ESG Chapter 6 Test Exam Questions
What are the three steps to calculating unmanaged risk? - Correct
Answer - ✔️✔️1) The overall exposure to a material ESG issue
that can be managed by a company (manageable risk assessment)
2) The degree to which a company has managed the overall
manageable risks that it is exposed to
3) The unmanageable risk score is calculated by subtracting managed
risks from the overall risk exposure score.
How does MSCI define materiality of risks/opportunities? - Correct
Answer - ✔️✔️A risk / opportunity is material to an industry
when it is likely that companies in that industry will incur substantial
costs / can capitalise on it for profit
,How does Sustainalytics define materiality of risks / opportunities? -
Correct Answer - ✔️✔️An issue is considered material within
the ESG risk rating if its presence or absence in financial reporting is
likely to influence the decisions made by a reasonable investor
What are MSCI's 10 themes? - Correct Answer - ✔️✔️E: Climate
change
E: Natural resources
E: Pollution and waste
E: Opportunities
S: Human capital
S: Product liability
S: Stakeholder opposition
S: Social opportunities
G: Corporate governance
, G: Corporate behaviour
Primary data can come from... - Correct Answer - ✔️✔️Direct:
Surveys
Direct company information
Company reports, presentations and documents
Indirect:
News articles
Third party reports and analysis
Investment and consulting research
Secondary sources normally involve... - Correct Answer - ✔️✔
️...a non reporting entity transforming the primary data and creating
new scores, assessments or ratings
What are the three steps to calculating unmanaged risk? - Correct
Answer - ✔️✔️1) The overall exposure to a material ESG issue
that can be managed by a company (manageable risk assessment)
2) The degree to which a company has managed the overall
manageable risks that it is exposed to
3) The unmanageable risk score is calculated by subtracting managed
risks from the overall risk exposure score.
How does MSCI define materiality of risks/opportunities? - Correct
Answer - ✔️✔️A risk / opportunity is material to an industry
when it is likely that companies in that industry will incur substantial
costs / can capitalise on it for profit
,How does Sustainalytics define materiality of risks / opportunities? -
Correct Answer - ✔️✔️An issue is considered material within
the ESG risk rating if its presence or absence in financial reporting is
likely to influence the decisions made by a reasonable investor
What are MSCI's 10 themes? - Correct Answer - ✔️✔️E: Climate
change
E: Natural resources
E: Pollution and waste
E: Opportunities
S: Human capital
S: Product liability
S: Stakeholder opposition
S: Social opportunities
G: Corporate governance
, G: Corporate behaviour
Primary data can come from... - Correct Answer - ✔️✔️Direct:
Surveys
Direct company information
Company reports, presentations and documents
Indirect:
News articles
Third party reports and analysis
Investment and consulting research
Secondary sources normally involve... - Correct Answer - ✔️✔
️...a non reporting entity transforming the primary data and creating
new scores, assessments or ratings
