Question1: Which of the following transition risks is most likely associated with increased environmental standards?
Question2: An emissions trading system (ETS) permits a high allocation of free allowances to energy-intensive companies. The most likely objective of this practice is to:
Question3: Pension funds are most likely classified as:
Question4: The Jevons paradox refers to:
Question5: A company has an audit contract with one Big Four firm and non-audit contracts with two other Big Four firms. Which scenario is most likely to materialize when the company rotates its auditors?
Question6: Which of the following is most likely an example of quantitative ESG analysis? Analyzing:
Question7: A pension fund concerned about climate change will most likely:
Question8: In which of the following circumstances is Free, Prior, and Informed Consent (FPIC) most applicable?
Question9: A company's reporting and transparency are initially led by its:
Question10: Interest by retail investors in responsible investing has:
Question11: With regards to the climate, financial materiality:
Question12: According to an OECD Centre for Opportunity and Equality (COPE) 2015 report, the average income of the richest 10% of the population is about:
Question13: According to the Brunel Asset Management Accord, which of the following is least likely a cause for concern when conducting an annual performance evaluation of a manager against a long-term ESG investment mandate?
Question14: According to the Stockholm Resilience Centre, which of the following planetary boundaries has been crossed as a result of human activity?
Question15: Which of the following statements about the effects of globalization are most likely correct?
Statement 1: Globalization has led to increased efficiency in markets, resulting in wider availability of products at lower costs.
Statement 2: Globalization has led to increased social well-being due to a reduction in social structural inequality.
Question16: Scorecards to assess ESG factors:
Question17: The UK's Green Finance Strategy identifies the policy lever of financing green as
Question18: Which of the following is most likely to cast doubt on a director's independence?
Question19: Passive investors typically start engagement by:
Question20: Which of the following is most likely a consequence of income inequality?
Question21: Non-recyclable waste is eliminated in the:
Question22: With respect to ESG reporting:
Question23: Assessing the alignment of local labor laws with International Labour Organization (ILO) principles is an example of social analysis at the:
Question24: Engagement teams with a history of governance-led engagement are most likely to be organized:
Question25: Which of the following statements about engagement escalation is most accurate?
Question26: The first step in the effective design of a client ESG investment mandate is to:
Question27: Which of the following statements about good corporate governance is most accurate?
Question28: Companies may be excluded from the UK Modern Slavery Act on the basis of:
Question29: Under which perspective did the Freshfields Report argue that integrating ESG considerations was necessary in all jurisdictions?
Question30: The size of the discount rate adjustment to account for ESG risks most likely depends on:
Question31: Primary ESG data can be sourced:
Question32: An investor positively screening for bonds that commit to specific improvements in ESG outcomes is most likely to tilt her portfolio towards:
Question33: Compared to credit rating agencies, the time horizon consideration for ESG rating providers is most likely:
Question34: Best-in-class funds most likely:
Question35: Philanthropy is most likely associated with:
Question36: An asset owner inquiring within a request for proposal (RFP) if the asset manager has an explicit objective to
"generate a positive, measurable ESG outcome alongside a financial return" is most likely aligned with a(n):
Question37: Which of the following is most likely a success factor characteristic of the engagement approach? Investors pursuing the engagement should have:
Question38: Which of the following would most likely see its estimate of intrinsic value increased by analysts?
Question39: Which of the following statements about executive pay in public companies is most accurate?
Question40: For sovereign debt, the predominant approach to ESG investing is most likely:
Question41: The Global Real Estate Sustainability Benchmark (GRESB) full benchmark report provides a GRESB score.
The GRESB score includes and weights which of the following considerations?
* Management, policy, and disclosure
* Overall portfolio key performance indicator (KPI) performance
Question42: A bond issued to finance construction of a solar farm is an example of a:
Question43: As a result of an aging population, which of the following sectors is most likely to experience slower growth?
Question44: 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)?
Question45: Which of the following would most likely be the initial step when drafting a client's investment mandate?
Question46: Which of the following best describes an Earth system that will exhibit large-scale and long-term changes when reaching critical levels of global warming?
Question47: An analyst evaluates the following statements about investor engagement:
Statement 1:Investor engagement focuses on preserving and enhancing short-term value on behalf of an asset owner.
Statement 2:Investor engagement can encompass lobbying as part of industry groups.
Which of the statements is accurate?
