FSA Credential Level I Study Guide - Part IV PDF

PART IV FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE A CLOSER LOOK: INVESTOR DEMAND FOR SUSTAINABILITY INFORMATION LEARNING OBJECTIVE(S) COVERED IN THIS CHAPTER: 12...

PART IV FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE A CLOSER LOOK: INVESTOR DEMAND FOR SUSTAINABILITY INFORMATION LEARNING OBJECTIVE(S) COVERED IN THIS CHAPTER: 12 IDENTIFY COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 158 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 13.1.1. GROWING SELL-SIDE AND CREDIT RESEARCH DEMAND 13.2.1. THE GROWTH OF INDEX FUNDS COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 159 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 13.2.1.1. Index funds meet active managers 13.2.2. THE GLOBAL STEWARDSHIP MOVEMENT Stewardship codes COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 160 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE SUSTAINABILITY: A STEW- ARDSHIP CODE KEYSTONE In the 2012 UK Stewardship Code ( the The revised 2020 UK Stewardship Code 13.2.2.1. Stewardship applied: shareholder engagement A shift in voting behavior COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 161 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE resolutions EXAMPLE: GREEN CENTURY CAPITAL MANAGEMENT AND TYSON FOODS - - - Withdrawal rates COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 162 FSA CREDENTIAL LEVEL I STUDY GUIDE PART II: THE SUSTAINABILITY INFORMATION ECOSYSTEM ESG: Not just for equity This chapter contains information related to the following Learning Objective(s): 12 IDENTIFY ? JUMP TO ANSWERS COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 163 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE CONSIDERATIONS FOR CORPORATE USE LEARNING OBJECTIVE(S) COVERED IN THIS CHAPTER: 13 RECOGNIZE 14 DISTINGUISH 15 IDENTIFY 16 RECOGNIZE Board of Directors COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 164 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE CEO and CFO Legal Counsel COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 165 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Chief Audit Executive and Internal Audit Risk Management Compliance Investor Relations Business Unit Managers Technology COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 166 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Human Resources Independent Assurance Provider 14.1.1. CROSS-FUNCTIONAL NATURE COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 167 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.1.2. ALIGNING ON THE ‘WHY’ 14.1.2.1. Taking ownership of your sustainability story COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 168 FSA CREDENTIAL LEVEL I STUDY GUIDE PART II: THE SUSTAINABILITY INFORMATION ECOSYSTEM 14.1.2.2. Peer effects 14.1.2.3. Improving access to capital 14.1.2.4. Improving performance management COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 169 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.2.1. UNDERSTANDING THE VALUE CHAIN 14.2.2. UNDERSTANDING THE REPORTING ENVIRONMENT COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 170 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Questions to consider frequently included in peer reporting to investors? Is information reported at the aggregate level for the company, or by region or business segment? How are peers presenting data on sustainability-related risks and opportunities? Do peers provide activity metrics that enable normalization and comparison? XBRL: A digital reporting standard In a digitized world, reporting comparable, consistent and reliable sustainability data with XBRL (eXtensible Business Reporting Language) provides a standardized system to from multiple platforms through manual integration, XBRL makes it easy to automatically reporting companies, regulators will mostly likely include sustainability disclosure as part COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 171 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.2.3. CREATING ORGANIZATIONAL BUY-IN 14.2.4. EVALUATING AUDIENCE NEEDS COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 172 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.3.1. ESTABLISHING DATA NEEDS AND PERFORMING A GAP ANALYSIS gap analysis COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 173 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.3.2. THE PILLARS OF RELIABLE INFORMATION Appropriate board oversight Established internal controls Data assurance 14.3.2.1. Board oversight and the audit committee audit committee COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 174 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.3.2.2. Internal controls internal controls certify COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 175 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Resource: Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control–Integrated Framework Principles: COSO—a private-sector initiative to provide frameworks and guidance on enterprise risk management, internal control, and fraud deterrence—developed a framework to help Leveraging the COSO Internal Control–Integrated Framework to rigor to measuring, validating, managing, and reporting material sustainability information By applying the COSO framework to sustainability information, a company can implement internal controls that mirror the rigor and robustness of regulatory internal-controls require- 14.3.2.3. Data assurance ‘Assurance’ Audits assurance readiness COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 176 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE reasonable assurance limited assurance review 14.3.3. SPECIAL DISCLOSURE SITUATIONS 14.3.3.1. Reporting across multiple industries COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 177 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.4.1. THE ROLE OF THE DISCLOSURE COMMITTEE The controller’s questionnaire Financial disclosure involves a control- - formation needed to support the accurate - mental in gathering information needed to assess the likelihood and magnitude helping companies assess the materi- practice can be useful when applied to 14.4.2. REPORTING PERIOD AND TIMELINE 14.4.3. ONGOING MATERIALITY ASSESSMENT COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 178 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.4.4. TELLING YOUR VALUE CREATION STORY 14.4.4.1. The importance of context COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 179 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.4.5. ASSURING SUSTAINABILITY INFORMATION COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 180 