ESG Mock Test Correct Questions &
Answers
Which of the following is a governance issue? - ANSWER Tax transparency
"[e]xamples of the definition and scope of ESG issues can be illustrated by the two
widely-referenced organisations...Tax Transparency [falls under the umbrella of]
Governance".
Triple bottom line accounting takes into account a company's financial performance and
its: - ANSWER environmental and social factors.
(Triple bottom line) accounting theory expands the traditional accounting framework
focused only on profit to include two other performance areas: the social and
environmental impacts of a company."
Which of the following investment styles often uses negative screening? - ANSWER
Faith-based investing.
"faith-based investment refers to investing in line with certain principles, often using
negative screening to avoid investing in companies whose products and services are
deemed morally objectionable by the investor or certain religions, international
declarations, conventions and voluntary agreements."
Negative externalities: - ANSWER result in societal costs that are not reflected in the
prices of goods.
[t]he term externalities refers to situations where the production or consumption of
goods and services creates costs or benefits to others that are not reflected in the
prices charged for them...when externalities are negative, private costs are lower than
societal costs...leading to 'market failures'..
Which of the following statements about ESG integration is most accurate? - ANSWER
Good ESG standards lower a company's cost of capital
Which of the following statements is most accurate? The Principles for Responsible
Investment (PRI): - ANSWER provides guidance on actions signatories can take to
incorporate ESG issues into investment practice.
Which of the following is a minimum requirement for signatories of the Principles for
Responsible Investment (PRI)? - ANSWER Senior-level commitment and accountability
mechanisms for responsible investment implementation must be in place
, As policies on ESG and financial regulation mature, regulatory requirements will most
likely move from: - ANSWER 'comply or explain' to 'comply and explain'.
"it is anticipated that as policies on ESG and financial regulation reach maturity, an
increasing number of governments will recognize the importance of moving to stronger
requirements, moving away from: 'comply or explain' to 'comply and explain'; voluntary
to mandatory; and policy to implementation and reporting."
When an asset manager receives an investment mandate from a pension fund, the
asset manager: - ANSWER assumes a fiduciary duty to the pension fund's members.
Which of the following high-net-worth investor groups are most likely to review the ESG
impact of their investment holdings? - ANSWER Millennial investors.
An analyst argues that a rapid transition from conventional to electric cars would
continue to put a strain on natural resources. This would best be explained by: -
ANSWER the shift in materials used. One of the aspects related to a further strain on
natural resources and their depletion is the result of the shift in materials used in
production.
Which of the following is one of the three principles of the circular economy? - ANSWER
Keep products and materials in use
An automotive supplier develops new products that will increase the fuel efficiency of
vehicles. These products will most likely contribute to a reduction in the supplier's: -
ANSWER Scope 3 emissions. Scope 3 of the GHG Protocol standards cover emissions
further in the supply chain, among other emissions arising from the activities of
consumers.
Scope 1 emissions - ANSWER cover direct emissions from a company's core
operations.
Scope 2 emissions - ANSWER cover emissions from purchased energy.
Which of the following statements is most accurate? An emission trading system: -
ANSWER creates an economic incentive for emissions reductions to occur at the point
of least cost.
Which of the following statements is most accurate? The Paris Agreement: - ANSWER
requires signatories to update their commitments to reduce emissions every five years.
The EU taxonomy: - ANSWER is a classification system to determine whether an
economic activity is environmentally sustainable.
Which of the following statements is most accurate? The 'materiality map' developed by
the Sustainability and Accounting Standards Board (SASB): - ANSWER identifies and
Answers
Which of the following is a governance issue? - ANSWER Tax transparency
"[e]xamples of the definition and scope of ESG issues can be illustrated by the two
widely-referenced organisations...Tax Transparency [falls under the umbrella of]
Governance".
Triple bottom line accounting takes into account a company's financial performance and
its: - ANSWER environmental and social factors.
(Triple bottom line) accounting theory expands the traditional accounting framework
focused only on profit to include two other performance areas: the social and
environmental impacts of a company."
Which of the following investment styles often uses negative screening? - ANSWER
Faith-based investing.
"faith-based investment refers to investing in line with certain principles, often using
negative screening to avoid investing in companies whose products and services are
deemed morally objectionable by the investor or certain religions, international
declarations, conventions and voluntary agreements."
Negative externalities: - ANSWER result in societal costs that are not reflected in the
prices of goods.
[t]he term externalities refers to situations where the production or consumption of
goods and services creates costs or benefits to others that are not reflected in the
prices charged for them...when externalities are negative, private costs are lower than
societal costs...leading to 'market failures'..
Which of the following statements about ESG integration is most accurate? - ANSWER
Good ESG standards lower a company's cost of capital
Which of the following statements is most accurate? The Principles for Responsible
Investment (PRI): - ANSWER provides guidance on actions signatories can take to
incorporate ESG issues into investment practice.
Which of the following is a minimum requirement for signatories of the Principles for
Responsible Investment (PRI)? - ANSWER Senior-level commitment and accountability
mechanisms for responsible investment implementation must be in place
, As policies on ESG and financial regulation mature, regulatory requirements will most
likely move from: - ANSWER 'comply or explain' to 'comply and explain'.
"it is anticipated that as policies on ESG and financial regulation reach maturity, an
increasing number of governments will recognize the importance of moving to stronger
requirements, moving away from: 'comply or explain' to 'comply and explain'; voluntary
to mandatory; and policy to implementation and reporting."
When an asset manager receives an investment mandate from a pension fund, the
asset manager: - ANSWER assumes a fiduciary duty to the pension fund's members.
Which of the following high-net-worth investor groups are most likely to review the ESG
impact of their investment holdings? - ANSWER Millennial investors.
An analyst argues that a rapid transition from conventional to electric cars would
continue to put a strain on natural resources. This would best be explained by: -
ANSWER the shift in materials used. One of the aspects related to a further strain on
natural resources and their depletion is the result of the shift in materials used in
production.
Which of the following is one of the three principles of the circular economy? - ANSWER
Keep products and materials in use
An automotive supplier develops new products that will increase the fuel efficiency of
vehicles. These products will most likely contribute to a reduction in the supplier's: -
ANSWER Scope 3 emissions. Scope 3 of the GHG Protocol standards cover emissions
further in the supply chain, among other emissions arising from the activities of
consumers.
Scope 1 emissions - ANSWER cover direct emissions from a company's core
operations.
Scope 2 emissions - ANSWER cover emissions from purchased energy.
Which of the following statements is most accurate? An emission trading system: -
ANSWER creates an economic incentive for emissions reductions to occur at the point
of least cost.
Which of the following statements is most accurate? The Paris Agreement: - ANSWER
requires signatories to update their commitments to reduce emissions every five years.
The EU taxonomy: - ANSWER is a classification system to determine whether an
economic activity is environmentally sustainable.
Which of the following statements is most accurate? The 'materiality map' developed by
the Sustainability and Accounting Standards Board (SASB): - ANSWER identifies and