Question48: A disadvantage of the Global Real Estate Sustainability Benchmark (GRESB) framework is that it:
Question49: One of the steps in developing an ESG scorecard is to:
Question50: New technologies have enabled workers to:
Question51: For engagement strategies to deliver meaningful results in a cost-effective and time-effective manner, investors must:
Question52: A fund focused on avoiding the worst ESG performers relative to industry peers is most likely engaged in:
Question53: Under the UK listing regime, Class 1 transactions:
Question54: When undertaking an ESG assessment of a private equity deal ESG screening and due diligence will most likely take place during:
Question55: For consistency purposes, the International Sustainability Standards Board (ISSB) requires sustainability disclosures to be:
Question56: Compared to developed markets, ESG investing in emerging markets is most likely characterized by:
Question57: Which of the following social factors most likely impacts a company's external stakeholders?
Question58: ESG performance attribution:
Question59: Offshoring is best categorized under which of the following social megatrends?
Question60: Which of the following investor types most likely have the shortest investment time horizon?
Question61: Which of the following pension fund actors are most likely exposed to fiduciary legal risks from financial losses caused by climate change?
Question62: Which of the following statements about externalities is most accurate?
Question63: Carbon intensity is calculated as Scope 1 plus Scope 2 emissions divided by:
Question64: Regrowing previously logged forests is most likely an example of climate:
Question65: The biggest direct impact of greenwashing most likely relates to:
Question66: EU regulators manage the independence of audits for public companies by:
Question67: By 2030, the European Strategy for Plastics in a Circular Economy will require:
Question68: According to market reviews conducted by the Global Sustainable Investment Alliance at the start of 2020, sustainable investing assets in the five major markets stood at approximately:
Question69: Technology and finance sectors are most likely to be underweighted when portfolios are screened for:
Question70: Institutional investors achieve their stewardship and engagement objectives in practice through which of the following?
Question71: Engagement is best described as a dialogue:
Question72: Wastewater treatment facilities:
Question73: Scores used to construct ESG index benchmarks can be
Question74: Which of the following is most likely an example of quantitative ESG analysis?
Question75: The social factor most widely incorporated by institutional investors in their analysis is:
Question76: Which of the following asset classes has the lowest degree of ESG integration?
Question77: To be aligned with the EU Taxonomy for Sustainable Activities, economic activities should make a substantive contribution to:
Question78: For engagement strategies to deliver results in a cost-effective and time-effective manner, an investor needs to:
Question79: In ESG integration, model adjustments are typically performed at the:
Question80: Negative screening for ESG factors in portfolios:
Question81: Which of the following is an advantage of using ESG index-based strategies?
Question82: Which of the following is most likely a secondary source of ESG information?
Question83: According to the fundamental conventions of the International Labour Organization (ILO), which of the following should not be supported as a labor right by companies?
Question84: Which of the following best describes a challenge of ESG integration?
Question85: Determining which ESG issues are material:
Question86: When assessing credit and ESG ratings, which of the following statements is most accurate?
Question87: Insurers face risk from climate change impacting:
Question88: Human rights violations are most likely to affect workers employed
Question89: In the context of effective corporate governance, the use of alternative performance metrics (APMs) most directly raises questions about:
Question90: Jurisdictions are most likely to impose extraterritorial laws in relation to:
Question91: The main growth driver of greenhouse gas (GHG) emissions is:
Question92: An analyst gathers the following information about three investors' approaches to ESG integration:
The approach of which investor most likely raises the risk of greenwashing?
Question93: Which of the following statements about integrating corporate governance into the investment decision- making process is most accurate?
Question94: Which of the following is best referred to as secondary ESG data?
Question95: An asset manager considering environmental risks would most likely use:
Question96: A company's exposure to social trends and factors:
Question97: In an emissions trading system:
Question98: When assessing the investment risk of a coal mining company, the concept of double materiality refers to the company reporting on matters of:
Question99: All else equal, which of the following companies would most likely have a lower price-to-earnings (P/E) ratio than industry average?
Question100: For which of the following asset classes are investment managers most likely to use voting to exert influence on a company?
Question101: For private equity investments, an especially important ESG factor is:
Question102: Concerns about the capital structure and financial viability of an investee company are most likely reflected in an active investor's voting decisions in relation to:
Question103: Which of the following climate risks are systemic risks to the financial system?
Question104: ESG portfolio optimization most likely:
Question105: Information provided by ESG rating agencies is most likely:
Question106: Which of the following is one of the six environmental factors in the "Materiality Map" by Sustainability Accounting Standards Board (SASB)?
Question107: The term 'management gap' most likely refers to:
Question108: Which of the following ESG investing approaches aims to drive positive change in the way investee companies are governed and managed?
