CFA ESG Certificate Correct 100%
What is ESG investing?
a) an approach to managing companies that explicitly acknowledges the relevance of
environmental, social, and governance factors in corporate decision making
b) an approach to managing companies that explicitly acknowledges the relevance of
environmental, social, and economic factors in investment decision making
c) an approach to managing assets where investors explicitly acknowledge the
relevance of environmental, social, and governance factors in their investment decisions
d) an approach to managing assets where investors explicitly acknowledge the
relevance of environmental, social, and economic factors in corporate engagement -
ANSWER c
Which of the following is not an example of a social factor?
a) Labor rights
b) Local communities
c) Product safety
d) Biodiversity - ANSWER d
In what sense are ESG considerations non-financial?
a) They are difficult to value precisely and difficult to time
b) They are issues that will never turn into financials
c) They sit in a different category of performance
d) They can only every be measured qualitatively - ANSWER a
For which of the following sectors will the management of greenhouse gas emissions be
most material?
a) Software
b) Recruitment
c) Power generation
d) Fund management - ANSWER c
Which of the following is not a typical method by which ESG is reflected in investment
approaches?
a) Integrating ESG into investment decision making
b) Engaging actively with companies on ESG matters
c) Engaging in public policy debates on ESG issues
d) Disclosing the investor's corporate social responsibility activities - ANSWER d
Which of the following is not a form of ESG investment?
a) Valuation investment
b) Ethical investment
c) Thematic investment
d) Impact investment - ANSWER a
,What are the four broad groupings of issues covered by the UN Global Compact?
a) Environmental, social, governance, and impact
b) Human rights, labor, environment, and anti corruption
c) Poverty, diversity, sustainability, and transparency
d) Education, development, fairness, independence - ANSWER b
What is the most probable reason why an investor would engage with policy makers on
ESG?
a) The consideration of ESG related matters can contribute to the proper functioning of
the financial markets
b) Asset owners need regulators to level the playing field in order to be able to increase
their percentage of ESG investments
c) Policy consultations on ESG investing are mandatory in order to ensure that all
perspectives are taken into consideration
d) ESG investors require a sound and stable financial system in order to make alpha
from ESG megatrends - ANSWER a
Which regions manage the highest proportion of sustainable and responsible investing
assets?
a) Asia and North America
b) Australia and USA
c) USA and Europe
d) Asia and Europe - ANSWER c
What is the largest sustainable investment strategy globally?
a) Impact investing
b) Best in class
c) ESG integration
d) Negative screening - ANSWER d
The largest and second largest asset classes, which implement responsible investment,
are respectively...
a) public equities and fixed income
b) passive equities and active equities
c) fixed income and infrastructure
d) hedge funds and commodities - ANSWER a
Why are investment mandates important for ESG investing?
a) They define the expectations of asset owners who are signatories of the PRI
b) They are contracts which define the requirements of the asset manager with regards
to ESG
c) They require asset managers to report on the ESG rating of their funds
d) They have limited implementation of stewardship - ANSWER b
Which of the following is NOT an outcome of short-termism?
a) Disproportionate focus on quarterly returns
, b) Companies are more willing to take on projects, such as research and development
c) 'Patient capital' is less likely to develop
d) Less investment in long term assets, such as infrastructure - ANSWER b
How are pension fund members most likely to influence responsible investment?
a) Their formal investment advice to pension fund executives must be implemented
b) They monitor company controversy through social media and inform asset managers
c) They act in the interest of sustainable companies
d) Their ethical preferences may be taken into account - ANSWER d
Which of the following is NOT among the challenges limiting the development of ESG
investing?
a) Lack of regulation and voluntary initiatives
b) The availability of expertise and skilled individuals
c) The quality of data, research, and analysis
d) Limited tools to assist with portfolio construction and management - ANSWER a
In what ways can an investment consultant be a barrier to the growth of the ESG
investing market?
a) By not considering ESG characteristics of the funds in their screening
b) By setting poor standards for ESG fund labels
c) By short-listing only ESG funds
d) By helping trustees understand their fiduciary duties - ANSWER a
What is the main challenge with policies that are 'comply or explain' regarding ESG?
a) It is the sole indication that the policy has not reached maturity
b) It leads to investors challenging the assertion that ESG integration is a requirement
c) It allows investors to explain all kinds of behavior away
d) It completely excuses investors from reporting on ESG practices - ANSWER b
What is the highest risk to the industry regarding greenwashing?
a) The overestimate of the ESG investing market
b) The disappointment of clients with quarterly financial returns
c) The negative impact on the industry's credibility
d) The increased challenge to standardization - ANSWER c
Why is ESG investing a concern for investors who are cautious of high tracking error?
a) The perception that exclusion resulting from ESG will distort the weight of sectors
and countries in the portfolio in comparison to the benchmark
b) The understanding that exclusion results in fewer available securities to invest in and
thus, a more limited investment universe
c) The belief that high performing stocks may be excluded due to negative ESG
characteristics, resulting in underperformance in comparison to the benchmark
d) The awareness that ESG investing requires a redefinition of active risk - ANSWER a
What matters does the EU Taxonomy address?
