Certificate in ESG Investing Edition 1
questions with answers.
Responsible investment ANS -This term indcates ESG factors are taken into consideration in the
investment process, but typically to mitigate risk with a focus purely on finacial reutrn
Sustainable investment ANS -akin to responsible investment, but going beyond integrating ESG factors
in order to limit risk to doing so in order to capture and enrourage ESG opportunities such as those
presented by the transition to a low carbon economy. Active ownership is actively pursued.
Impact investment ANS -Seeks to create positive environmental or social impacts alongside a financial
return.
Socially responsible investment (SRI) ANS -Positive or negative screening strategiesfor moral or ethical
reasons.
Ethical investing ANS -Subset of SRI, individual or insitutitions own ethical preferences
Thematic investing ANS -Strategy which focus on a trend within ESG or sustainable investment
Institutional investors typically reflect ESG considerations in three ways ANS -1. Integrating ESG factors
2. Engaging actively
3. Public policy and best practice
Framworks for materiality ANS -SASB
Global Reporting initiative (GRI)
IIRC
MSCI
Sustainalytics
,United Nations Global Compact (UNGC) ANS -10 principles within:
Human Rights
Labour
Environment
Anti-Corruption
Sustainable Development Goals ANS -A set of universal goals adopted by 150 UN member states. 17
goals in various areas such as poverty, gender equality and life below water. Goals needs to be reach
before 2030. Totaling 169 sub-goals
United Nations Framework Convention on Climate Change (UNFCCC) ANS -Aims to stabilise greenhouse
gas emissions to limit man-made climate change. Paris Agreement are within UNFCCC
Task Force on Cliamte-related Financial disclosures (TCFD) ANS -Takes the Paris Agreement's two
degrees Celcius target and tries to operationalise it for the business world.
Disclose the following around climate
1. Governance
2. Strategy
3. Risk management
4. Metrics and targets
United Nations Principles for Responsible investment (UN PRI) ANS -Six principles:
1. Incorporate ESG issues into investment analysis
2. Will be active owners
3. Disclose on ESG issues
4. Promote acceptance and implementation of the principles
5. Work together to enhance effectiveness
6. We will each report on our activities and progress torwards implementing the principles
The international corporate governance network (ICGN) ANS -Focus on governance.
,Key guidance developed are:
Global Stewardship Principles
Global Corporate Governance Principles
The Model Mandate
In what sence are ESG considerations non-financial ANS -They are difficult to value precisely and difficult
to time.
How much have PRI signatories growth been per annum since 2006 ANS -30%
1.How many signatories were there in april 2018?
2. AUM? ANS -1. 1961
2. US$ 82 Trillion
Which strategies have the most AUM on a global scale? ANS -1. Negative/exclusionary screening
2. ESG integration
3. Corporate engagenment and shareholder action
What are Pensions funds' ESG drivers? ANS -1. Media and civil society
2. Beneficiaries
3. Regulators
Which big case in Holland led to changes in responsible investment in the pension world? ANS -Zembla
exposed pension funds invested in cluster mines in Holland.
Model Mandate is what? ANS -An initiative whereby more long-term thinking could be embedded into
investment contracts. (especially important for pensions schemes)
Which focus do Japans government pension fund focus on? ANS -Governance
, Article 173-VI in France focus on what? ANS -Requires both fund managers and asset owners to
describe how they incorporate ESG factors into their investment strategy across all asset classes. Largest
firms must also describe how their investments support energy transistion
EU'sHigh Level Expert Group on Sustainable Finance have 8 recommendations? ANS -1. Introduce a
common sustainable finance taxonomy to ensure consitency and clarity, starting with climate change
2. Clarify investor duties to extend time horizon and bring greater focus on ESG factors
3. Upgrade disclosure rules on climate change risk.
4. Investment advice, Ecolabel, SRI minimum standards.
5. Sustainable finance strandards on e.g. green bonds
6. Expand the universe of sustainable assets
7. Reform governance and leadership of companies
8. Enlarge role of three european supervisory authorities to promote sustainable finance.
The walker review led to what? ANS -A UK stewardship Code in 2010, following the financial crisis.
Describe the UK stewardship Code ANS -It sets out stewardship principles that investment insitutions
are expected to comply with or be able to explain any adherence failures. It has been adopted across
the world.
What is the Corporate Governance Code? and which 3 recommendations did it give? ANS -From 1992.
Code was based on the Cadbury Report, in the wake of the BCCI and Maxwell Scandals.
1. The CEO and chairman of companies should be seperated
2. boards should have at least three non-executive directors, two of whom should have no financial or
personal ties to executive.
3. Each board should have an audit committee composed of non-executive directors.
What are the 7. challenges to successful ESG investing? ANS -1. The availability of expertise
2. The quality of data, research and analysis
3. limited tools to assist with portfolio construction and management
4. difficulty of demonstrating the value-add from ESG
questions with answers.