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.4.5.1. A growing body of assurance guidance Table 6—Sample of assurance guidance resources COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 181 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.5.1. CREATING A SUSTAINABLE BUSINESS STRATEGY sustainability strategy sustainable business strategy Figure 20—Pathway to a sustainable business strategy COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 182 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.5.2. DISCLOSURE METRICS AS KEY PERFORMANCE INDICATORS 14.5.3. CONNECTING SUSTAINABILITY METRICS TO STRATEGY COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 183 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Example: Pirelli & C. S.p.A. Tire manufacturer Pirelli capitalized on an opportunity to create value related to a metric in the SASB Standards for the input costs are reduced, its manufacturing of input materials consisting of recycled or process consumes less energy, and its products reduce fuel consumption by not only lower the environmental lifecycle impact of vehicles, they also help auto parts CO2 emissions—due to their low rolling companies more effectively manage risks related to the pricing volatility and the cost strategy, which deeply embeds sustainability 2009, Pirelli launched a Green Performance Strategy to produce tires that combine performance and environmental sustain- to a doubling in the number of analysts - its costs and attract new customers by launched its Green Performance Strategy, this developing high-performance silica—which improves the safety and durability of tires— drivers makes them useful starting points for The Green Performance tires now account for COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 184 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.5.3.1. Sustainability information and management accounting 14.5.4. PERFORMANCE MANAGEMENT COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 185 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.5.4.1. Stages of value creation Table 7—Four stages of value creation Four Stages of Examples Value Creation technologies and differentiated value - proposition COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 186 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.5.5. THE ROLE OF SUSTAINABILITY IN CORPORATE RISK MANAGEMENT ERM COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 187 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 14.5.5.1. Connecting ERM and sustainability to strategy Governance and culture of ESG-related risks: Strategy and objective-setting for ESG-related risks: Performance for ESG-related risks: Review and revision of ESG-related risks: COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 188 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Information, communication and reporting for ESG-related risks: 14.5.5.3. ERM and the IFRS Sustainability Disclosure Standards Assessment: Response: COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 189 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Monitoring: Reporting: This chapter contains information related to the following Learning Objective(s): 13 RECOGNIZE 14 DISTINGUISH 15 IDENTIFY 16 RECOGNIZE ? JUMP TO ANSWERS COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 190 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE CONSIDERATIONS FOR INVESTOR USE LEARNING OBJECTIVE(S) COVERED IN THIS CHAPTER: 17 IDENTIFY 18 IDENTIFY 19 IDENTIFY 20 IDENTIFY alpha retail investors COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 191 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.1.1. INVESTOR USE OF MATERIAL SUSTAINABILITY INFORMATION COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 192 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.2.1. FINDING COMMON GROUND COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 193 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.2.2. A RANGE OF STRATEGIES 15.2.2.1. Exclusionary screening socially responsible investing ‘exclusionary screening’ Values-based Norms-based COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 194 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.2.2.2. Inclusionary investment strategies positive screening COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 195 FSA CREDENTIAL LEVEL I STUDY GUIDE PART II: THE SUSTAINABILITY INFORMATION ECOSYSTEM Best-in-class vs. Momentum In active public equity, the best-in-class approach to ESG investing refers to the selec- an ESG score or ranking. Investors seek companies that achieve a top-half, quartile, or decile ESG ranking. The best-in-class theory assumes that companies that demonstrate effective management of sustainability-related risks and opportunities are at a competitive Momentum strategies, sometimes called directional strategies, target companies that do jumps in performance, the investor can realize larger gains relative to the marginal (and often diminishing) returns of a best-in-class approach. Directional strategies can be good performers currently but that demonstrate (via disclosure) positive momentum. Contrary to some companies’ concerns that disclosing performance below the industry average could hurt their attractiveness (and therefore their choice not to disclose), those companies can be very attractive to some investors if the companies demonstrate improved performance. Thematic investing tracking error impact investing COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 196 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Intention: Impact measurement: Impact management: thematic bonds ESG integration COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 197 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Figure 21—A range of investment strategies COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 198 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Human capital: agnostic or specific? The market is grappling with how to handle information related to human capital. On the one hand, the value of all companies depends on the skills, knowledge and experience possessed by the leadership, staff and workforce. On the other hand, a company’s labor force often has unique value implications, depending on its business model and operating environment. differently from how the workforce of an agricultural products company does. In IT, an in- dustry that competes on recruiting top talent and intellectual property, it might be incredibly important for an investor to know how the company is recruiting and managing a global, diverse, and highly skilled workforce. In agricultural products, an