3 CFA ENVIRONMENTAL, SOCIAL, AND GOVERNANCE ISSUES IN INVESTING A Guide for Investment Professionals

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Which of the following is a top ESG issue according to investment professionals?

ESG integration
Board accountability (correct)
Shorttermism in financial markets
Climate change

What is one of the challenges in considering ESG issues in investing?

Shorttermism in financial markets
Lack of clarity on 'what' and 'why' for ESG considerations
Lack of clarity on 'how to' apply ESG methods (correct)
All of the above

According to the text, what percentage of respondents agree that ESG disclosures by listed companies should be subject to some level of independent verification?

16%
15%
No opinion
69% (correct)

According to the text, what percentage of respondents think it is important that ESG disclosures be subject to some level of independent verification?

69% (D) Signup and view all the answers

According to the text, what percentage of respondents said that listed companies should spend on an ESG audit as much as they spend on an accounting audit?

10% (A) Signup and view all the answers

According to the text, what percentage of respondents indicated that they consider ESG issues because it is their fiduciary duty?

37% (B) Signup and view all the answers

According to the text, what percentage of research studies show that solid ESG practices result in better operational performance of firms?

88% (D) Signup and view all the answers

What is the main concern raised by divestment campaigners regarding fossil fuel divestment?

The impact on financial performance (B) Signup and view all the answers

Which region has the highest proportion of survey respondents who consider ESG issues?

Asia-Pacific (C) Signup and view all the answers

What is the main reason behind the perceived regional differences in addressing ESG issues?

Differences in regulation (C) Signup and view all the answers

According to the text, what is one reason why valuations from discounted cash flow analysis may differ?

The analysts have different opinions (B) Signup and view all the answers

What is one challenge in using evidence-based cause-and-effect attribution for ESG methods?

The methods are not well-documented (B) Signup and view all the answers

What is one limitation of ESG analysis mentioned in the text?

It may not lead to investment insights (A) Signup and view all the answers

What is one mode of training on ESG issues mentioned in the text?

Live, in-person structured training course (B) Signup and view all the answers

According to the text, what is one challenge investors face when considering ESG issues in their investment decisions?

Limited availability of relevant and timely information (B) Signup and view all the answers

What is one initiative mentioned in the text that aims to improve ESG disclosure?

Sustainable Stock Exchanges Initiative (B) Signup and view all the answers

According to the text, what are the main sources of ESG information for the majority of respondents?

Public information, third-party research, and company reports (D) Signup and view all the answers

Which of the following best describes green bonds?

Bonds that finance projects with environmental benefits (D) Signup and view all the answers

What is the main concern regarding green bonds?

Whether they finance projects that would not be funded otherwise (C) Signup and view all the answers

What is a social impact bond?

A contract between a special purpose vehicle and the government (A) Signup and view all the answers

How are ESG issues relevant to passive investing?

ESG considerations can be integrated into the benchmark index (B) Signup and view all the answers

According to the text, what is the main reason why investment professionals consider ESG issues?

To manage risks (A) Signup and view all the answers

What is the main method of ESG integration used by investment professionals?

ESG integration (C) Signup and view all the answers

What was the goal of the reassessment of ESG issues in the Candidate Body of Knowledge initiated by CFA Institute?

To identify the scope and practical implications of ESG investing appropriate for the CFA Program (A) Signup and view all the answers

What is the main conclusion regarding the practice of considering ESG issues in investing?

It has evolved significantly from its origins (B) Signup and view all the answers

Which organization believes that every investment analyst should know about the investment risks and opportunities posed by ESG issues?

CFA Institute (C) Signup and view all the answers

How does CFA Institute help investment professionals better understand ESG issues in investing?

Through educational programs (A) Signup and view all the answers

How is the ESG content in the CFA Program curriculum determined?

Through a survey of investment practitioners (C) Signup and view all the answers

What is the top reason investment professionals consider ESG issues?

To manage risks (D) Signup and view all the answers