensure the quality of the evaluation and data provision services they provide, and should develop their own professional skills.

Guideline 1: Bloomberg has established a governance framework that oversees the sufficiency of resources (both personnel and technological capabilities) necessary to consistently apply its Sustainable Product methodologies.

Guidelines 2 and 3: Bloomberg takes necessary measures to appropriately evaluate personnel and ensure they have the necessary skills to perform their responsibilities. Personnel engaged in preparing and deliberating on Sustainable Products have the professional knowledge and integrity to carry out their duties in good faith.

Guideline 4: Bloomberg has established a governance framework to oversee decisions related to its Sustainable Products. The governance framework includes the Sustainability Oversight Committee, supported by associated forums, which collectively oversee execution of the strategic direction and priorities set by Bloomberg’s management committee in connection with sustainability-related commercial activities at both the product level and the corporate level. The organization has established a personnel management policy to support the development of human resources to support high quality Sustainable Products.

Principle 3: Ensuring Independence and Managing Conflicts of Interest

ESG evaluation and data providers should establish effective policies so that they can independently make decisions and appropriately address conflicts of interest that may arise from their organization and ownership, business, investment and funding, and compensation for their officers and employees, etc. With regard to conflicts of interest, providers should identify their own activities and situations that could undermine the independence, objectivity, and neutrality of their business, and avoid potential conflicts of interest or appropriately manage and reduce the risk of conflict of interest.

Guidelines 1 and 2: Bloomberg is committed to conducting business in accordance with the highest ethical standards and avoiding, or where appropriate, actively managing, actual, potential or perceived conflicts of interest (“Conflicts of Interest”). Bloomberg has established a Conflict of Interest policy that is applicable to all its employees (not specific to Sustainable Product businesses), which sets out the following general standards of conduct to which all employees must adhere:

• Employees must avoid and/or disclose any competing interests that could give rise to Conflicts of Interest, including without limitation, interests that create an opportunity for personal gain for employees, their friends, family, and associated outside activities or other activity.
• Employees must avoid and/or disclose the inherent risks of any competing interests or interference that arises between two or more products, services, and/or clients.

Guideline 3: Bloomberg does not generally collect information through the use of questionnaires or surveys to develop its Sustainable Products. However, certain Sustainable Products may include information collected through the use of questionnaires or surveys by a third-party data provider. Bloomberg does not currently verify the status of compliance of its third-party providers with the Codes’ requirements.

Guideline 4: Bloomberg has established a personal trading policy that is applicable to all its employees, which sets out firm-wide approach on trading individual securities and derivative products.

Guideline 5 and 6: Bloomberg’s organisational design separates reporting lines and compensation arrangements between relevant teams (e.g., Product development and Sales).

Guidelines 7 and 8: Bloomberg does not operate an ‘issuer-paid’ model for any of its Sustainable Products.

Bloomberg can make a Conflict of Interest Statement, which summarises the key elements of our approach, available upon request.

Principle 4 – Ensuring Transparency

ESG evaluation and data providers should recognize that ensuring transparency is an essential and prioritized issue, and publicly clarify their basic approach in providing services, such as the purpose and basic methodology of evaluations. Methodologies and processes for formulating services should be sufficiently disclosed.

Guideline 1: Bloomberg prioritizes transparency into data and methodologies used to develop its Sustainable Products.

Guideline 2: Where available, Sustainable Product methodologies may be provided to our customers and Companies in accordance with our Procedures of Engagement.

Guideline 3: Information on how to contact Bloomberg can be found in our Procedures of Engagement.

Guideline 4: Bloomberg discloses the sources of information that are used in the development of its Sustainable Products in a reasonable scope and manner.

Guideline 5: Bloomberg prioritizes transparency in its Sustainable Products. Where applicable, methodology documents contain information on the measurement objective, criteria used for assessment, KPIs, relative weightings, principal sources, time horizon assessment, frequency of reviews and the meaning of each assessment category.

Principle 5 – Confidentiality

ESG evaluation and data providers should establish policies and procedures to appropriately protect non-public information obtained in the course of business.

Guidelines 1 and 2: Bloomberg has established policies and procedures designed to protect any non-public information, or information otherwise subject to data privacy protections and which may be used in connection with developing a Sustainable Product. These policies are made available via Bloomberg’s user-based services. Bloomberg has put in place procedures that it believes are appropriate to protect the confidentiality and integrity of any non-public information.

Principle 6 – Communication with Companies

ESG evaluation and data providers should devise and improve the way they gather information from companies so that the process becomes efficient for both service providers and companies or necessary information can be sufficiently obtained. When important or reasonable issues related to information source are raised by companies subject to evaluation, ESG evaluation and data providers should appropriately respond to the issues.

Guideline 1: Bloomberg does not generally collect information through the use of questionnaires or surveys to develop its Sustainable Products. However, certain Sustainable Products may include information collected through the use of questionnaires or
surveys by a third-party data provider. Such third-party questionnaires or surveys are developed without input from Bloomberg.

Guidelines 2 through 6: Bloomberg generally takes the following approach when engaging with Companies. Additional steps may be taken, or reasonable deviations may occur, as may be required from time to time.

• We allow Companies to provide feedback on our Sustainable Products once they have been published.
• We review and improve Sustainable Product methodologies.
• We take measures to ensure that Companies are assessed transparently by applying quantitative, rules-based and data-driven methodologies.
• We have established policies and procedures which we believe are appropriate to safeguard non-public information which may be used to develop Sustainable Products.
• We seek to follow high standards of conduct in our engagement and expect Companies not to provide any (i) price sensitive or inside information; or (ii) monetary or non-monetary benefits (including gifts and entertainment) to our product specialists or other employees.

Further information on Bloomberg’s principles of engagement with Companies and how to contact Bloomberg can be found in our Procedures of Engagement.

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