industry that requires use of heavy machinery and exposed working conditions, it will likely be more important for an in- vestor to know how the company is performing on measures of workforce health and safety. COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 199 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 200 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.4.1. DATA DECISIONS Sustainability disclosure standards as tools for identifying decision-useful information COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 201 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Applying a consistent framework for analysis Figure 22—PRI ESG Integration Framework 15.4.2. INDUSTRY ANALYSIS COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 202 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Figure 23—Industry analysis: automobile Industry Industry drivers and Sustainability Impacts on Value valuation methods Sustainability topics Drivers Value drivers Product safety Revenue growth: Product mix alignment Leverage; restructuring Labor practices Global markets Fuel economy and low-emission vehicles is a growth Product mix and use-phase driver, with a corollary impact from emissions switching away from larger, higher-margin Risk factors Materials sourcing vehicles. Changing gas prices Demand for alternative and recycling Operating costs and CAPEX: Materials energy scarcity can lead to higher costs, R&D Changing commodity prices and CAPEX for substitution. Sourcing, Large unfunded pension plans Valuation methods Option value/scenario analysis: Enterprise value/ EBITDAPO for incumbents investments (R&D, CAPEX) in alternative powertrains (EV/ fuel-cell hybrid) with and revenue-based ratio uncertain outcomes. for new entrants or new markets COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 203 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.4.2.1. Industry analysis: debt vs. equity credit risk, interest rate risk, yield curve risk liquidity risk 15.4.3. FUNDAMENTAL ANALYSIS fundamental analysis comparative analysis company valuation 15.4.3.1. Comparative analysis COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 204 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.4.3.2. Valuation COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 205 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 206 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE Figure 25—Sustainability-integrated valuation of a hypothetical company COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 207 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE The Role of Green Bonds Like their traditional counterparts, they are backed by the issuing entity’s balance sheet and therefore carry the same credit rating as their issuer’s other debt obligations. However, they also come with tax incentives and are widely believed to be a means to access low-cost capital held by institutional investors for green projects. To corporate issuers, green bonds represent an attractive opportunity to secure a lower rate tied to a sustainability project or sustainability KPIs. Voluntary best-practice guidelines such as the Green Bond Principles, established by a consortium of investment banks have emerged to ensure the integrity of the bonds and avoid greenwashing. - Principles and Climate Bonds Standard,’ accessed October 2020. 15.4.3.3. Credit analysis COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 208 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.4.3.4.Deal sourcing and due diligence in private equity COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 209 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE index fund COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 210 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.5.1. SUSTAINABILITY DATA IN INDEX FUNDS tilt COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 211 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.5.1.1. Sector allocation systemic risk systematic or market risk COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 212 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.6.1. ACTIVE OWNERSHIP COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 213 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.6.2. MONITORING AND ENGAGEMENT Example: Engaging for Food Waste Reduction majority stake in Vermaat, a Dutch premium hospitality provider that operates close to 400 food and beverage locations. Its core customer segments include hospitals, leisure, corporate, travel and events. The company employs more than 4,100 people. In line with Vermaat’s 2022 Food Vision Program, which includes targets for health, sustainability and social responsibility, PG worked with Vermaat throughout ownership to - provements but also help achieve the environmental goals of reduced waste and carbon emissions and align with Sustainable Development Goal 12.3. which is related to reducing global food waste. After examining Vermaat’s supply chain, PG introduced a process focused on ingredient production, planning, cooking and point of sale, thus optimizing resource utilization and helping put Vermaat on track to meet its target food-waste-reduction rate of 10% annually. COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 214 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.6.3. PROXY VOTING AND RESOLUTIONS COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 215 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 216 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.9.1. EXISTING CHALLENGES COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 217 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.9.1.1. Policies, not performance 15.9.1.2. Quantitative data is not always comparable 15.9.1.3. A range of scoring methods COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 218 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.9.1.4. Sustainability disclosure is often not comprehensive 15.9.1.5. Sustainability information is not always reliable COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 219 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE 15.9.1.6. Never-ending demands for more information COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 220 FSA CREDENTIAL LEVEL I STUDY GUIDE PART IV: CORPORATE AND INVESTOR USE: GOING BEYOND DISCLOSURE This chapter contains information related to the following Learning Objective(s): 17 IDENTIFY 18 IDENTIFY 19 IDENTIFY 20 IDENTIFY ? JUMP TO ANSWERS COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 221 FSA CREDENTIAL LEVEL I STUDY GUIDE CONCLUSION CONCLUSION COPYRIGHT © 2023 IFRS FOUNDATION. ALL RIGHTS RESERVED 222