Green Finance Flashcards
What is the definition of sustainable finance?
Sustainable finance refers to the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects.
What are the five ESG motivations?
Values and Ethics
Risk Management
Fiduciary Duty
Financial Performance
Systemic and Economic Sustainability
Describe the two different views concerning responsibilities of corporations.
Friedman with the Shareholder Theory; Corporations have no social responsibility to the society and should maximize their profit.
Freeman with the Stakeholder Theory; Corporations create negative externalities and therefore they have social and moral responsibilities for society.
What does PRI stand for?
Principles for Responsible Investment
What are the Principles for Responsible Investment?
6 ESG principles developed by the United Nations and the largest institutional investors in 2006. The principles were launched at New York Stock Exchange.
Name 8 different rating agencies.
ISS ESG
Moody’s
MSCI
Fitch
S&P Global
Sustainalytics
Refinitiv
Reprisk
Who regulates the banks in the world, Europe and VS?
World; Basel Committee for Banking Supervision
Europe; European Central Bank, European Banking Authority
VS: Federal Reserve Board, Federal Deposit Insurance Corporation
Who regulates the insurers in the world, Europe and VS?
World; International Association of Insurance Supervisors
Europe; European Insurances and Occupational Pensions Authority
VS; Federal Insurance Office
Who regulates the markets in the world, Europe and VS?
World; International Organization of Securities Commission
Europe; European Securities and Markets Authority
VS; Securities and Exchanges Commission
Who regulates all financial sectors in the world, Europe and VS?
World; Financial Stability Board
Europe; European System of Financial Supervision
VS; Financial Stability Oversight Council
What is greenwashing?
Pretending to be more ESG aware than you actually are
According to research, do polluting firms perform better or worse?
Firms with more emissions earn higher returns because there is less demand from institutional investors for those companies. Thus, because the demand goes down, the expected return per share goes up.
Name 6 different ESG areas used in the Netherlands.
Climate change mitigation.
Climate change adaptation.
Sustainable use and protection of water and marine resources.
Transition to a circular economy.
Pollution prevention and control.
Protection and restoration of biodiversity and ecosystem.
Name the 7 ESG strategies.
- Exclusion policy for negatively screened things
- Norms-based screening
- Selection of positively screened things
- Sustainability-themed investing
- ESG Scoring to be integrated into portfolio management
- Engagement through shareholders
- Impact investing
What is the first ESG strategy; exclusion?
The exclusion from a fund or portfolio of certain sectors, companies or practices based on specific ESG criteria (worst-in-class)