Question109: For a board to be successful, the most important type of diversity relates to:
Question110: The International Corporate Governance Network's (ICGN) Model Mandate Initiative requests two areas of ESG-specific disclosure. Which of the following is not one of the disclosures?
Question111: 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
Question112: Which of the following types of ESG bonds provide financing to issuers who commit to future improvements in sustainability outcomes?
Question113: ESG integration into a company's operations most likely leads to increased:
Question114: Which of the following statements regarding the effects of an aging population is most accurate?
Question115: Which of the following sectors receives the highest investment from the Inflation Reduction Act of 2022 (IRA)?
Question116: A discount retailer facing a consumer boycott due to its poor working conditions will most likely face:
Question117: Regarding ESG issues, which of the following sets the tone for the investment value chain?
Question118: Which of the following statements about ESG integration in credit ratings is most accurate?
Question119: Which of the following best characterizes a climate mitigation strategy rather than a climate adaptation strategy?
Question120: Which of the following is an example of a climate adaptation measure?
Question121: With respect to ESG reporting, company management has:
Question122: ESG disclosure among listed companies can be required by:
Question123: The European Union (EU) Ecolabel:
Question124: Which of the following is an example of quantitative ESG analysis?
Question125: A French company is most likely considered to have weak corporate governance practices if its board:
Question126: Under the International Corporate Governance Network's (ICGN) Global Governance Principles, a board chair's independence is most likely to be questioned if the person:
Question127: When determining ESG investment mandates, an asset owner should consider:
Question128: Which of the following is an example of shareholder engagement? Institutional investors:
Question129: According to the "Shades of Green" methodology developed by the Center for International Climate Research (CICERO), which of the following colors best categorizes a green bond that reduces emissions in the near term without contributing to climate-resilient long-term solutions?
Question130: Which of the following statements is most accurate? Faith-based Islamic investors:
Question131: Which of the following statements about the materiality of social factors is most accurate?
Question132: According to the UK Investor Forum which of the following is a key success factor for effective engagement?
Question133: When portfolio managers upload their portfolios onto third-party ESG data provider online platforms, most of these platforms are capable of:
Question134: Fund labelers are most likely classified as:
Question135: Which of the three ESG factors is most often taken into consideration by traditional investment analysts?
Question136: Among ESG data and research providers, traditional providers tend to:
Question137: A small company based in Sweden operates in an industry that has good sustainability ratings. The company has a low ESG rating that an analyst believes to be biased. The bias would most likely result from the company's:
Question138: Which of the following asset classes is most sensitive to climate-related transition risk?
Question139: Environmental analysis will potentially determine adjustments to:
Question140: An analyst derives correlations to determine how ESG factors might impact financial performance over time and then weights those factors appropriately within the portfolio. This approach is best described as:
Question141: The "Protect, Respect, and Remedy" framework is the foundation for the:
Question142: Which of the following events typically increases the discount rate in an investor's discounted cash flow (DCF) model? The investee company:
Question143: According to the UK Pensions and Lifetime Savings Association Stewardship Checklist, during the RFP process pension fund trustees considering active fixed income managers should:
Question144: Which of the following ESG investment approaches is most likely applicable when investing in sovereign debt?
Question145: When constructing net zero portfolios, investors:
Question146: Corporate governance in the UK is notable for:
Question147: A regulatory framework designed to support ESG integration in corporate disclosures is:
Question148: Which of the following reporting practices by an investee company is most likely a red flag for an investor?
Question149: The perpetual compound annual rate that a company's cash flow is assumed to change by after the discrete forecasting period is referred to as the:
Question150: Concerns about the capital structure and financial viability of an investee are most likely reflected in an active investor's voting decisions in relation to:
Question151: Which of the following is most likely a characteristic of good corporate governance?
Question152: Which of the following investor types most likely prefers exclusions as an ESG approach?
Question153: Which of the following ESG investment approaches would most appropriately be used to construct a balanced and diversified portfolio?
Question154: Which of the following is most likely designed to promote consideration of environmental and social risks in investing?
Question155: 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:
Question156: Which of the following encourages institutional investors to work together on human rights and social issues?
Question157: Which of the following board committees aims to ensure that the board is balanced and effective?
Question158: ESG integration should be considered as part of:
Question159: Which of the following statements is most accurate? The Kyoto Protocol was created to:
Question160: To reflect weak governance of a private equity holding, an analyst's model should most likely include a reduction in the holding's:
Question161: In order to safeguard the independence of the external auditor, European Union (EU) regulation:
Question162: To address conflicts of interest and maintain the independence of audit firms, EU law requires firms to abide by:
Question163: The role of auditors is to assess the financial reports prepared by management and to provide assurance that:
Question164: With regards to environmental analysis in fixed income investing, a country-level analysis is relevant to:
Question165: The triple bottom line accounting theory considers people, profit, and:
Question166: Thematic funds are most likely characterized by:
Question167: What did Semite, Bhagwat, and Yankee's 2018 study conclude about board diversity and governance?
