CFA ESG Investing Cert - Chapter 2 The ESG Market Exam Solved 100%

In 1987, a Commission put together by the __ issued the __ __, also called __ __ __, which introduced the concept of sustainable development and described how it could be achieved. - Answer UN, Brundtland Report, Our Common Future The concept of responsible investing dates back to the __ century. One of the first ethical mutual funds that moved to screens based on religious traditions was the __ __ that was launched in 1928. The modern institutionalization of ethical exclusions arguably began at the height of the Vietnam War in 1971 with the establishment of the__ __Fund - Answer 17th, Pioneer Fund, Pax World In the early 2000s, the UN Global Compact's report __ __ __ encourages financial institutions to integrate ESG into capital markets. Concurrently, the __ __ produced the so-called Freshfields Report, which showed that ESG issues are relevant for __ __ and thus, __ __. These two reports formed the backbone for the launch of the __ in 2006. - Answer Who Cares Wins, UNEP FI, financial valuation, fiduciary duty, Principles for Responsible Investment (PRI) The __ most recent report shows sustainable investing assets in the __ major markets stood at US$30.7 trillion (£22tn) at the start of 2018, a 34% increase in two years. The proportion of sustainable investing relative to total __ __ grew in almost every region, and in __ and __, responsible investing assets now make up most total assets under professional management. - Answer Global Sustainable Investment Alliance's (GSIA), five, managed assets, Canada, Australia/New Zealand Although institutional investors tend to dominate the financial market, interest by __ __ in responsible investing has been steadily growing; in 2018, the retail portion of total ESG assets totaled __ __ - Answer retail investors, one quarter Most ESG assets are allocated to __ __ (over 50% at the start of 2018). The next largest asset allocation is in __ __, with 36%. - Answer public equities, fixed income __ __ set the direction of the investment value chain. Asset owners' understanding of how ESG factors influence __ __ and how their capital impacts the __ __ can significantly drive the __ and __of ESG investing from the investment value chain - Answer Asset owners, financial returns, real economy, amount, quality Institutional asset owners establish contracts, known as __ __, with asset managers. These are important as they define the expectations around the __ __, and at times even aspects about the manager's __ and __ more broadly. The large majority (over 90%) of asset owner signatories of the PRI require in their investment mandate that asset managers act in accordance with the asset owner's __ __ __ and over half of the asset owners (65%) also require __. - Answer investment mandates, investment product, processes, resources, responsible investment policy, reporting Many actors in the investment value chain have recognized the shortfalls of __-__ in investment practice and have sought to increase awareness of the value of long-termism and encourage it. Short-termism may leave companies less willing to take on projects (such as __ and __) that may take multiple years - and patient capital - to develop. Furthermore, short-term investment strategies tend to ignore factors that are considered more long-term, such as __ factors. This was confirmed by a review conducted on the __ equity market and long-term decision-making by Professor John Kay for the UK Government in 2012. - Answer short-termism, research, development, ESG, UK In theory, asset owners with long-term __ (like pension funds) are well aligned with long-term investing and are due to benefit from it. In practice, they at times help create the problem by __ managers and companies for short-term behavior. - Answer liabilities, rewarding