Ch14 Defining and Measuring ESG Performance and Reporting

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What is a key challenge companies face when transitioning from mitigating risks to embracing sustainability opportunities?

Identifying clear strategic directions

Involving asset managers in the process

Building effective management structures

Refocusing sustainability strategy emphasis (correct)

How can asset owners contribute to the transition process towards improved sustainability?

Focus solely on short-term financial gains

Encourage companies to downsize their operations

Engage with firms they believe can benefit from a better sustainability approach (correct)

Discourage the integration of sustainability into business models

What do companies need to do to ensure an early competitive advantage in the context of sustainability opportunities?

Implement clear metrics and tangible actions for sustainability performance (correct)

Delay any sustainability initiatives until the competition catches up

Rely solely on past achievements without updating strategies

Avoid integrating sustainability into their business models

Why do majority of companies fail to positively inspire current and future development despite acknowledging the importance of sustainability?

Failure to reframe strategic perceptions Signup and view all the answers

What is a crucial opportunity presented by the current global economic situation for companies regarding sustainability?

Opportunity to rationalize and redirect corporate sustainability responsibility Signup and view all the answers

How can companies ensure they identify developments that will inspire current and future development?

By forming a clear strategic direction based on current trends Signup and view all the answers

According to the passage, what is the primary reason why companies with strong sustainability and governance policies are better able to manage non-financial risks and changing regulation?

They are more proactive in identifying and addressing emerging sustainability challenges. Signup and view all the answers

What type of engagement approach should asset owners consider when their shareholding in a company is relatively small?

Collaborating with other investors to engage collectively. Signup and view all the answers

What is the primary purpose of engagement between asset owners/managers and investee companies?

To review how the company is managing its ESG risks and identifying related business opportunities. Signup and view all the answers

According to the passage, what is the relationship between the level of commitment involved in engagement and the size of the asset owner's investment in a company?

The level of commitment is directly related to the size of the investment - larger investments require more commitment. Signup and view all the answers

What is the primary purpose of conducting 'proactive' engagement between asset owners/managers and investee companies, as mentioned in the passage?

To identify and address potential ESG risks before they materialize. Signup and view all the answers

What is the primary benefit to asset owners of investing in companies with strong sustainability and governance policies?

These companies are better positioned to capitalize on new sustainability-related business opportunities. Signup and view all the answers

Which of the following is likely to be considered an example of a sustainability-related risk?

All of the above Signup and view all the answers

How have executive attitudes toward sustainability historically been viewed?

As a cost center and corporate social responsibility issue Signup and view all the answers

How are more firms now viewing sustainability?

Through the lens of market opportunity and value creation Signup and view all the answers

Which of the following is NOT likely to be a factor contributing to the growing attention on sustainability-related risks?

Concerns over climate change and environmental impact Signup and view all the answers

Ch14 Defining and Measuring ESG Performance and Reporting

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