SASB LEVEL II EXAM QUIDE
QUESTIONS AND ANSWERS
kurtosis distribution - Answer- A high kurtosis describes a chart with fat tails and even
distribution, while a low kurtosis refers to a chart with skinny tails and distribution
centered toward the mean. In mapping distribution on a SASB metric, high kurtosis
charts will have results clustered at the ends and evenly distributed across the rest of
the chart, while low kurtosis typically have results clustered in the middle with light
distribution at the ends.
Revenue and Skewness - Answer- As a result, a characteristic such as revenue could
impact the distribution of SASB-reported data within an industry. In one example, 80
percent of companies in an industry have sales ranging from $100 million to $10 billion,
while only a small handful of companies have revenue of $100 billion or more. In this
case, the weight of the distribution of revenue is aggregated on the left side, and there
is long right tail—the distribution is positively skewed
Regulatory Mandates and Skewness - Answer- Regulatory mandates are another
common reason for the asymmetrical distribution of sustainability performance data. In
many cases, regulations impose hard and soft caps on a company's allowable
performance.
Contextual Factor Categories to Consider - Answer- 1. Operating Context
2. Performance Context
Operating Context - Answer- Important factors related to a company's operating context
include such things as:
Business climate.
Economic climate
Societal trends.
Regulatory climate.
Geographic footprint
Business Climate - Answer- Industry trends can affect a company's competitive
landscape, its opportunities for innovation through new technologies, and risks or
innovations in the existing distribution channels and supply chain.
Economic Climate - Answer- A company's exposure or sensitivity to emerging-market
growth, commodity prices, business cycles, and other economic factors can be
important considerations when evaluating performance on sustainability issues.
Societal Trends - Answer- another important contextual factor, as individual consumers
and the society at large shift their preferences and concerns.
, Regulatory Climate - Answer- Regulatory differences, which are often regional in nature,
can have a significant impact on sustainability performance. The financial impacts of
more stringent or complex regulation will manifest differently than regulation that is less
stringent or complex. The strength of legal enforcement can also influence the degree of
financial impacts. Understanding how these regulatory factors differ from one
jurisdiction to another, and therefore from one company to another, can make
performance assessments more meaningful.
Performance Context - Answer- Company’s Actions, Peer Company's Actions, and
Historical performance on topics and metrics all impact the companies’ disclosed data
and information interpretation.
Revenues and Costs - Answer- Impacts on revenue affect demand for core products
and services, intangible assets, and long term growth. Impacts on costs are typically
related to operational efficiency and cost structure
Assets and Liabilities - Answer- Impacts along these channels affect the value of core
assets and liabilities
Cost of Capital - Answer- Impacts the firms cost of capital tend to affect areas of
governance, license to operate, and risk.
SASB Financial Impact Tables - Answer- Included with each industry brief, groups
impact into Cost of capital, Assets and Liabilities, and Revenues and Costs. Can be
helpful for understanding the most likely channels of impact per topic and the likely
intensity of a specific impact (High medium)
Key Characteristics of Sustainability Impact - Answer- 1. Time Frame
2. Likelihood
3. Intensity
Near Term Impacts - Answer- Time frame consideration. Currently happening or can
happen at anytime impacts. Direct Financial/reputational immediate impacts on a
company. Typically have a span of a year. Ex. Food Borne Illness in food
Medium-Long term impacts - Answer- Relate to currently known trends that will have an
impact in the future. Ex. Climate Change Regulations
Low Likelihood - Answer- Less likelihood to occur based on historical evidence and
operating conditions. However these risks can have a major impact on companies. Ex.
Oil Spill
Recognizing Data Types Question - Answer- 1. Does the Metric yield Discrete Data?
2.Does the metric yield Continuous Data?
3.What is the possible range of performance on a topic?
QUESTIONS AND ANSWERS
kurtosis distribution - Answer- A high kurtosis describes a chart with fat tails and even
distribution, while a low kurtosis refers to a chart with skinny tails and distribution
centered toward the mean. In mapping distribution on a SASB metric, high kurtosis
charts will have results clustered at the ends and evenly distributed across the rest of
the chart, while low kurtosis typically have results clustered in the middle with light
distribution at the ends.
Revenue and Skewness - Answer- As a result, a characteristic such as revenue could
impact the distribution of SASB-reported data within an industry. In one example, 80
percent of companies in an industry have sales ranging from $100 million to $10 billion,
while only a small handful of companies have revenue of $100 billion or more. In this
case, the weight of the distribution of revenue is aggregated on the left side, and there
is long right tail—the distribution is positively skewed
Regulatory Mandates and Skewness - Answer- Regulatory mandates are another
common reason for the asymmetrical distribution of sustainability performance data. In
many cases, regulations impose hard and soft caps on a company's allowable
performance.
Contextual Factor Categories to Consider - Answer- 1. Operating Context
2. Performance Context
Operating Context - Answer- Important factors related to a company's operating context
include such things as:
Business climate.
Economic climate
Societal trends.
Regulatory climate.
Geographic footprint
Business Climate - Answer- Industry trends can affect a company's competitive
landscape, its opportunities for innovation through new technologies, and risks or
innovations in the existing distribution channels and supply chain.
Economic Climate - Answer- A company's exposure or sensitivity to emerging-market
growth, commodity prices, business cycles, and other economic factors can be
important considerations when evaluating performance on sustainability issues.
Societal Trends - Answer- another important contextual factor, as individual consumers
and the society at large shift their preferences and concerns.
, Regulatory Climate - Answer- Regulatory differences, which are often regional in nature,
can have a significant impact on sustainability performance. The financial impacts of
more stringent or complex regulation will manifest differently than regulation that is less
stringent or complex. The strength of legal enforcement can also influence the degree of
financial impacts. Understanding how these regulatory factors differ from one
jurisdiction to another, and therefore from one company to another, can make
performance assessments more meaningful.
Performance Context - Answer- Company’s Actions, Peer Company's Actions, and
Historical performance on topics and metrics all impact the companies’ disclosed data
and information interpretation.
Revenues and Costs - Answer- Impacts on revenue affect demand for core products
and services, intangible assets, and long term growth. Impacts on costs are typically
related to operational efficiency and cost structure
Assets and Liabilities - Answer- Impacts along these channels affect the value of core
assets and liabilities
Cost of Capital - Answer- Impacts the firms cost of capital tend to affect areas of
governance, license to operate, and risk.
SASB Financial Impact Tables - Answer- Included with each industry brief, groups
impact into Cost of capital, Assets and Liabilities, and Revenues and Costs. Can be
helpful for understanding the most likely channels of impact per topic and the likely
intensity of a specific impact (High medium)
Key Characteristics of Sustainability Impact - Answer- 1. Time Frame
2. Likelihood
3. Intensity
Near Term Impacts - Answer- Time frame consideration. Currently happening or can
happen at anytime impacts. Direct Financial/reputational immediate impacts on a
company. Typically have a span of a year. Ex. Food Borne Illness in food
Medium-Long term impacts - Answer- Relate to currently known trends that will have an
impact in the future. Ex. Climate Change Regulations
Low Likelihood - Answer- Less likelihood to occur based on historical evidence and
operating conditions. However these risks can have a major impact on companies. Ex.
Oil Spill
Recognizing Data Types Question - Answer- 1. Does the Metric yield Discrete Data?
2.Does the metric yield Continuous Data?
3.What is the possible range of performance on a topic?