Question168: Advantages of investing in ESG indexes include:
Question169: The LEAP assessment framework developed by the Taskforce on Nature-Related Financial Disclosure (TNFD) stands for:
Question170: 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?
Question171: The manager of a sovereign fund publishes a list of excluded companies with reasons for the divestments.
This is most likely a form of:
Question172: The low correlation between the ratings from different ESG rating agencies:
Question173: Engagement is least appropriate for which of the following investment types?
Question174: The Task Force on Climate-related Financial Disclosures (TCFD) recommends measuring carbon exposure on a:
Question175: ESG rating providers:
Question176: Integrating the impact of material ESG factors into traditional financial analysis for a company with strong ESG practices most likely.
Question177: Which of the following social factors most likely impacts a company's internal stakeholders?
Question178: Active ownership most likely:
Question179: Which of the following statements regarding the UK Stewardship Code is accurate? The Code:
Question180: Which of the following is most likely a result of monitoring rather than engagement?
Question181: A credit investor uses fundamental credit measures and sector-specific ESG indicators to evaluate a beverage company. Water is a key input for the ingredients used in the company's products. For the investor, the company's efforts to ensure a steady supply of water would most likely be considered:
Question182: Determining which ESG issues are material:
Question183: Primary data sources for ESG data include:
Question184: Will including additional ESG constraints in a portfolio optimization model most likely affect tracking error?
Question185: In the ESG rating process, an assessment of risk, policies, and preparedness is best categorized as part of a(n):
Question186: Human rights violations most likely occur:
Question187: Under the disclosure guide for public equities published by the Pension and Lifetime Savings Association (PLSA). fund managers are expected to report on:
Question188: Formal corporate governance codes are most likely to
Question189: In which country is the nominations committee drawn from shareholders rather than being a committee of the board?
Question190: ESG engagement is a two-way dialogue to share perspectives between:
Question191: A bond issued to fund projects that provide a clear benefit to the environment best describes a:
Question192: Which of the following sectors has the highest percentage of corporate profits at risk from state intervention?
Question193: Which of the following is a form of individual engagement?
Question194: Alignment of an investment manager's performance against a long-term ESG investor's objectives is best achieved by which of the following?
Question195: 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:
Question196: Jevon's paradox refers to a situation where improvements in efficiency are offset by increased:
Question197: With respect to ESG reporting by investment managers, the 2020 version of the UK Stewardship Code calls for more reporting on the:
Question198: According to the Brunel Asset Management Accord, which of the following is most likely a concern for the asset owner? A fund manager:
Question199: According to the Principles of Responsible Investment (PRI), which of the following is an example of a social issue?
Question200: Which of the following is a challenge in ESG integration?
Question201: The first step in the effective design of an investment mandate is determining the:
Question202: Which of the following data are most likely the easiest to optimize in a portfolio?
Question203: Which of the following countries has a joint audit requirement that all public interest entities must engage at least two independent accounting firms to perform an annual audit?
Question204: Within fixed income, ESG integration is most developed in:
Question205: At the portfolio level, ESG integration will most likely consider:
Question206: Measuring a portfolio's carbon intensity using the European Union's Sustainable Finance Disclosure Regulation (SFDR) accounts for:
Question207: Which of the following social trends is more relevant to developed markets than emerging markets?
Question208: In a request for proposal from managers, for which of the following asset classes are voting policies least likely to be considered?
Question209: 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
Question210: According to the McKinsey framework which of the following elements of sustainable investing is allocated to the investment dimension of tools and processes?
Question211: Which of the following ESG megatrends relates to issues around human rights, including free speech, and tensions between big social media companies and sovereign nation-states that point in the direction of a possible new ordering of societal power?
Question212: Which of the following is an example of a social factor affecting external stakeholders?
Question213: Scopewashing is best described as a situation in which a company's management:
Question214: 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:
Question215: Which of the following statements best describes Weitzman's dismal theorem?
Question216: Which of the following refers to a network where investors engage with the world's largest corporate emitters of greenhouse emissions?
