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

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Questions and Answers

Which organization is NOT mentioned as working to promote ESG considerations in investing?

  • United Nations Environment Programme (correct)
  • Global Reporting Initiative
  • Sustainability Accounting Standards Board
  • CDP (formerly, Carbon Disclosure Project)

What percentage of the 180 laws and regulatory standards pertaining to corporate sustainability reporting are mandatory?

  • 85%
  • 62%
  • 72% (correct)
  • 45%

Which country has a stewardship code for institutional investors?

  • South Africa
  • United Kingdom (correct)
  • Malaysia
  • Belgium

What is the objective of the guide on ESG considerations in investing?

<p>To share the views of CFA Institute members (C)</p> Signup and view all the answers

Which label is most closely associated with avoiding morally questionable businesses?

<p>Socially responsible investing (D)</p> Signup and view all the answers

What is the main difference between sustainable investing and socially responsible investing?

<p>Sustainable investing is a newer concept (D)</p> Signup and view all the answers

When did CFA Institute start pursuing its Future of Finance initiative?

<p>2013 (B)</p> Signup and view all the answers

Which of the following best describes the term ESG issues?

<p>A term used to refer to environmental, social, and governance issues in investing (A)</p> Signup and view all the answers

Why do some investors consider ESG issues?

<p>All of the above (D)</p> Signup and view all the answers

Which approach is larger in investment management?

<p>Value-based investing (D)</p> Signup and view all the answers

Why do ESG issues not fit well with short-termism in investing?

<p>They tend to affect financial performance over longer periods (D)</p> Signup and view all the answers

Which organization developed industry- and sector-specific ESG performance indicator standards?

<p>The Sustainability Accounting Standards Board (B)</p> Signup and view all the answers

According to the Intergovernmental Panel on Climate Change, what is the impact of continued greenhouse gas emissions?

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

Which issue is listed as number 5 of the 'top 10 risks in terms of impact' in the World Economic Forum's 'Global Risks 2015 Report'?

<p>Failure of climate-change adaptation (D)</p> Signup and view all the answers

Which issue did respondents rate higher than climate change in the CFA Institute survey?

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

Which of the following is NOT a reason why investment managers consider ESG issues?

<p>Regulation requires it (C)</p> Signup and view all the answers

What is the main reason why asset owners demand that investment managers pay attention to ESG issues?

<p>To help manage investment risks (D)</p> Signup and view all the answers

What is the top reason why some respondents do not consider ESG issues in their investment analysis/decisions?

<p>These issues are not material—no added value (D)</p> Signup and view all the answers

What would cause some respondents to begin considering ESG issues in their investment analysis/decisions?

<p>Demand from clients/investors (A)</p> Signup and view all the answers

The UK Stewardship Code aims to enhance the quality of engagement between asset managers and companies to help improve what?

<p>Long-term risk-adjusted returns to shareholders (B)</p> Signup and view all the answers

The Code for Responsible Investing in South Africa gives guidance on how the institutional investor should execute investment analysis and investment activities and exercise rights so as to promote what?

<p>Sound governance (B)</p> Signup and view all the answers

Why is it difficult to integrate ESG issues into quantitative models?

<p>ESG issues are difficult to assign a monetary value to (D)</p> Signup and view all the answers

What is a well-known indicator of the increasing awareness of ESG issues?

<p>The growing list of signatories to the United Nations–supported Principles for Responsible Investment (B)</p> Signup and view all the answers

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