Sustainable Investing Exam Free Dumps

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It is easy for you to pass Sustainable Investing exam. The Sustainable Investing exam consists of 100 multiple-choice questions, and you have 2 hours and 20 minutes to answer all the questions. The registration fee for the Sustainable Investing Certificate is USD 890. We provide the latest CFA Institute Sustainable Investing exam dumps, which can ensure you pass the test easily. Free Sustainable Investing exam dumps are available below.

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1. Excluding investment in companies with a history of labor infractions is best categorized as a(n):

universal exclusion.

idiosyncratic exclusion.

conduct-related exclusion

2. The offering of indexes and passive funds with ESG integration by asset managers

preceded the offering of actively managed ESG funds

occurred at the same time as the offering of actively managed ESG funds.

followed the offering of actively managed ESG funds

3. Which of the following investor types most likely has the shortest investment time horizon?

Foundations

General insurers

Defined benefit pension schemes

4. When assessing credit and ESG ratings, which of the following statements is most accurate?

The correlation between country ESG risk and credit ratings is high

The correlation between ESG ratings among rating providers is high

The correlation between credit ratings among credit rating agencies (CRAs) is low

5. A portfolio manager may need to adopt a more appropriate ESG benchmark rather than a broad market benchmark if the degree of exclusions results in:

low active share and low tracking error

low active share and high tracking error.

high active share and high tracking error.

6. Which of the following statements about the Green Claims Directive (GCD) is most accurate? The GCD:

applies to mandatory green claims made by businesses towards consumers

aims to make green claims reliable, comparable, and verifiable across the world.

requires verification by independent auditors before green claims can be made and marketed

7. Which of the following statements about the decoupling of economic activities from resource usage is most accurate?

Moving to a circular economy boosts decoupling

The Jevons paradox explains why decoupling happens

Absolute long-term decoupling is more common than relative decoupling

8. Which of the following was established by the United Nations Environment Programme Finance Initiative (UNEP FI)?

Principles for Sustainable Insurance (PSI)

Climate Disclosure Standards Board (CDSB)

Global Sustainable Investment Alliance (GSIA)

9. Which of the following ESG investment approaches would most appropriately be used to construct a balanced and diversified portfolio?

Thematic investing

Screening on a relative basis

Screening on an absolute basis

10. The concept of double-agency in society refers to the conflict of interest between

corporate CEOs and shareholders

money managers and asset owners.

corporate CEOs and money managers

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11. The UK’s Green Finance Strategy identifies the policy lever of financing green as

strengthening the role of the UK financial sector in driving green finance

directing private sector financial flows to economic activities that support an environmentally sustainable and resilient growth.

ensuring that the financial sector systematically considers environmental and climate factors in its lending and investment activities.

12. A company reduces water usage and increases usage of more expensive resources after regulations become more stringent. This most likely impacts:

revenues

provisions

operating expenditure

13. Which of the following increases pressure on natural resources?

Population growth

Economic recession

Declining life expectancy

14. The investor initiative FAIRR focuses on screening out companies

mining ancestral lands.

using suppliers that do not pay a living wage.

exhibiting poor antibiotic stewardship in animal farming

15. Companies may be excluded from the UK Modern Slavery Act on the basis of:

size only

sector only.

both size and sector

16. Which of the following countries is most likely to use a two-tier board structure?

USA

Japan

Germany

17. Which of the following asset classes has the lowest degree of ESG integration?

Sovereign debt

Investment grade corporate debt

Emerging markets corporate debt

18. According to the Active Ownership study, which of the following statements regarding ESG engagement is most accurate?

Unsuccessful engagements often have adverse impacts on returns

Success is typically achieved within 12 months of the initial engagement

Successful engagement activity was followed by positive abnormal financial returns

19. Which of the following would most likely be the initial step when drafting a client's investment mandate?

Clarifying the client's ESG investment beliefs

Defining how ESG performance will be measured

Reflecting the client's investment beliefs operationally in the fund manager’s investment approach

20. The role of auditors is to assess the financial reports prepared by management and to provide assurance that:

the numbers are correct

there is no fraud within the business.

the reports fairly represent the performance and position of the business

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21. Which of the following statements about ESG integration in fixed income is most accurate?

Municipal bonds cannot be considered for ESG integration

Credit rating agencies attempt to capture the risk of contingent liabilities in their sovereign credit ratings

Equity investors typically place greater emphasis on ESG factors that affect balance sheet strength compared to fixed-income investors

22. Which of the following is most likely the primary driver of ESG investment for a life insurer?

Reputational risk

Recognition of lengthy investment time horizons

Awareness of financial impacts of climate change

23. Which of the following statements about quantitative ESG analysis is most accurate?

Quantitative ESG analysis is only based on third-party data

The length of the timeseries for ESG data is shorter than for financial data

Application programming interfaces (APIs) are used to bring structure to the ESG dataset

24. Which of the following transition risks is most likely associated with increased environmental standards?

Legal risks

Policy risks

Technology risks

25. Which of the following greenhouse gases (GHGs) has the longest lifetime in the atmosphere?

Methane

Carbon dioxide

Fluorinated gas

26. Which of the following climate risks are systemic risks to the financial system?

Policy and legal risks

Technology and stability risks

Physical and transitional risks

27. Which of the following emphasizes that short-term investment performance will be of limited significance in evaluating the manager?

Brunel Asset Management Accord

International Corporate Governance Network (ICGN) Model Mandate

Principals for Responsible Investment’s (PRI) Practical Guide to ESG Integration for Equity Investing

28. What is the underlying principle of the corporate governance code in most markets?

If not, why not

Apply or explain

Comply or explain

29. Which of the following types of ESG bonds provide financing to issuers who commit to future improvements in sustainability outcomes?

Green bonds

Sustainability bonds

Sustainability-linked bonds

30. Which of the following has the long-term goal to keep the increase in global average temperature to well below 2°C (3.6°F) above pre-industnal levels?

The Kyoto Protocol

The Paris Agreement

The UN Framework Convention on Climate Change

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31. Which of the following is a form of individual engagement?

Generic letter

Soliciting support

Informal discussions

32. Human rights violations are most likely to affect workers employed

by first-tier suppliers to publicly traded companies

by second-tier suppliers to publicly traded companies.

deep within the supply chain of publicly traded companies.

33. What order should investors follow when implementing social factors in their investment decisions?

Process 1: Assess the critical social factors in the supply chain

Process 2: Assess how exposed companies are to sector-specific social factors

Process 3: Assess which social factors are most financially material in a particular industry

Process 1, followed by Process 2, and then Process 3

Process 2, followed by Process 1, and then Process 3

Process 3, followed by Process 2, and then Process 1

34. Scores used to construct ESG index benchmarks can be

data based, but not rating based

rating based, but not data based.

both data based and rating based

35. According to the McKinsey framework which of the following elements of sustainable investing is allocated to the investment dimension of tools and processes?

Proactive engagement

Review of external managers

Integration with investment teams

36. According to the Sustainability Accounting Standards Board (SASB) materiality risk mapping, greenhouse gas emissions (GHG) are most material for the

financial sector

healthcare sector.

infrastructure sector

37. A bond issued to fund projects that provide a clear benefit to the environment best describes a:

green bond.

transition bond.

sustainability-linked bond.

38. Which of the following is most likely an example of a negative externality?

Impairment costs incurred by a company due to regulatory changes

Direct costs incurred by a company in reducing environmental damages

Indirect costs incurred by third parties due to environmental damages caused by a company

39. Which of the following sectors has the highest percentage of corporate profits at risk from state intervention?

Banking

Consumer goods

Pharmaceuticals and healthcare

40. Which of the following is best described as a risk management framework for assessing environmental and social risk in project finance?

The Equator Principles

The Helsinki Principles

The Net Zero Asset Managers initiative

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41. Which of the following statements about materiality is most accurate?