Question217: ESG indices that exclude economically meaningful sectors will most likely:
Question218: An ESG scorecard is best categorized as:
Question219: Third-party assessments that highlight events, behaviors, and practices that may lead to reputational and business risks and opportunities are best classified as:
Question220: If a company does not manage social factors appropriately, an analyst is most likely to:
Question221: A meat-processing company does not sell its pork products in predominantly Muslim countries. Investing in the company on this basis would be considered an example of:
Question222: The adoption of ESG investing by retail investors has generally been:
Question223: The Integrated Biodiversity Assessment Tool (IBAT) is best described as an interactive mapping tool allowing decision makers to:
Question224: When using a threshold assessment to integrate governance factors into the investment decision-making process, fund managers most likely focus on the:
Question225: Increased investment crowding into more ESG-friendly sectors is most likely to increase:
Question226: Which of the following is best described as a risk management framework for assessing environmental and social risk in project finance?
Question227: Externalities for an infrastructure asset are issues:
Question228: A just transition in climate policy refers to:
Question229: 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.
Question230: Commodity price volatility resulting in profits vulnerability for companies is most likely an example of financial risk transmission by:
Question231: A family office is best categorized as an:
Question232: Which issue was most similar in the governance challenges faced by Enron and WeWork?
Question233: Which of the following frameworks created requirements to disclose the extent to which investment products consider or promote environmental and social factors?
Question234: Which of the following scenarios best illustrates the concept of a 'just' transition?
Question235: According to most of the world's corporate governance codes, the expectation is that remuneration committees are populated by:
Question236: Which of the following most likely outlines an investment firm's ESG integration approach?
Question237: Which of the following statements regarding corporate governance is most accurate?
Question238: A benefit of carbon footprinting is that:
Question239: Which of the following challenges is most likely related to the attribution of returns to ESG factors?
Question240: Considering ESG integration, an advantage relevant to private real estate markets but not equities and fixed income is most likely:
Question241: The correlation between country ESG scores and credit ratings is:
Question242: Corporate engagement and shareholder action is the predominant investment strategy in:
Question243: Which of the following is an example of collaborative engagement?
Question244: An investor requires a social return and will tolerate a sub-market financial return. This best characterizes:
Question245: Which of the following best describes Weitzman's dismal theorem?
Question246: The world's first formal corporate governance code emerged in:
Question247: Which of the following organizations is not a provider of both ESG-related and non-ESG-related products and services?
Question248: With respect to the current state of ESG disclosure globally, issuer reporting frameworks for ESG information are:
Question249: A portfolio manager of an ESG fund attempting to outperform the general market is most likely to:
Question250: A framework for assessing environmental risk in project finance is set out by the:
Question251: Which of the following represents the majority of the largest asset owners?
Question252: When an external auditor's performance materiality level is 60% of its overall materiality threshold, the auditor most likely:
Question253: 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:
Question254: 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:
Question255: Formal corporate governance codes are most likely to:
Question256: 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:
Question257: Which of the following subclasses is most likely to have the highest level of ESG integration using Mercer's ratings?
Question258: Which of the following tests defines the internal theoretical cost on carbon emissions to guide a company's decision-making process in energy-intensive sectors?
Question259: Which of the following statements about the decoupling of economic activities from resource usage is most accurate?
Question260: Which of the following private equity investors is most susceptible to allegations of greenwashing? An investor that views ESG integration as a way of:
Question261: Which of the following is best described as a form of engagement that requires institutions to have a formal agreement with concrete objectives and agreed steps?
Question262: For investments in wastewater treatment plants, a significant obstacle is:
Question263: When optimizing a portfolio for ESG factors, as constraint parameters are tightened, the deviation from an optimal portfolio most likely:
Question264: Leased assets of a company contribute to:
Question265: Which of the following projects are most likely to be financed in the green bond market?
Question266: Which of the following is an example of greenwashing?
Question267: The investor initiative FAIRR focuses on screening out companies
Question268: Which of the following is a challenge of integrating ESG analysis into investment processes?
Question269: According to the Active Ownership study, which of the following statements regarding ESG engagement is most accurate?
Question270: Information for use in ESG tools can be collected directly via:
Question271: Poor corporate governance in the form of weak accountability and alignment increases the risk of value erosion for:
Question272: 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?
Question273: Which of the following steps in the ESG rating process is most likely the earliest source of the dispersal of opinions between different ESG rating agencies?
Question274: An ESG-contingent asset for a healthcare company may result from:
Question275: Which of the following is the most important type of diversity in a boardroom?
Question276: Which of the following actions seeks to avoid exploitation of minority shareholders?
Question277: An advantage of the carbon footprinting approach to environmental risk analysis is that it allows for:
Question278: Compared with younger people, older people are more likely to have:
Question279: 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: