ESG Principles

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Questions and Answers

A company is praised for its new waste management strategy that involves recycling and reducing its overall waste production. Under which ESG criteria would this primarily fall?

  • Social Responsibility
  • Environmental (correct)
  • Impact Investing
  • Governance

An investment fund is specifically designed to provide capital to companies that are developing new technologies for clean water access in developing countries. This initiative would MOST accurately be described as:

  • Impact Investing (correct)
  • General ESG Investing
  • Social Responsibility
  • Sustainable Finance

Which aspect of governance is MOST likely to be improved by increasing the diversity of a company's board of directors?

  • Objective decision-making (correct)
  • Sustainable land use
  • Fair wages and benefits
  • Reduction of carbon emissions

A corporation is found to be using child labor in its supply chain. Which aspect of social responsibility is MOST directly violated by this practice?

<p>Fair labor practices (B)</p> Signup and view all the answers

A company switches to sourcing all electricity from renewable sources and invests in technologies to reduce its water consumption. This initiative would primarily fall under which ESG criteria?

<p>Environmental (D)</p> Signup and view all the answers

To improve its governance, a company decides to ensure that the compensation of its executives is tied to both financial performance and the achievement of specific sustainability targets. What objective is the company MOST likely trying to achieve?

<p>Align executive incentives with long-term value creation (D)</p> Signup and view all the answers

An investor wants to support companies that positively contribute to society. Which of the following actions aligns with social responsibility?

<p>Encouraging companies to implement fair labor practices (C)</p> Signup and view all the answers

A financial institution issues a bond where the funds are earmarked exclusively for environmentally-friendly construction projects. Which type of financial instrument is being used?

<p>Green bonds (B)</p> Signup and view all the answers

A company decides to implement blockchain technology to ensure greater transparency and traceability within its supply chain. Under which criteria would this initiative primarily fall?

<p>Governance (C)</p> Signup and view all the answers

A fund manager decides to allocate a portion of a portfolio to companies that are actively working to reduce poverty in underserved communities while also seeking financial returns. Which strategy is the fund manager employing?

<p>Impact Investing (C)</p> Signup and view all the answers

Flashcards

Environmental Criteria

A company's impact on the environment, including climate change, resource depletion, and pollution.

Environmental Assessment

Practices for energy use, waste management and conservation of natural resources.

Social Responsibility

A company's relationships with employees, suppliers, customers, and communities.

Socially Responsible Practices

Standards for fair wages, health and safety, diversity, and community relations.

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Governance

A company's leadership, ethics, and shareholder rights.

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Good Governance

Practices for transparent reporting, ethical conduct, and shareholder fairness.

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Impact Investing

Investments made to generate positive social and environmental impact alongside financial returns.

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Impact Objectives

Specific social or environmental outcomes such as poverty reduction or clean energy access.

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Sustainable Finance

Integrating ESG factors into financial decisions to support sustainable development.

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Sustainable Financial Products

Financial instruments like green bonds and sustainability-linked loans to fund responsible projects.

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Study Notes

The text provided is identical to the existing notes, and does not contain any new information. Therefore, the existing notes do not need to be updated.

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