Double materiality excludes impacts of a company on ESG factors

Financial materiality is an extension of the accounting concept of double materiality

Dynamic materiality means that investors must constantly review what is financially material for a company

42. Wastewater treatment facilities:

are highly capital intensive to develop

require minimal ongoing maintenance expenditures.

can be maintained by lower-skilled workers once developed

43. Norms-based screening is the largest investment strategy in

japan

europe

the united states

44. Which of the following is most likely a reason for concern regarding the quality of a company's ESG disclosures?

The inclusion of audited ESG data

Competitors have stronger disclosure standards

There is written commitment to improve future ESG disclosure

45. With respect to ESG integration, adjusting financial model inputs based on an evaluation of a company’s ESG risk factors is an example of a:

hybrid approach

qualitative approach.

quantitative approach

46. According to the UK Investor Forum which of the following is a key success factor for effective engagement?

Transparency on conflicts of interest

Regulatory approval of the collaboration

Clear leadership with appropriate relationships, skills and knowledge

47. Uploading a portfolio to an external ESG data provider’s online platform

safeguards portfolio holdings

lowers overreliance on a single provider.

shows a portfolio's environmental exposure.

48. Which of the following is an example of a just’ transition with regards to climate change?

A company issues a first transition bond to finance a gas-fired power utility project

A manufacturer designs products that are more reusable and recyclable to support the circular economy

A government works with labor unions to develop a social package for displaced workers due to closure of coal mines

49. Which of the following statements about social trends is most accurate?

Companies within a sector are equally exposed to social trends

Social trends have a similar impact across sectors in developed countries

The importance of a social trend depends on a country’s regulatory framework

50. Fund labelers are most likely classified as:

regulators

fund promoters.

financial advisers

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51. Integrating the impact of material ESG factors into traditional financial analysis for a company with strong ESG practices most likely.

leads to a lower estimate of intrinsic value

has no impact on intrinsic value

leads to a higher estimate of intrinsic value

52. When undertaking an ESG assessment of a private equity deal ESG screening and due diligence will most likely take place during:

exit

ownership

deal sourcing

53. When incorporating ESG factors into valuation inputs, which of the following would most likely require the lowest discount rate?

A company with strong ESG practices

A high-growth technology company operating in emerging markets

A company that is judged to have a negative environmental impact

54. Formal corporate governance codes are most likely to

be found in all major world markets

call for serious consequences for non-comphant organizations.

be interpreted by proxy advisory firms when corporate compliance is assessed

55. In which country is the proposal of shareholder resolutions most common?

Australia

56. Which of the three ESG factors is most often taken into consideration by traditional investment analysts?

Social

Governance

Environmental

57. Which of the following statements about corporate governance is most accurate? Companies with a more diverse board of directors are most likely associated with

lower profitability

lower stock return volatility.

less investment in research and development.

58. In France, shareholders eligible for being awarded double voting rights are

founding shareholders during an IPO

long-standing shareholders of at least two years.

minority shareholders that are employee representatives

59. With respect to ESG engagement for a company that is a going concern, the interests of equity investors and debt investors are most likely.

aligned

opposed.

independent

60. According to the Capitals Coalition, the stock of renewable and non-renewable natural resources that combine to yield a flow of benefits to people is best described as

nature

natural capital.

ecosystem assets

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61. ESG factors that relate to future growth opportunities are most relevant to:

equity investors.

sovereign debt investors.

corporate bond investors.

62. The United Nations Sustainable Development Goals (SDGs) are particularly aimed at

investors

corporations.

governments

63. When searching for an asset manager with an ESG approach, in the request for proposal (RFP) an institutional asset owner would most appropriately ask:

which broad market index the asset manager tracks

detailed questions on specific portfolio holdings of the asset manager

if the asset manager aims for positive, measurable ESG outcomes beyond financial returns

64. According to the Taskforce on Nature-related Financial Disclosures (TNFD), the four realms of nature include

land

pollution.

biodiversity

65. In ESG integration, model adjustments are typically performed at the:

research stage

valuation stage.

portfolio construction stage

66. An asset manager considering environmental risks would most likely use:

qualitative analysis only

quantitative analysis only

both qualitative and quantitative analyses

67. To produce a rating, an ESG rating provider will most likely apply a weighting system to

qualitative data only

quantitative data only

both qualitative data and quantitative data

68. Compared with younger people, older people are more likely to have:

lower accumulated savings and spend less on consumer goods

higher accumulated savings and spend less on consumer goods.

higher accumulated savings and spend more on consumer goods

69. The divergence of ratings among ESG providers most likely.

enhances the credibility of empirical research

ensures that ESG performance is reflected in asset prices.

hampers the ambition of companies to improve their ESG performance

70. The adoption of ESG investing by retail investors has generally been:

slower than its adoption by institutional investors.

at the same pace as its adoption by institutional investors.

faster than its adoption by institutional investors.

