EFPA ESG Advisor (EQF 5) Exam
Question 1. What does ESG stand for in sustainable finance?
A) Environmental, Social, and Governance
B) Economic, Social, and Growth
C) Environmental, Structural, and Global
D) Ethical, Sustainable, and Green
Answer: A
Explanation: ESG stands for Environmental, Social, and Governance—three central factors in
measuring the sustainability and ethical impact of an investment.
Question 2. Which initiative developed the 17 Sustainable Development Goals (SDGs)?
A) European Commission
B) United Nations
C) World Bank
D) International Monetary Fund
Answer: B
Explanation: The United Nations introduced the 2030 Agenda for Sustainable Development, which
includes the 17 SDGs.
Question 3. What is the primary objective of the Paris Agreement?
A) To promote global economic growth
B) To limit global warming to well below 2°C above pre-industrial levels
C) To prevent tax evasion
D) To regulate global financial markets
Answer: B
Explanation: The Paris Agreement aims to limit global warming to well below 2°C, with efforts to
keep it to 1.5°C.
Question 4. Which of the following best defines sustainable finance?
A) Investing with a focus solely on profit
B) Investing that considers environmental, social, and governance factors
C) Investing only in green technology
D) Investing without any consideration for social issues
Answer: B
Explanation: Sustainable finance integrates ESG factors into investment decisions for better long-
term outcomes.
Question 5. The EU Taxonomy is primarily designed to:
A) Define which economic activities are environmentally sustainable
B) Set interest rates in the Eurozone
C) Regulate banking liquidity
D) Standardize accounting practices
Answer: A
Explanation: The EU Taxonomy provides a classification system to determine which activities are
sustainable.
Question 6. What is the main purpose of the Principles for Responsible Investment (UN PRI)?
A) To enforce legal compliance for all investments
B) To guide investors in incorporating ESG issues into investment practice
C) To set global accounting standards
D) To regulate financial markets
, EFPA ESG Advisor (EQF 5) Exam
Answer: B
Explanation: The UN PRI is a voluntary set of principles that encourage investors to integrate ESG
into their processes.
Question 7. The European Green Deal aims to achieve which primary goal by 2050?
A) Double the EU’s GDP
B) Achieve climate neutrality
C) Eliminate all taxes on renewables
D) Abolish coal subsidies
Answer: B
Explanation: The European Green Deal’s main aim is to make Europe climate neutral by 2050.
Question 8. Corporate Social Responsibility (CSR) can be best described as:
A) Legal requirements for all companies
B) Voluntary business practices that contribute to sustainable development
C) Government-imposed taxes
D) The same as ESG investing
Answer: B
Explanation: CSR refers to voluntary actions companies take to address social and environmental
concerns.
Question 9. Which regulation requires investment firms to consider clients’ sustainability
preferences in suitability assessments?
A) MiFID II
B) Basel III
C) Solvency II
D) IFRS 9
Answer: A
Explanation: MiFID II has been updated to include sustainability preferences in the investment
advice process.
Question 10. The Task Force on Climate-related Financial Disclosures (TCFD) is known for:
A) Setting accounting standards
B) Providing recommendations for disclosing climate-related financial risks
C) Regulating banks’ capital requirements
D) Auditing corporate finances
Answer: B
Explanation: TCFD develops voluntary disclosures for climate-related financial risks and
opportunities.
Question 11. Which type of investing focuses on generating measurable positive social or
environmental impact alongside financial return?
A) Passive investing
B) Impact investing
C) Day trading
D) Index investing
Answer: B
Explanation: Impact investing intentionally seeks both financial returns and positive, measurable
impact.
, EFPA ESG Advisor (EQF 5) Exam
Question 12. What is the main difference between ESG investing and ethical investing?
A) Ethical investing only considers financial returns
B) ESG investing is based on standardized criteria, while ethical investing is guided by personal values
C) ESG investing only applies to government bonds
D) There is no difference
Answer: B
Explanation: Ethical investing is value-based, while ESG investing relies on broader, more
standardized criteria.
Question 13. Which reporting framework is known for its sector-specific sustainability standards,
especially in the US?
A) Global Reporting Initiative (GRI)
B) Sustainability Accounting Standards Board (SASB)
C) TCFD
D) CDP
Answer: B
Explanation: SASB provides sector-specific ESG disclosure standards, popular in the US market.
Question 14. What does “double materiality” refer to in ESG analysis?
A) Focusing only on financial materiality
B) Considering both the impact of sustainability issues on the company and the company’s impact on
society and environment
C) Only environmental factors
D) Doubling the value of material investments
Answer: B
Explanation: Double materiality recognizes the importance of both financial and
societal/environmental impacts.
Question 15. Which of the following is NOT typically considered an environmental factor in ESG?
