CFA ESG Glossary Exam Questions &
Answers 100% Correct!!
Active Ownership - ANSWERSActive ownership represents actively exercising ones
right as the shareholder of a company, particularly active engagement with
management, and discussion on both financial and non-financial ESG factors.
Active Risk - ANSWERSThe risk that a portfolio assumes in an effort to compete
against and beat its benchmark index. It represents how closely as portfolio tracks to or
deviates from its benchmark.
Activism - ANSWERSA form of investing where the fund manager (often referred to as
an activist) buys into a company with the express intention of generating additional
returns by catalysing change.
AGM, EGM - ANSWERS- Respectively, annual general meeting and extraordinary
general meeting.
- The formal gatherings of shareholders to agree official business of a company. The
shareholders have the right to take some decisions about the future of the company and
these are the occasions when those decisions are taken. The agendas very much
depend on the law of the state or country of incorporation of the company.
Alpha Generation - ANSWERSThe risk-adjusted contribution of the value that a portfolio
manager contributes - either adding or subtracting - to the fund's investment returns.
Animal Welfare - ANSWERSHow an animal copes with the conditions in which it lives
Automation - ANSWERSTechnology by which a process or procedure is performed with
minimum human assistance. It is associated with faster production and cheaper labour
costs, replacing hard, physical or monotonous work.
Bayesian Inference - ANSWERSA statistical methodology based on Bayes's theorem
commonly used to treat or update the probability of an outcome of a given hypothesis
as more information become available.
Best-in-Class Investment - ANSWERSInvolves selecting only the companies that
overcome a defined ranking hurdle, established using ESG criteria within each sector or
industry.
Carbon Dioxide - ANSWERSA colourless, odourless, non-poisonous gas that results
from fossil fuel combustion, and it normally part of the ambient air.
, Carbon Footprint - ANSWERSThe annual amount of greenhouse gas emissions, mainly
carbon dioxide, that result from the activities of an individual or a group of people,
especially their use of energy and transport and consumption of goods and services. It
is measures as the mass, in KG or tonnes per year, either of carbon dioxide emissions
alone, or of the carbon dioxide equivalent affect of other greenhouse emissions.
Carbon Market - ANSWERSA market that is created from the trading of carbon
emission allowances to encourage or help countries and companies to limit their carbon
dioxide emissions. This is also known as emissions or carbon trading.
Carbon Sequestration - ANSWERSThe long-term storage of carbon in plants, soils,
geologic formations and the ocean. Carbon sequestration occurs both naturally and as
a result of anthropogenic activities, and typically refers to the storage of carbon that has
the immediate potential to become CO2 gas. In response to growing concerns about
climate change resulting from increased carbon dioxide concentration in the
atmosphere, considerable interest has been drawn to the possibility of increasing the
rate of carbon sequestration through changes in land use and forestry, and also through
geoengineering techniques such as carbon capture and storage.
Carbon Tax - ANSWERSDirectly sets a price on carbon by defining a tax rate on
greenhouse gas emissions or - more commonly- on the carbon content of fossil fuels.
CDP - ANSWERS(Formerly known as the Carbon Disclosure Project) is NGO that
supports companies, financial institutions and cities to disclose and manage their
environmental impact. It runs a global environmental disclosure system in which nearly
10,000 companies, as well as cities, states, and regions, report on their risks and
opportunities on climate change, water security and deforestation.
Climate Change - ANSWERSA change of climate, directly or indirectly attributed to
human activity, that alters the composition of the global atmosphere and which is, in
addition to natural climate variability, observed over comparable time periods.
Climate Change Adaptation - ANSWERSAbout adapting to a changing climate-involving
adjusting to actual or expected future climate events- thereby increasing society's
resilience to climate change and reducing vulnerabilities to its harmful effects.
Climate Change Mitigation - ANSWERSHuman intervention that involves reducing the
sources of greenhouse gas emissions or slowing down the process or enhancing the
'sink' that store these gases, such as forests, oceans and soil.
Climate Disclosure Standards Board - ANSWERSInternational Consortium of business
and environmental NGO'S with the mission to create the enabling conditions for material
climate change and natural capital information to be integrated into mainstream
reporting.
