ESG CFA TOPIC 1 Questions & Answers
100% Correct!!
Engagement - ANSWERSThe active process of dialogue with a company, where the
investor is seeking specific change. This can often be a lengthy process and involve
many iterations of contact with senior representatives of the company.
Environmental, social and governance (ESG) - ANSWERSThe grouping for a range of
underlying issues, where those that are material will impact the long-term business
performance of a company and influence its attraction as an investment.
International Integrated Reporting Council (IIRC) - ANSWERSAn organisation
encouraging companies to produce integrated reports which unite financial and ESG
considerations in a single document.
Materiality - ANSWERSA core consideration in ESG investing; a factor is material if it
will drive long-term financial value in a particular business. Not every ESG factor is
material in every company all the time. A core challenge for ESG investors is to identify
the factors that are material to a business over a particular time frame.
Stewardship - ANSWERSThe broad term for an investor operating as a good long-term
owner of assets, standing in the shoes of their underlying clients to ensure that value is
added or preserved over time.
Triple Bottom line (TBL) - ANSWERSThe triple bottom line (TBL) or (3BL) is an
accounting framework with three parts: social, environmental (or ecological) and
financial
United Nations Global compact (UNGC) - ANSWERSThe united nations initiative for
businesses seeking to ensure that they avoid poor business behaviours in the areas of
human rights, labour relations, the environment and anti-corruption.
UN PRI - ANSWERSA UN - linked initiative by investors to emphasis the importance of
ESG matters and to support and encourage their peers to incorporate ESG
considerations into their investment process
Sustainability Accounting Standards board (SASB) - ANSWERSA US- Based initiative
to identify and encourage the disclosure of a small number of key material indicators for
each subsection. The ultimate aim of SASB is to see each of these factors disclosed in
every company in a given sector. This may require regulatory backing
100% Correct!!
Engagement - ANSWERSThe active process of dialogue with a company, where the
investor is seeking specific change. This can often be a lengthy process and involve
many iterations of contact with senior representatives of the company.
Environmental, social and governance (ESG) - ANSWERSThe grouping for a range of
underlying issues, where those that are material will impact the long-term business
performance of a company and influence its attraction as an investment.
International Integrated Reporting Council (IIRC) - ANSWERSAn organisation
encouraging companies to produce integrated reports which unite financial and ESG
considerations in a single document.
Materiality - ANSWERSA core consideration in ESG investing; a factor is material if it
will drive long-term financial value in a particular business. Not every ESG factor is
material in every company all the time. A core challenge for ESG investors is to identify
the factors that are material to a business over a particular time frame.
Stewardship - ANSWERSThe broad term for an investor operating as a good long-term
owner of assets, standing in the shoes of their underlying clients to ensure that value is
added or preserved over time.
Triple Bottom line (TBL) - ANSWERSThe triple bottom line (TBL) or (3BL) is an
accounting framework with three parts: social, environmental (or ecological) and
financial
United Nations Global compact (UNGC) - ANSWERSThe united nations initiative for
businesses seeking to ensure that they avoid poor business behaviours in the areas of
human rights, labour relations, the environment and anti-corruption.
UN PRI - ANSWERSA UN - linked initiative by investors to emphasis the importance of
ESG matters and to support and encourage their peers to incorporate ESG
considerations into their investment process
Sustainability Accounting Standards board (SASB) - ANSWERSA US- Based initiative
to identify and encourage the disclosure of a small number of key material indicators for
each subsection. The ultimate aim of SASB is to see each of these factors disclosed in
every company in a given sector. This may require regulatory backing