A) Carbon emissions
B) Water usage
C) Board diversity
D) Energy efficiency
Answer: C
Explanation: Board diversity is a governance factor, not an environmental one.
Question 16. The Social factor in ESG may include:
A) Employee relations
B) Carbon footprint
C) Tax transparency
D) Executive compensation
Answer: A
Explanation: Social factors cover employee relations, human rights, health and safety, etc.
Question 17. Which is a Governance factor in ESG analysis?
A) Waste management
B) Gender diversity on boards
C) Community engagement
D) Sustainable sourcing
, EFPA ESG Advisor (EQF 5) Exam
Answer: B
Explanation: Board diversity is a governance issue, while the others are environmental or social.
Question 18. Which European regulation strengthens ESG disclosure for asset managers and
financial advisers?
A) SFDR (Sustainable Finance Disclosure Regulation)
B) Basel IV
C) MiFID I
D) EMIR
Answer: A
Explanation: SFDR mandates ESG disclosure for financial market participants in the EU.
Question 19. What is the primary role of ESG rating providers?
A) To set legal standards for ESG
B) To provide independent assessments of companies’ ESG performance
C) To audit financial statements
D) To conduct government inspections
Answer: B
Explanation: ESG rating agencies assess and rate companies’ ESG practices and risks.
Question 20. What is a negative screening strategy in sustainable investing?
A) Selecting only high-performing companies
B) Excluding securities of companies involved in undesirable activities
C) Investing in only government bonds
D) Focusing on best-in-class ESG performers
Answer: B
Explanation: Negative screening excludes investments in certain sectors or companies based on ESG
criteria.
Question 21. Positive or “best-in-class” screening refers to:
A) Choosing only companies with the lowest emissions
B) Selecting companies with superior ESG performance within their sector
C) Excluding all fossil fuel companies
D) Investing in index funds only
Answer: B
Explanation: Positive screening invests in companies with the best ESG scores in each sector.
Question 22. Which international agreement aims to “mobilize $100 billion per year” for climate
action in developing countries?
A) Paris Agreement
B) Kyoto Protocol
C) Basel Accord
D) UN Charter
Answer: A
Explanation: The Paris Agreement includes a goal to mobilize $100 billion annually for climate
finance in developing countries.
Question 23. What does the EU Action Plan on Financing Sustainable Growth aim to achieve?
A) Increase taxes on polluters only
B) Direct private capital towards sustainable investments
Question 1. What does ESG stand for in sustainable finance?
A) Environmental, Social, and Governance
B) Economic, Social, and Growth
C) Environmental, Structural, and Global
D) Ethical, Sustainable, and Green
Answer: A
Explanation: ESG stands for Environmental, Social, and Governance—three central factors in
measuring the sustainability and ethical impact of an investment.
Question 2. Which initiative developed the 17 Sustainable Development Goals (SDGs)?
A) European Commission
B) United Nations
C) World Bank
D) International Monetary Fund
Answer: B
Explanation: The United Nations introduced the 2030 Agenda for Sustainable Development, which
includes the 17 SDGs.
Question 3. What is the primary objective of the Paris Agreement?
A) To promote global economic growth
B) To limit global warming to well below 2°C above pre-industrial levels
C) To prevent tax evasion
D) To regulate global financial markets
Answer: B
Explanation: The Paris Agreement aims to limit global warming to well below 2°C, with efforts to
keep it to 1.5°C.
Question 4. Which of the following best defines sustainable finance?
A) Investing with a focus solely on profit
B) Investing that considers environmental, social, and governance factors
C) Investing only in green technology
D) Investing without any consideration for social issues
Answer: B
Explanation: Sustainable finance integrates ESG factors into investment decisions for better long-
term outcomes.
Question 5. The EU Taxonomy is primarily designed to:
A) Define which economic activities are environmentally sustainable
B) Set interest rates in the Eurozone
C) Regulate banking liquidity
D) Standardize accounting practices
Answer: A
Explanation: The EU Taxonomy provides a classification system to determine which activities are
sustainable.
Question 6. What is the main purpose of the Principles for Responsible Investment (UN PRI)?
A) To enforce legal compliance for all investments
B) To guide investors in incorporating ESG issues into investment practice
C) To set global accounting standards
D) To regulate financial markets
, EFPA ESG Advisor (EQF 5) Exam
Answer: B
Explanation: The UN PRI is a voluntary set of principles that encourage investors to integrate ESG
into their processes.
Question 7. The European Green Deal aims to achieve which primary goal by 2050?
A) Double the EU’s GDP
B) Achieve climate neutrality
C) Eliminate all taxes on renewables
D) Abolish coal subsidies
Answer: B
Explanation: The European Green Deal’s main aim is to make Europe climate neutral by 2050.
