ESG CFA TOPIC 1 Questions With Verified Answers

Engagement - Answer The 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) - Answer The 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. ESG Integration - Answer the inclusion of ESG considerations within financial analysis and investment decisions. This may be done in various ways , tailored to the investment process and approach of the fund manager. Externalities - Answer costs that a business does not bear itself but instead imposes on others (externalities). Where the business is made to bear formerly externalised costs, they are said to have been internalised.