ESG

Question 1

Insurance is the sector with greatest risk of increased insurance cost due to physicla climate change .

Answer 1

A property and general Insurance company

Question 2

Engage with company on issue and sees that a quarterly earnings conference call is coming.
What should sernior analyst do?

Answer 2

Establish clear objective

Question 3

CEO remuneration is 1.2million GBP.

How will financial model may take account of the CEO variable remuneration that is not disclosed KPI.

Answer 3

Increase cost of capital from
4.6% to 4.8% to reflect increase of risk stemmed from
Uncertainty around alignment of interest

Question 4

Correlarion brtween ESg performance corporate performance is ?

Answer 4

Positive

Question 5

Tail risk of a portoflio. This the low chnace of soemthig worse happening. But still happened to rhe portoflio

Ex: coronoa virus , ukraine war

Question 6

Change is maintianing equity portoflio using ESG as E, S, G independently. To reduce downside of tail risk of the portoflio which one she cooiod avoid

Answer 6

Avoid all companies with low S score

Question 7

Investment mandate: set of instructions how a pool of assets should be invested.

Which ESG will be specified in investment mandate ?

Answer 7

Reported returns

Question 8

Stewardship: the job of supervising or taking care of something, such a organisation or property

Question 9

Not true: environmental costs include higher litigation and insurance cost

Question 10

Norm based screening is most popular in Canada

Question 11

Transation to low carbon economy is expected to open investment oppurtuniites.
What would likely have the most financial risk for investors?

Answer 11

Upgrades to buildings to bring them to sustainable standards

Question 12

Management remuneration packages shouod be alligbed to the function or role pf management as agents responsible to their board.

Question 13

Whoch of this risk will be greater for imvestor who is passively exposed to ESg index, than for investor witht actively managed investments?

Answer 13

Risk of incorrctly included index constitutents

Question 14

Whoch of this risk will be greater for imvestor who is passively exposed to ESg index, than for investor witht actively managed investments?

Answer 14

Risk of incorrctly included index constitutents

Question 15

GRESB (Greater real estate sustainability benchmark)

This provides benchmark for ESg real estate investor

Question 16

“Undertaking any internal ESG research required “- first step of inegrating ESG in portfolio management process

Question 17

Thomson reuters - esg index provides governance

Corporate responsibility indices

Question 18

Green bond funds - is “Thematic investing”

Question 19

Stewardship of assets (guardian)- preserving and enhancing of the long term value of assets over time

Question 20

Challenges auditors face in preventing fraud in company accounting

Answer 20

1. Auditors maybe mislead by management
2. Auditors rely to a great degree on the accuracy of a company’s internal accounting system.
3. Audits are based on samples and not all figures are reviewed.
4. Only segments of a company business that are deemed material are reviewed.

Question 21

Ethical investing- investor who wants to ensure that his/her personal, social and moral views direct the investment decision

Question 22

Triple botton line (ESG)- system of evaluating the Social, Environmental and fiscal impaxts of business.

Answer 22

As per triple bottom line companies shiuod focus on social, environmental as much as they do on profit.

Question 23

Common governance structure in France and US - CEO and chairman of the board are typically one person

Question 24

Climate change mitigation:

Retrofiting building

Question 25

Law suit with $4 billion payout. How is this payout adjusted in financial model?

Answer 25

Raise the cost of capital to reflect the risk of payouts

Question 26

Describe responsible investing

Answer 26

ESG factors take into account to mitigate risk with a focus on financial return

Question 27

Bill wants to support charity that reduce mortality, which one shouod be support?

Answer 27

Charity focusing on pollution