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71. When optimizing a portfolio for ESG factors, as constraint parameters are tightened, the deviation from an optimal portfolio most likely:

decreases.

is not affected.

increases.

72. Performance materiality:

is usually higher than overall materiality

is set lower when financial controls are strong.

can indicate the auditor's level of trust in a company’s financial systems.

73. Assessing the alignment of local labor laws with International Labour Organization (ILO) principles is an example of social analysis at the:

sector level

country level.

company level

74. Under the disclosure guide for public equities published by the Pension and Lifetime Savings Association (PLSA). fund managers are expected to report on:

ESG integration only.

stewardship activities only.

both ESG integration and stewardship activities

75. In ESG integration, which of the following best describes a data-mformed analytical opinion designed to support investment decision-making?

ESG screening

Integrated research

Voting and governance advice

76. One of the mam principles of stewardship codes calls for institutional investors to:

regularly monitor investee companies

avoid considering conflicts of interest regarding stewardship matters.

act independently of other investors when escalating stewardship activity

77. Which of the following technologies is most likely to be viewed by investors as a strategic solution to the decarbonization of high-temperature processes?

Nuclear fusion

Next-generation battery storage

The use of renewable energy to produce hydrogen

78. Regarding ESG issues, which of the following sets the tone for the investment value chain?

Asset owners

Asset managers

Investment consultants

79. Which of the following is an example of shareholder engagement? Institutional investors:

responding to policy consultations

making ESG recommendations to policy makers

discussing ESG issues with an investee company’s board

80. Compared to an optimal portfolio that does not have any ESG restrictions a portfolio that optimizes for multiple ESG factors will most likely experience

lower active risk

higher active risk.

lower tracking error

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81. Which of the following ESG investing approaches aims to drive positive change in the way investee companies are governed and managed?

Impact investing

Active ownership

Positive alignment

82. low risk exposure to this factor in the short run

With reference to data security and customer privacy issues a technology company in the research and development stage with no commercially marketed products is most likely to have:

medium risk exposure to this factor in the short run.

high risk exposure to this factor in the short run.

83. For a board to be successful the most important type of diversity needed is:

age

gender

thought

84. The Sustamalytics database is most likely used for:

manager ESG assessment

company ESG assessment.

creating an ESG benchmark

85. Which of the following factors is most relevant to the performance outlook of a military equipment manufacturer?

Offshoring

Gender equality

Artificial intelligence

86. A discount retailer facing high employee turnover due to poor working conditions will most likely experience:

significant liabilities

greater operating costs.

an adverse impact on revenues

87. Which of the following challenges is most likely related to the attribution of returns to ESG factors?

Difficulty to demonstrate the value added by a programme of engagement

Difficulty to assess the performance drag that comes from excluding an industrial sector

Performance attribution to ESG factors is still in its early stages and may well need further assurance and consistency for it to have real power

88. Which of the following is an environmental megatrend that has a severe social impact?

Urbanization

Globalization

Mass migration

89. According to a study of the Hermes UK Focus Fund: which of the following engagement objectives was most likely to be achieved through shareholder activism?

Renumeration policy changes

Improvements to investor relations

Restructuring and financial policies

90. Jurisdictions are most likely to impose extraterritorial laws in relation to:

bribery and corruption

paying suppliers appropriately and promptly.

upholding high standards in health and safety

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91. The triple bottom line accounting theory considers people, profit, and:

planet

efficiency.

licence to operate

92. Which of the following social factors most likely impacts a company's external stakeholders?

Working conditions, health, and safety

Employment standards and labor rights

Product liability and consumer protection

93. An ESG scorecard for sovereign debt issuers has the following information:

Country 1No carbon policy and high corruption risk

Country 2High-level carbon policy and low corruption risk

Country 3Detailed carbon policy and low corruption risk

Based only on this information, the country with the lowest ESG risk is:

Country 1.

