Exam Questions Flashcards
A majority of the research papers on the topic find that companies with long standing good practice in terms of sustainability tend to…?
Outperform in accounting and market returns.
Are human rights principles reflected as part of the UN Global Compact or PRI? What is the UN GC?
NO!
Non-binding pact to encourage businesses and firms worldwide to adopt sustainable and socially responsible policies
Which UK body is responsible for issuing the Stewardship Code
FRC - Financial Reporting Council
Can qualitative ESG Data be used for the VaR of a company?
Value at risk (VaR) is a statistic that quantifies the extent of possible financial losses within a firm, portfolio, or position over a specific time frame so no it is not.
Which two sectors have the greatest risk of increased insurance costs due to physical climate change?
Travel & Leisure
What is the result of an analyst failing to correctly model the risks and opportunities
associated with ESG?
Systematic underestimation of high ESG performers and overestimation of ESG under performers.
Which argument can be used to best highlight the importance of appropriate
governance to enterprises?
A meta study by Friede, Busch and Bassen has shown that the majority of studies showed a positive correlation between governance and corporate financial performance.
- Exclusionary screening is historically most common in which region?
Europe!
The Bangladesh Investor Initiative is intended to address which social factor?
Health and Safety stemming from Rana Plaza Disaster
Which form of risk will not be lowered by the integration of ESG into a firm’s investment process?
Market Risk
What should be included in the process for directors to be made accountable to
shareholders?
Review of the accounts by the Board at the Annual General Meeting (AGM)
Scores from an ESG factor scorecard will always be more qualitative or quantitative?
Quantitative
Given that an analyst is able to judge the materiality of an ESG factor, will they be able to determine financial performance impact?
Not for certain
What are COP meetings, who hosts them and what ar the two biggest ones?
The UNFCCC hosts annual Conferences of the Parties (COP) meetings, which seek to advance members states voluntary agreements on limiting climate change.
1) Kyoto Protocol in 1997, members committed to reducing GHG emissions
2) 2015 Paris agreeement which lead to a commitment by industrialized and developing economies to keep global warming below 2 degrees C above industrialized levels
Name 3 requirments to be PRI member?
1)Investment policy focused on responsible investment approach covering >50% of assets
2) Internal or external staff for responsible investment integration
3) Senior level commitment for RI implementation
When was Kyoto Protocol signed and what does it mandate?
Signed in Kyoto Japan in 1997 during COP3 meeting and commits industrialized nations to reduce GHG emmissions
Did the UNEP FI Freshfields report call to integrate ESG into capital markets?
NO- but it did show that ESG issues are relative to financial valuation and fiduciary duty. Also lead to the creation of the PRI
Who created the EU Taxonomy?
EU Technical Expert Group
EU Shareholder Rights Directive came into effect when and mandates what and reports how often?
2019 and mandates that investors have an engagement policy and report annually
Within MSCI ACWI, which sectors generate the most carbon emissions?
Utilities 1st, then Materials, then Energy
How do sustainability linked loans work under the SLLP? Are they required to have a clear sustainability purpose?
Borrower is incentivized to drive ESG or SGD improvement through a margin ratchet linked to KPI’s.. No they do not
5 Global risks identified by WEF?
- Extreme weather events
- Failure of climate-change mitigation and adaptation by government and business.
- Major biodiversity loss and ecosystem collapse
- Major natural disasters .
- Human-made environmental damage and disasters, including environmental crime, such as oil spills and radioactive contamination.
What is the Kigali Agreeement of 2016?
Global agreement to phase out the manufacturing of ozone depleting hydroflurocarbon substances
What are the OECD Guidelines for MultiNational Enterprises?
Comprehensive set of government backed recommendations on responsible business conduct