Question 8. Corporate Social Responsibility (CSR) can be best described as:
A) Legal requirements for all companies
B) Voluntary business practices that contribute to sustainable development
C) Government-imposed taxes
D) The same as ESG investing
Answer: B
Explanation: CSR refers to voluntary actions companies take to address social and environmental
concerns.
Question 9. Which regulation requires investment firms to consider clients’ sustainability
preferences in suitability assessments?
A) MiFID II
B) Basel III
C) Solvency II
D) IFRS 9
Answer: A
Explanation: MiFID II has been updated to include sustainability preferences in the investment
advice process.
Question 10. The Task Force on Climate-related Financial Disclosures (TCFD) is known for:
A) Setting accounting standards
B) Providing recommendations for disclosing climate-related financial risks
C) Regulating banks’ capital requirements
D) Auditing corporate finances
Answer: B
Explanation: TCFD develops voluntary disclosures for climate-related financial risks and
opportunities.
Question 11. Which type of investing focuses on generating measurable positive social or
environmental impact alongside financial return?
A) Passive investing
B) Impact investing
C) Day trading
D) Index investing
Answer: B
Explanation: Impact investing intentionally seeks both financial returns and positive, measurable
impact.
, EFPA ESG Advisor (EQF 5) Exam
Question 12. What is the main difference between ESG investing and ethical investing?
A) Ethical investing only considers financial returns
B) ESG investing is based on standardized criteria, while ethical investing is guided by personal values
C) ESG investing only applies to government bonds
D) There is no difference
Answer: B
Explanation: Ethical investing is value-based, while ESG investing relies on broader, more
standardized criteria.
Question 13. Which reporting framework is known for its sector-specific sustainability standards,
especially in the US?
A) Global Reporting Initiative (GRI)
B) Sustainability Accounting Standards Board (SASB)
C) TCFD
D) CDP
Answer: B
Explanation: SASB provides sector-specific ESG disclosure standards, popular in the US market.
Question 14. What does “double materiality” refer to in ESG analysis?
A) Focusing only on financial materiality
B) Considering both the impact of sustainability issues on the company and the company’s impact on
society and environment
C) Only environmental factors
D) Doubling the value of material investments
Answer: B
Explanation: Double materiality recognizes the importance of both financial and
societal/environmental impacts.
Question 15. Which of the following is NOT typically considered an environmental factor in ESG?
A) Carbon emissions
B) Water usage
C) Board diversity
D) Energy efficiency
Answer: C
Explanation: Board diversity is a governance factor, not an environmental one.
Question 16. The Social factor in ESG may include:
A) Employee relations
B) Carbon footprint
C) Tax transparency
D) Executive compensation
Answer: A
Explanation: Social factors cover employee relations, human rights, health and safety, etc.
Question 17. Which is a Governance factor in ESG analysis?
A) Waste management
B) Gender diversity on boards
C) Community engagement
D) Sustainable sourcing
, EFPA ESG Advisor (EQF 5) Exam
Answer: B
Explanation: Board diversity is a governance issue, while the others are environmental or social.
Question 18. Which European regulation strengthens ESG disclosure for asset managers and
financial advisers?
A) SFDR (Sustainable Finance Disclosure Regulation)
B) Basel IV
C) MiFID I
D) EMIR
Answer: A
Explanation: SFDR mandates ESG disclosure for financial market participants in the EU.
Question 19. What is the primary role of ESG rating providers?
A) To set legal standards for ESG
B) To provide independent assessments of companies’ ESG performance
C) To audit financial statements
D) To conduct government inspections
Answer: B
Explanation: ESG rating agencies assess and rate companies’ ESG practices and risks.
Question 20. What is a negative screening strategy in sustainable investing?
A) Selecting only high-performing companies
B) Excluding securities of companies involved in undesirable activities
C) Investing in only government bonds
D) Focusing on best-in-class ESG performers
Answer: B
Explanation: Negative screening excludes investments in certain sectors or companies based on ESG
criteria.
Question 21. Positive or “best-in-class” screening refers to:
A) Choosing only companies with the lowest emissions
B) Selecting companies with superior ESG performance within their sector
C) Excluding all fossil fuel companies
D) Investing in index funds only
Answer: B
Explanation: Positive screening invests in companies with the best ESG scores in each sector.
Question 22. Which international agreement aims to “mobilize $100 billion per year” for climate
action in developing countries?
A) Paris Agreement
B) Kyoto Protocol
C) Basel Accord
D) UN Charter
Answer: A
Explanation: The Paris Agreement includes a goal to mobilize $100 billion annually for climate
finance in developing countries.
Question 23. What does the EU Action Plan on Financing Sustainable Growth aim to achieve?
A) Increase taxes on polluters only
B) Direct private capital towards sustainable investments