Country 2

Country 3

94. According to Mercer Consulting, which of the following asset classes has the highest availability of sustainability-themed strategies compared to its asset-class universe?

Real estate

Private debt

Infrastructure

95. The Cadbury Commission proposed that:

transparency around drivers of performance pay should be increased

the Public Company Accounting Oversight Board should be established.

every public company should have an audit committee meeting at least twice a year

96. Which of the following statements regarding ESG screening is most accurate?

There is limited availability of sustainability ratings for collective funds

ESG screening does not consider stewardship and engagement activities

Only collective funds with a high level of ESG integration have a high sustainability rating

97. Which of the following is an example of a bottom-up ESG engagement approach? An asset manager:

joining the PRI Collaboration Platform

sending out a letter to the CFOs of all investee companies

initiating dialogue with an investee company's investor relations team

98. Which of the following would credit rating agencies (CRAs) most likely focus on in order to test how ESG factors affect an issuer’s ability to convert assets into cash?

Capital structure analysis

Interest coverage ratio analysis

Profitability and cash flow analysis

99. To fall in scope of mandatory compliance with the EU’s Corporate Sustainability Reporting Directive (CSRD), companies would need to meet which of the following conditions?

Condition 1EUR40 million in net turnover

Condition 2EUR20 million in assets

Condition 3250 or more employees

Any one of these conditions

Any two of these conditions

All three of these conditions

100. According to the framework of the Task Force on Climate-Related Financial Disclosures (TCFD): the formula for carbon intensity at the portfolio level weighs emissions based upon an issuer's:

profit.

revenue.

net assets

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101. Corporate engagement and shareholder action is the predominant investment strategy in:

Japan

Europe

the United States

102. ESG screens embedded within portfolio guidelines can be used as:

a risk management tool only.

a source of investment advantage only.

both a risk management tool and a source of investment advantage.

103. When accounting for a critical weakness in a company's environmental management process, an analyst using a discounted cash flow (DCF) valuation model should:

decrease the cost of capital.

not change the cost of capital.

increase the cost of capital.

104. Which of the following is an example of collaborative engagement?

Follow-on dialogue

Active public engagement

Housekeeping engagement

105. Which of the following UK Stewardship Code principles is not addressed in the European Fund and Asset Management Association (EFAMA) Code? The principle that institutional investors should:

monitor their investee companies

report periodically on their stewardship and voting activities

have a robust policy on managing conflicts of interest in relation to stewardship

106. Increased investment crowding into more ESG-friendly sectors is most likely to increase:

valuations.

expected returns.

materiality thresholds.

107. A bond issued to finance construction of a solar farm is an example of a:

blue bond

green bond

transition bond

108. The EU Paris-Aligned Benchmarks and EU Climate Transition Benchmarks both:

prohibit investments in fossil fuels

impose green-to-brown ratios to restrict “brown" investments

use a relative approach by comparing a company's performance to its sector average

109. Which of the following engagement styles is most likely closely aligned with passive investments?

Bottom-up engagement

Issued-based engagement

Company-focused engagement

110. An analyst reads the following statements about wastewater treatment plants:

Statement I: Wastewater treatment plants are capital intensive.

Statement II: Wastewater treatment plants are difficult to maintain.

Which of the following is correct?

Statement I only

Statement II only

Both Statement I and Statement II

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111. For engagement strategies to deliver meaningful results in a cost-effective and time-effective manner, investors must:

identify which company in their portfolio is most in need of engagement

raise all possible concerns with the company which has the most risk in their portfolios

frame the engagement topic into a broader discussion around strategy and avoid discussing long-term financial performance with a company's board

112. In the investment management industry, triple bottom line accounting theory:

replaces a broader framework of sustainability.

complements a broader framework of sustainability.

has been replaced by a broader framework of sustainability.