Responsible investment ANS -This term indcates ESG factors are taken into consideration in the
investment process, but typically to mitigate risk with a focus purely on finacial reutrn
Sustainable investment ANS -akin to responsible investment, but going beyond integrating ESG factors
in order to limit risk to doing so in order to capture and enrourage ESG opportunities such as those
presented by the transition to a low carbon economy. Active ownership is actively pursued.
Impact investment ANS -Seeks to create positive environmental or social impacts alongside a financial
return.
Socially responsible investment (SRI) ANS -Positive or negative screening strategiesfor moral or ethical
reasons.
Ethical investing ANS -Subset of SRI, individual or insitutitions own ethical preferences
Thematic investing ANS -Strategy which focus on a trend within ESG or sustainable investment
Institutional investors typically reflect ESG considerations in three ways ANS -1. Integrating ESG factors
2. Engaging actively
3. Public policy and best practice
Framworks for materiality ANS -SASB
Global Reporting initiative (GRI)
IIRC
MSCI
Sustainalytics
,United Nations Global Compact (UNGC) ANS -10 principles within:
Human Rights
Labour
Environment
Anti-Corruption
Sustainable Development Goals ANS -A set of universal goals adopted by 150 UN member states. 17
goals in various areas such as poverty, gender equality and life below water. Goals needs to be reach
before 2030. Totaling 169 sub-goals
United Nations Framework Convention on Climate Change (UNFCCC) ANS -Aims to stabilise greenhouse
gas emissions to limit man-made climate change. Paris Agreement are within UNFCCC
Task Force on Cliamte-related Financial disclosures (TCFD) ANS -Takes the Paris Agreement's two
degrees Celcius target and tries to operationalise it for the business world.
Disclose the following around climate
1. Governance
2. Strategy
3. Risk management
4. Metrics and targets
United Nations Principles for Responsible investment (UN PRI) ANS -Six principles:
1. Incorporate ESG issues into investment analysis
2. Will be active owners
3. Disclose on ESG issues
4. Promote acceptance and implementation of the principles
5. Work together to enhance effectiveness
6. We will each report on our activities and progress torwards implementing the principles
The international corporate governance network (ICGN) ANS -Focus on governance.
,Key guidance developed are:
Global Stewardship Principles
Global Corporate Governance Principles
The Model Mandate
In what sence are ESG considerations non-financial ANS -They are difficult to value precisely and difficult
to time.
How much have PRI signatories growth been per annum since 2006 ANS -30%
1.How many signatories were there in april 2018?
2. AUM? ANS -1. 1961
2. US$ 82 Trillion
Which strategies have the most AUM on a global scale? ANS -1. Negative/exclusionary screening
2. ESG integration
3. Corporate engagenment and shareholder action
What are Pensions funds' ESG drivers? ANS -1. Media and civil society
2. Beneficiaries
3. Regulators
Which big case in Holland led to changes in responsible investment in the pension world? ANS -Zembla
exposed pension funds invested in cluster mines in Holland.
Model Mandate is what? ANS -An initiative whereby more long-term thinking could be embedded into
investment contracts. (especially important for pensions schemes)
Which focus do Japans government pension fund focus on? ANS -Governance
, Article 173-VI in France focus on what? ANS -Requires both fund managers and asset owners to
describe how they incorporate ESG factors into their investment strategy across all asset classes. Largest
firms must also describe how their investments support energy transistion
EU'sHigh Level Expert Group on Sustainable Finance have 8 recommendations? ANS -1. Introduce a
common sustainable finance taxonomy to ensure consitency and clarity, starting with climate change
2. Clarify investor duties to extend time horizon and bring greater focus on ESG factors
3. Upgrade disclosure rules on climate change risk.
4. Investment advice, Ecolabel, SRI minimum standards.
5. Sustainable finance strandards on e.g. green bonds
6. Expand the universe of sustainable assets
7. Reform governance and leadership of companies
8. Enlarge role of three european supervisory authorities to promote sustainable finance.
The walker review led to what? ANS -A UK stewardship Code in 2010, following the financial crisis.
Describe the UK stewardship Code ANS -It sets out stewardship principles that investment insitutions
are expected to comply with or be able to explain any adherence failures. It has been adopted across
the world.
What is the Corporate Governance Code? and which 3 recommendations did it give? ANS -From 1992.
Code was based on the Cadbury Report, in the wake of the BCCI and Maxwell Scandals.
1. The CEO and chairman of companies should be seperated
2. boards should have at least three non-executive directors, two of whom should have no financial or
personal ties to executive.
3. Each board should have an audit committee composed of non-executive directors.
What are the 7. challenges to successful ESG investing? ANS -1. The availability of expertise
2. The quality of data, research and analysis
3. limited tools to assist with portfolio construction and management
4. difficulty of demonstrating the value-add from ESG