Answers 100% Correct!!
Active Ownership - ANSWERSActive ownership represents actively exercising ones
right as the shareholder of a company, particularly active engagement with
management, and discussion on both financial and non-financial ESG factors.
Active Risk - ANSWERSThe risk that a portfolio assumes in an effort to compete
against and beat its benchmark index. It represents how closely as portfolio tracks to or
deviates from its benchmark.
Activism - ANSWERSA form of investing where the fund manager (often referred to as
an activist) buys into a company with the express intention of generating additional
returns by catalysing change.
AGM, EGM - ANSWERS- Respectively, annual general meeting and extraordinary
general meeting.
- The formal gatherings of shareholders to agree official business of a company. The
shareholders have the right to take some decisions about the future of the company and
these are the occasions when those decisions are taken. The agendas very much
depend on the law of the state or country of incorporation of the company.
Alpha Generation - ANSWERSThe risk-adjusted contribution of the value that a portfolio
manager contributes - either adding or subtracting - to the fund's investment returns.
Animal Welfare - ANSWERSHow an animal copes with the conditions in which it lives
Automation - ANSWERSTechnology by which a process or procedure is performed with
minimum human assistance. It is associated with faster production and cheaper labour
costs, replacing hard, physical or monotonous work.
Bayesian Inference - ANSWERSA statistical methodology based on Bayes's theorem
commonly used to treat or update the probability of an outcome of a given hypothesis
as more information become available.
Best-in-Class Investment - ANSWERSInvolves selecting only the companies that
overcome a defined ranking hurdle, established using ESG criteria within each sector or
industry.
Carbon Dioxide - ANSWERSA colourless, odourless, non-poisonous gas that results
from fossil fuel combustion, and it normally part of the ambient air.
, Carbon Footprint - ANSWERSThe annual amount of greenhouse gas emissions, mainly
carbon dioxide, that result from the activities of an individual or a group of people,
especially their use of energy and transport and consumption of goods and services. It
is measures as the mass, in KG or tonnes per year, either of carbon dioxide emissions
alone, or of the carbon dioxide equivalent affect of other greenhouse emissions.
Carbon Market - ANSWERSA market that is created from the trading of carbon
emission allowances to encourage or help countries and companies to limit their carbon
dioxide emissions. This is also known as emissions or carbon trading.
Carbon Sequestration - ANSWERSThe long-term storage of carbon in plants, soils,
geologic formations and the ocean. Carbon sequestration occurs both naturally and as
a result of anthropogenic activities, and typically refers to the storage of carbon that has
the immediate potential to become CO2 gas. In response to growing concerns about
climate change resulting from increased carbon dioxide concentration in the
atmosphere, considerable interest has been drawn to the possibility of increasing the
rate of carbon sequestration through changes in land use and forestry, and also through
geoengineering techniques such as carbon capture and storage.
Carbon Tax - ANSWERSDirectly sets a price on carbon by defining a tax rate on
greenhouse gas emissions or - more commonly- on the carbon content of fossil fuels.
CDP - ANSWERS(Formerly known as the Carbon Disclosure Project) is NGO that
supports companies, financial institutions and cities to disclose and manage their
environmental impact. It runs a global environmental disclosure system in which nearly
10,000 companies, as well as cities, states, and regions, report on their risks and
opportunities on climate change, water security and deforestation.
Climate Change - ANSWERSA change of climate, directly or indirectly attributed to
human activity, that alters the composition of the global atmosphere and which is, in
addition to natural climate variability, observed over comparable time periods.
Climate Change Adaptation - ANSWERSAbout adapting to a changing climate-involving
adjusting to actual or expected future climate events- thereby increasing society's
resilience to climate change and reducing vulnerabilities to its harmful effects.
Climate Change Mitigation - ANSWERSHuman intervention that involves reducing the
sources of greenhouse gas emissions or slowing down the process or enhancing the
'sink' that store these gases, such as forests, oceans and soil.
Climate Disclosure Standards Board - ANSWERSInternational Consortium of business
and environmental NGO'S with the mission to create the enabling conditions for material
climate change and natural capital information to be integrated into mainstream
reporting.
