52 Questions
Which group acts as the legal owner of assets under management?
Asset Owners
Who can outsource asset management to an asset manager?
Asset Owners
Which group is required to act as a fiduciary to clients?
Asset Managers
Which of the following accurately describes the size and scope of ESG investing?
ESG investing commands a significant share of professionally managed assets globally.
What are some key market drivers of ESG integration?
Investor demand, regulation and policy, public awareness, and data sourcing and processing improvements
Who are some of the key stakeholders involved in ESG integration?
All of the above
Which strategy had the largest growth over the 2016-2020 period?
ESG integration
Which strategy is the largest in Europe?
Impact/community investing
Which strategy commands the most assets in the United States?
Sustainability themed investing
Which strategy is the predominant one in Japan?
ESG integration
Which organization was responsible for proposing long-term solutions for sustainable development in response to environmental concerns?
World Commission on Environment and Development (WCED)
What is the main focus of ESG investing?
All of the above
Which form of socially responsible investment (SRI) was most popular in the early days of ESG investing?
Negative screening
Which fund was one of the first ethical mutual funds to incorporate religious traditions into its investment screens?
Pioneer Fund
Which of the following is NOT considered a key market driver of ESG integration?
Technological advancements
Who are the main stakeholders in responsible investment?
Asset owners, asset managers, and fund promoters
Which of the following is NOT a role of shareholders in a company?
Lending money
Which of the following is NOT considered an asset owner?
Investment consultants
According to the Global Sustainable Investment Alliance (GSIA) report, what was the total value of sustainable investing assets in the five major markets at the start of 2020?
US$35.3 trillion
Which region has the highest proportion of sustainable and responsible investing assets?
United States
Which region experienced a decline in sustainable investing assets relative to total managed assets since 2018?
Europe
Which sustainable investment strategy had the largest assets under management globally in 2020?
ESG integration
Which term refers to the form of responsible investment that primarily considers ethical behavior?
Value-based SRI
What were the key developments between early and modern SRI?
Growth in shareholder activism, widespread consideration of environmental factors, and introduction of positive-screening investing
What event in the early 2000s led to an increasing emphasis on good corporate governance and specific regulations?
The widespread fraud at Enron Corporation
Which report effectively coined the term 'ESG' and made the case for embedding ESG factors in capital markets?
The Freshfields Report
Which of the following is NOT considered a key driver for ESG integration?
Technological advancements
What is the historical origin of ESG investing?
16th century
Which region has the highest proportion of sustainable and responsible investing assets?
Europe
Which of the following accurately describes the role of asset managers in the investment process?
They act as agents on behalf of clients.
Which of the following is NOT an example of an asset owner?
Registered investment advisors
What is the main responsibility of intermediaries in the investment process?
They provide investment advice to asset owners.
Which asset class had the largest allocation of global sustainable investing assets in 2018?
Public equity
What was the percentage of assets held by retail investors in 2012?
11%
Which strategy had the largest growth over the 2016-2020 period?
ESG integration
Which region had the highest proportion of sustainable and responsible investing assets?
Europe
Which of the following is NOT a stakeholder in responsible investment?
Individual (retail) investors and wealth management
Which of the following is NOT a role of shareholders in a company?
Lending money
What is the main goal of asset owners?
Maximize returns at a given level of risk
Which of the following is NOT a key market driver of ESG integration?
Technological advancements
Which region has experienced a decline in sustainable investing assets relative to total managed assets since 2018?
Europe
Which strategy had the largest growth over the 2016-2020 period?
Impact investing
Which organization conducts research in the five major markets for responsible investment every two years?
Global Sustainable Investment Alliance (GSIA)
What proportion of total managed assets do responsible investing assets make up in Canada?
62%
Which international conference led to the establishment of the UN Commission on Sustainable Development?
The Rio Summit
Which term was commonly used to describe responsible investing before the term 'ESG' came into use?
Socially Responsible Investment
Which mutual fund, launched in 1928, was one of the first to incorporate religious traditions into its investment screens?
The Pioneer Fund
Which movement gained global prominence in the late 1970s through a divestment campaign against South Africa's system of apartheid?
The Sullivan Principles
Which of the following reports had a significant influence on the investment industry's understanding of climate change?
The Stern Review on the Economics of Climate Change
The disinvestment campaign in South Africa expanded globally the disinvestment movement in the late '70s. What was the main focus of the disinvestment campaign in South Africa?
Pressuring the South African government to dismantle apartheid
Which organization launched the Principles for Responsible Investment (PRI) in 2006?
The United Nations Global Compact
What were the key developments between early and modern SRI?
All of the above
Study Notes
Asset Management
- Institutional investors, such as pension funds, endowments, and sovereign wealth funds, act as the legal owners of assets under management.
- Asset managers can outsource asset management to an asset manager.
Responsible Investment
- Asset managers are required to act as fiduciaries to clients.
- Asset owners, such as pension funds, outsource asset management to asset managers.
ESG Investing
- ESG (Environmental, Social, and Governance) investing focuses on long-term sustainability and responsible investment.
- Key market drivers of ESG integration include climate change, social inequality, and corporate governance.
- Stakeholders involved in ESG integration include asset owners, asset managers, and intermediaries.
ESG Integration Strategies
- Strategies include negative screening, positive screening, ESG integration, active ownership, and impact investing.
- ESG integration had the largest growth over the 2016-2020 period.
- Impact investing is the largest in Europe.
- ESG integration commands the most assets in the United States.
- Active ownership is the predominant strategy in Japan.
History of ESG Investing
- The United Nations Environment Programme Finance Initiative (UNEP FI) proposed long-term solutions for sustainable development in response to environmental concerns.
- The main focus of ESG investing is on long-term sustainability and responsible investment.
- Socially Responsible Investment (SRI) was most popular in the early days of ESG investing.
- The Pax World Fund, launched in 1971, was one of the first ethical mutual funds to incorporate religious traditions into its investment screens.
Market Trends
- The Global Sustainable Investment Alliance (GSIA) reported a total value of sustainable investing assets of $30.7 trillion in the five major markets at the start of 2020.
- Europe has the highest proportion of sustainable and responsible investing assets.
- North America experienced a decline in sustainable investing assets relative to total managed assets since 2018.
- ESG integration had the largest assets under management globally in 2020.
Key Reports and Organizations
- The United Nations Environment Programme Finance Initiative (UNEP FI) proposed long-term solutions for sustainable development.
- The Global Reporting Initiative (GRI) effectively coined the term 'ESG' and made the case for embedding ESG factors in capital markets.
- The Global Sustainable Investment Alliance (GSIA) conducts research in the five major markets for responsible investment every two years.
Industry History
- The disinvestment campaign in South Africa, which started in the 1970s, led to an increasing emphasis on good corporate governance and specific regulations.
- The key developments between early and modern SRI include the rise of ESG integration, active ownership, and impact investing.
- The UN Commission on Sustainable Development was established following the 1992 Rio Earth Summit.
- The term "socially responsible investment" was commonly used to describe responsible investing before the term 'ESG' came into use.
Test your knowledge on asset management ownership, outsourcing, fiduciary responsibilities, ESG investing size and scope, market drivers of ESG integration, and key stakeholders involved in ESG integration.
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