113. When integrating ESG analysis into the investment process, deriving correlations on how ESG factors might impact financial performance over time is an example of a:

passive approach.

thematic approach.

systematic approach.

114. Which of the following actions is best categorized as an escalation of engagement?

Arranging a meeting with the investor relations team

Engaging management through an operational site visit

Submitting resolutions and speaking at general meetings

115. Which element of EU Taxonomy for Sustainable Activities screening is most closely associated with social factors?

Do no significant harm

Substantially contribute

Comply with minimum safeguards

116. Negative screening for ESG factors in portfolios:

results in static exclusions.

can exclude an entire country.

is commonly applied to all asset classes.

117. Which of the following is one of the five main drivers of nature change described by the Taskforce on Nature-related Financial Disclosures (TNFD)?

Ecosystem services

Invasive alien species

Transmission channels

118. Using surface water in a business activity is best characterized as a:

direct impact on biodiversity

positive indirect impact on biodiversity

negative indirect impact on biodiversity

119. Anti-corruption laws are a relevant governance factor for which of the following investments?

Private equity

Sovereign debt

Infrastructure assets

120. Corporate disclosures in line with the recommendations of the Corporate Sustainability Reporting Directive (CSRD) are a regulatory requirement for companies in:

the EU only

the UK only

both the EU and the UK

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121. A company’s emission reduction commitments are best evaluated using:

Scope 3 emissions.

science-based targets.

financial modelling of material environmental factors.

122. New technologies have enabled workers to:

improve their work-life balance only.

adopt more flexible working patterns only.

both improve their work-life balance and adopt more flexible working patterns.

123. Scorecards for ESG analysis are most likely:

applicable to public companies but not private companies.

used when third-party research or scores are not available.

inappropriate for country-level assessments of sovereign bonds.

124. Applying ESG screens to quantitative strategies directs the portfolio on:

an asset basis.

a top-down basis.

an individual issuer basis.

125. Which of the following statements is aligned with the Pensions and Lifetime Savings Association (PLSA) Stewardship checklist?

Statement 1: Investors should seek to ensure that fund managers deliver effective separation of long-term ESG factors from their investment approach.

Statement 2: Investors should work with their advisers to consider the level of resource available for stewardship activities.

Statement 1 only

Statement 2 only

Both Statement 1 and Statement 2

126. Which of the following is an example of secondary data?

A news article

A letter to shareholders

A Bloomberg Disclosure score

127. Which of the following projects are most likely to be financed in the green bond market?

Real estate projects

Manufacturing projects

Communications technology projects

128. An unfavorable corporate governance assessment would most likely be incorporated in valuation through reduced:

discount rates.

risk premia in the cost of capital.

levels of confidence in the valuation range.

129. Which of the following is most likely a secondary source of ESG information?

Annual reports

ESG rating reports

Corporate sustainability reports

130. Under the UK listing regime, Class 1 transactions:

must be approved via shareholder vote.

can be completed at management's discretion.

require additional disclosures to shareholders but no approval via shareholder vote.

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131. Asset owners can reflect ESG considerations through corporate engagement by:

discussing ESG issues with an investee company’s board.

working with regulators to design a more stable financial system.

using ESG criteria to identify investment opportunities through a thematic approach.

132. Which of the following is a success factor characteristic of investor collaboration? Investors should have:

an engagement approach that is bespoke to the target company.

clear leadership with appropriate relationships, skills, and knowledge.

objectives that are linked to material strategic and governance issues.

133. A social media company faces criticism from a consumer action group for selling user data to advertising clients. A potential lawsuit will have the greatest direct effect on the company’s:

return on equity ratio.

creditors turnover ratio.

liabilities-to-assets ratio.

134. Which of the following encourages institutional investors to work together on human rights and social issues?

Human Rights 100+

OECD Guidelines for Multinational Enterprises

United Nations Guiding Principles on Business and Human Rights

135. Which of the following statements regarding optimization of portfolios for ESG criteria is most accurate?

ESG integration may enhance the risk and return profile of portfolio optimization

Optimization is limited to carbon data because of its absolute nature and more standardized reporting metrics

ESG optimization via constraints is similar to exclusionary screening because it also applies a fixed decision on specific securities

136. With respect to ESG integration in private equity, which of the following is most likely a challenge an investor may face?