What is ESG investing?
a) an approach to managing companies that explicitly acknowledges the relevance of
environmental, social, and governance factors in corporate decision making
b) an approach to managing companies that explicitly acknowledges the relevance of
environmental, social, and economic factors in investment decision making
c) an approach to managing assets where investors explicitly acknowledge the
relevance of environmental, social, and governance factors in their investment decisions
d) an approach to managing assets where investors explicitly acknowledge the
relevance of environmental, social, and economic factors in corporate engagement -
ANSWER c
Which of the following is not an example of a social factor?
a) Labor rights
b) Local communities
c) Product safety
d) Biodiversity - ANSWER d
In what sense are ESG considerations non-financial?
a) They are difficult to value precisely and difficult to time
b) They are issues that will never turn into financials
c) They sit in a different category of performance
d) They can only every be measured qualitatively - ANSWER a
For which of the following sectors will the management of greenhouse gas emissions be
most material?
a) Software
b) Recruitment
c) Power generation
d) Fund management - ANSWER c
Which of the following is not a typical method by which ESG is reflected in investment
approaches?
a) Integrating ESG into investment decision making
b) Engaging actively with companies on ESG matters
c) Engaging in public policy debates on ESG issues
d) Disclosing the investor's corporate social responsibility activities - ANSWER d
Which of the following is not a form of ESG investment?
a) Valuation investment
b) Ethical investment
c) Thematic investment
d) Impact investment - ANSWER a
,What are the four broad groupings of issues covered by the UN Global Compact?
a) Environmental, social, governance, and impact
b) Human rights, labor, environment, and anti corruption
c) Poverty, diversity, sustainability, and transparency
d) Education, development, fairness, independence - ANSWER b
What is the most probable reason why an investor would engage with policy makers on
ESG?
a) The consideration of ESG related matters can contribute to the proper functioning of
the financial markets
b) Asset owners need regulators to level the playing field in order to be able to increase
their percentage of ESG investments
c) Policy consultations on ESG investing are mandatory in order to ensure that all
perspectives are taken into consideration
d) ESG investors require a sound and stable financial system in order to make alpha
from ESG megatrends - ANSWER a
Which regions manage the highest proportion of sustainable and responsible investing
assets?
a) Asia and North America
b) Australia and USA
c) USA and Europe
d) Asia and Europe - ANSWER c
What is the largest sustainable investment strategy globally?
a) Impact investing
b) Best in class
c) ESG integration
d) Negative screening - ANSWER d
The largest and second largest asset classes, which implement responsible investment,
are respectively...
a) public equities and fixed income
b) passive equities and active equities
c) fixed income and infrastructure
d) hedge funds and commodities - ANSWER a
Why are investment mandates important for ESG investing?
a) They define the expectations of asset owners who are signatories of the PRI
b) They are contracts which define the requirements of the asset manager with regards
to ESG
c) They require asset managers to report on the ESG rating of their funds
d) They have limited implementation of stewardship - ANSWER b
Which of the following is NOT an outcome of short-termism?
a) Disproportionate focus on quarterly returns
, b) Companies are more willing to take on projects, such as research and development
c) 'Patient capital' is less likely to develop
d) Less investment in long term assets, such as infrastructure - ANSWER b
How are pension fund members most likely to influence responsible investment?
a) Their formal investment advice to pension fund executives must be implemented
b) They monitor company controversy through social media and inform asset managers
c) They act in the interest of sustainable companies
d) Their ethical preferences may be taken into account - ANSWER d
Which of the following is NOT among the challenges limiting the development of ESG
investing?
a) Lack of regulation and voluntary initiatives
b) The availability of expertise and skilled individuals
c) The quality of data, research, and analysis
d) Limited tools to assist with portfolio construction and management - ANSWER a
In what ways can an investment consultant be a barrier to the growth of the ESG
investing market?
a) By not considering ESG characteristics of the funds in their screening
b) By setting poor standards for ESG fund labels
c) By short-listing only ESG funds
d) By helping trustees understand their fiduciary duties - ANSWER a
What is the main challenge with policies that are 'comply or explain' regarding ESG?
a) It is the sole indication that the policy has not reached maturity
b) It leads to investors challenging the assertion that ESG integration is a requirement
c) It allows investors to explain all kinds of behavior away
d) It completely excuses investors from reporting on ESG practices - ANSWER b
What is the highest risk to the industry regarding greenwashing?
a) The overestimate of the ESG investing market
b) The disappointment of clients with quarterly financial returns
c) The negative impact on the industry's credibility
d) The increased challenge to standardization - ANSWER c
Why is ESG investing a concern for investors who are cautious of high tracking error?
a) The perception that exclusion resulting from ESG will distort the weight of sectors
and countries in the portfolio in comparison to the benchmark
b) The understanding that exclusion results in fewer available securities to invest in and
thus, a more limited investment universe
c) The belief that high performing stocks may be excluded due to negative ESG
characteristics, resulting in underperformance in comparison to the benchmark
d) The awareness that ESG investing requires a redefinition of active risk - ANSWER a
What matters does the EU Taxonomy address?
