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CFA Climate Investing > Chapter 5 > Flashcards

Chapter 5 Flashcards

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CFA flashcards
1
Q

In the absence of Scope 3 emissions, what can be used to estimate?

A

Economic Input-Output Life Cycle Assessment models

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2
Q

What does the EU Technical Expert Group (TEG) say on Scope 3 emissions reporting?

A

Companies should report scope 3 within 4 years of initial report, with companies with more material scope 3 emissions reporting earlier

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3
Q

What does the WRI call avoided emissions?

A

Comparative emissions

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4
Q

What is the WACI?

A

Weighted average carbon intensity of revenue. This is a weighted average of each company’s revenue carbon intensity based on portfolio weight. Alternatively, same metric can be derived through portfolio carbon intensity by revenue, which divides portfolio claim of emissions by portfolio claim of revenue

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5
Q

The GRI apply what 5 metrics on energy?

A

Energy consumption within the organisation
Energy consumption outside the organisation
Energy intensity
Reduction in energy consumption
Reduction in energy requirements of products and services

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6
Q

The GRI apply what 3 metrics on waste?

A

Waste generated
Waste diverted from disposal
Waste directed to disposal

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7
Q

The EU has enhanced emissions air pollution regilatiok on?

A

Sulfur oxide and nitrogen oxide, especially impacting large combustion power stations

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8
Q

Which tool monitors deforestation in the supply chain?

A

Trace from Global Canopy and the Stockholm Environment Institute

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9
Q

What tool is available to track soil health?

A

TerraCarbon and it’s Verified Carbon Standard. Focused on increasing soil organic carbon storage, net emissions, methane and nitrous oxide emissions

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10
Q

Under the SBTi, what proportion of scope 1 and 2 emissions may be excluded?

A

Up to 5%

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11
Q

What are the 3 available SBTi methodologies for financial institutions?

A
  1. SDA (e.g. for real estate, power generation etc.)
  2. SBTi portfolio coverage approach - engagement targets set for companies to have SBTi targets in place
  3. Temperature Rating Approach
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12
Q

What do NZAOA members have to do?

A

Set targets within 12 months.
Engagement targets, sector targets, (sub) portfolio targets, and financing transition indicators.
Must also subscribe to NZAOA position papers on coal and O&G, limiting financing of these, and preventing any new exploration or new exploitation of reserves
Sector approach is similar to NZBA with first 5uear period to 2025

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13
Q

PAII is run by?

A

IIGCC and includes NZIF

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14
Q

LCA is what versus IAMs?

A

Bottom up versus top down

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15
Q

What did the IPCC provide in its Special Report: Global Warming of 1.5-C

A

High level indicative conceptual alignment of energy- and land-use-related mitigation pathways and the UN SDGs

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16
Q

What is PRISMA?

A

Net zero Pathway Research throigh IAM Advancement programme. Aims to:
1. Advance science of AIM towards more societally relevant representation
2. Strengthen empirical basis
3. Make models more policy relevant and trustworthy through active engagement with stakeholders

17
Q

Can you still use RCP scenarios?

A

Yes, but these will be out of date. They are coupled with SSP scenarios, but have now been subsumed by them.

18
Q

Describe IEA modelling

A

Least cost optimisation through World Energy Model. Takes assumptions on 800 technologies from Energy Technology Perspectives model. In 2021, developed hybrid approach through the Global Energy and Climate model.

19
Q

IEA SDS achieves what temperature?

A

2C

20
Q

What is IRENA’s approach to modelling?

A

Supports national governments in their energy-economy-environment modelling. Jointly led by German and danish governments. Provide a roadmap to double renewables worldwide by 2030. This roadmap provides 2 scenarios: Transforming Energy Scenario and Planned Energy Scenario

21
Q

What is PRI IPR?

A

Inevitable Policy Response. Not an IAM. Thesis is we are in a pre-trigger or risk build up phase. More stringent policies are to come.
IPR FPS is an alternative to NZE, painting a policy picture to achieve 1.5C. 90% of OECD policies align; only 40% of non-OECD

22
Q

How did the PRI IPS FPS recently innovate?

A

Produced the FPS + Nature , first integrated climate and nature model for use by investors

23
Q

What do the EU Climate Benchmarks require of portfolios?

A

Demonstrate annual 7% emissions reduction on average and over 70% of the time over any decade. Then can be considered 1.5C-aligned. Linear benchmark that punishes deviation for 2 consecutive years or more
Produced by EU TEG

24
Q

What does NZAOA say on portfolio target setting?

A

Does not need to be linear. Instead, can triangulate different scenarios by asset class and scenario. This improves risk management vis-a-vis straight line uniform decarbonisation.

25
Q

What does NZAOA say on portfolio target setting?

A

Does not need to be linear. Instead, can triangulate different scenarios by asset class and scenario. This improves risk management vis-a-vis straight line uniform decarbonisation.

26
Q

What is a limit of climate stress testing?

A

Modelling contagion is difficult when ownership of equity or debt is often unclear and protected by data laws. So, models often model shocks on entities and model contagion effects, rather than the economy as a whole. Proprietary models can dismantle some of the hurdles, but not the contagion (although this can be done better by a regulator)

27
Q

What is the scenario that the BoE uses for climate stress testing?

A

Climate Biennial Exploratory Scenario

28
Q

What are the NGFS scenarios?

A

Orderly - 67% chance of B2C. Net zero by 2070.
Disorderly - emissions reductions are later and sharper to achieve same warming as orderly.
Hot House World - only current policies so NDCs not achieved. 3C plus of warming, emissions grow until 2080

Variable adjustments mean NGFS provide 18 scenarios overall for firms to understand differentiated impacts

29
Q

PTA versus PWP?

A

Portfolio Warming Potential is bottom up and uses climate sensitivity to relate emissions changes to warming. Allows flex to temperature. PTA is top down with fixed temperature and carbon budget.

30
Q

Flaw of PTA?

A

Top-down and assumes linear warming (no feedback effects).

31
Q

PTA mehodologies?

A

Apply overshoot to all companies in sector, or all sectors, or all relevant sectors only (last is PACTA principle)

32
Q

How to calculate PTA with climate sensitivity?

A

See photo

33
Q

Notional carbon taxes may be?

A

Detached from their implied role in an assessment model

CFA Climate Investing (10 decks)

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