Lack of strategy and long-term orientation from private equity managers

Lack of capacity within the investee company to fulfill ESG reporting requirements

Reporting frameworks that do not account for the relative lack of transparency found in private markets relative to public markets

137. In Australia, a managing director of a company is the:

executive chair.

only executive director.

former CEO of the company.

138. Corporate governance in the UK is notable for:

its requirement for joint auditors.

the existence of double voting rights for some shareholders.

the prominence of board behavior guidelines in its Corporate Governance Code.

139. Which of the following governance initiatives was focused on increased oversight of banks?

The Dodd-Frank Act

The Greenbury Report

The Sarbanes-Oxley Act

140. Which of the following statements about the assessment of ESG risks is most accurate?

Manageable risks that are managed well can be eliminated

Management gap refers to risks inherent in the business model

Unmanageable risks cannot be addressed by company initiatives

Page 15 of 18

141. Which of the following best summarizes the studies on carbon risk?

Companies with lower levels of CO2 emissions are associated with higher returns

Companies with higher levels of CO2 emissions are associated with higher returns

There is no conclusive evidence on the link between a company's level of CO2 emissions and returns

142. The financial crisis of 2008 led to which of the following legislative changes?

The Cadbury Code

The Dodd-Frank Act

The Greenbury Report

143. Avoiding long-term transition risk can most likely be achieved by:

investing in companies with stranded assets.

divesting highly carbon-intensive investments in the energy sector.

reducing exposure to companies exposed to extreme weather events.

144. With respect to exclusion policies, which of the following falls outside of the traditional spectrum of responsible investment?

Indices

Listed equities

Corporate debt

145. In contrast to engagement dialogues, monitoring dialogues most likely involve:

a two-way sharing of perspectives.

discussions intended to understand the company, its stakeholders and performance.

conversations between investors and any level of the investee entity including non-executive directors.

146. According to the Brunel Asset Management Accord, which of the following is most likely a concern for the asset owner? A fund manager:

having short-term investment underperformance

taking lower risk compared to the investment mandate

generating returns consistently above the industry average

147. Company reporting and transparency are led by the:

board

auditor

management team

148. When using a threshold assessment to integrate governance factors into the investment decision-making process, fund managers most likely focus on the:

cost of capital

quality of management

level of confidence about future earnings

149. An investor requires a social return and will tolerate a sub-market financial return. This best characterizes:

social investing.

impact investing.

sustainable and responsible investing.

150. Is the following statement accurate? "Engagement is meant to preserve and enhance long-term value on behalf of the asset owner by focusing on factors such as capital structure and lobbying."

Yes

No, because engagement does not focus on lobbying

No, because engagement does not focus on capital structure

Page 16 of 18

151. When assessing the investment risk of a coal mining company, the concept of double materiality refers to the company reporting on matters of:

current and future materiality

people and planet materiality

financial and impact materiality

152. Organizing companies according to their sustainability attributes, such as resource intensity, sustainability risks, and innovation opportunities, best describes the:

Morningstar sustainability rating.

Sustainable Industry Classification System (SICS).

Task Force on Climate-related Financial Disclosures (TCFD).

153. Which of the following organizations is not a provider of both ESG-related and non-ESG-related products and services?

S&P

Factset

RepRisk

154. Which of the following is most likely to cast doubt on a director’s independence?

Holding cross-directorships

Receipt of director's fees from the company

Serving as a director for a relatively short period of time

155. Which of the following is one of the four phases of activities contained by the LEAP assessment framework developed by the Taskforce on Nature-related Financial Disclosures (TNFD)?

Minimize their interface with nature

Maximize their dependence and impact on nature

Evaluate material risks and opportunities for their operations

156. In the ESG rating process, an assessment of risk, policies, and preparedness is best categorized as part of a(n):

operational assessment.

fundamental assessment.

disclosure-based assessment.

157. The correlation between ESG ratings of issuers by different ESG rating providers is:

lower than the correlation between credit ratings of issuers by different credit rating providers.

the same as the correlation between credit ratings of issuers by different credit rating providers.

higher than the correlation between credit ratings of issuers by different credit rating providers.

158. Which of the following ESG investment approaches is most likely applicable when investing in sovereign debt?

ESG tilting

Collaborative engagement

Active private engagement

159. A hurdle to adopting ESG investing is most likely a:

lack of suitable benchmarks.

focus on short-term performance.

lack of options outside of equities.

160. Which of the following would most likely see its estimate of intrinsic value increased by analysts?

A company with high climate-related risk

A company facing significant environmental regulations

A company having launched a service that reduces customers’ electricity usage

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161. Mass migration from developing countries to developed countries are most likely caused by:

desertification only.

scarcity of fresh water only.

both desertification and scarcity of fresh water.

162. Which of the following initiatives is most closely associated with the increased prevalence of antimicrobial resistance?

The Bangladesh Accord

Access to Medicine Index

Farm Animal Investment Risk and Return

163. Measuring a portfolio's carbon intensity using the European Union's Sustainable Finance Disclosure Regulation (SFDR) accounts for:

Scope 1 emissions only.

Scope 1 and Scope 2 emissions only.

Scope 1, Scope 2, and Scope 3 emissions.

164. A company is accused of surveying employees to prevent them from forming a union. The decision of an asset manager to divest from holding shares in the company is an example of:

universal exclusion.

idiosyncratic exclusion.

conduct-related exclusion.

165. Impact investment funds most likely align their portfolios with:

Sustainable Development Goals.

ESG frameworks that are norms-based.

OECD Guidelines for Multinational Enterprises.

166. Which of the following scenarios best illustrates the concept of a 'just' transition?

A region transitioning to solar power subsidizes businesses to install solar arrays

A region transitioning to a smaller public sector workforce funds outplacement programs for displaced office workers

A region transitioning away from iron ore mining helps displaced miners to work in the safe decommission of abandoned mines

167. Formal corporate governance codes are most likely to:

be found in all major world markets.

call for serious consequences for non-compliant organizations.

be interpreted by proxy advisory firms when corporate compliance is assessed.

168. According to the Sustainability Accounting Standards Board (SASB), GHG emission is material for more than 50% of the industries in which sector?

Health care

Technology and communications

Extractives and minerals processing

169. In response to policy changes, several of the world’s largest automakers made pledges to halt producing cars with internal combustion engines by 2035.

Which of the following would an asset manager most appropriately use to address this trend?

Factor risk asset allocation model

Liability-driven asset allocation model

Regime switching asset allocation model

170. Regime switching strategic asset allocation models are:

typically based on historical data

widely utilized by investment practitioners

used to model abrupt changes in financial variables due to shifts in regulations and policies

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171. The challenge of ESG integration for an investor is most likely attributable to:

a lack of third-party ESG data providers.

ESG disclosure mandates by stock exchanges.

the vast range of possible ESG data and the conflicting demands among investors and other stakeholders.

172. During the decommissioning phase of a company’s mining project, the government tightens regulations on land restoration.

Which of the following is most likely impacted?

taxes

revenue

provision

173. Suppose the average price-to-earnings (P/E) ratio for the financial industry is 10x. A financial institution with high ESG risk compared to its industry, is most likely assigned a fair value P/E ratio:

lower than 10x

of 10x

higher than 10x

174. According to most of the world’s corporate governance codes, the expectation is that remuneration committees are populated by:

executive directors only

non-executive directors only

both executive directors and non-executive directors

175. Which of the following social factor scenarios is most likely to affect revenue forecasting?

Consumer boycotts related to controversial sourcing

Fines related to occupational health and safety failures

High employee turnover related to poor human capital management

176. Which of the following statements is least accurate? Compared to social and environmental factors, governance has a:

greater link to financial performance.

greater consideration in traditional investment analysis.

greater materiality for private companies than for public companies.

177. Which of the following subclasses is most likely to have the highest level of ESG integration using Mercer's ratings?

Sovereign debt

High-yield credit

Investment-grade credit

Sustainable Investing Exam Free Dumps

Sustainable Investing Exam Free Dumps

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