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FSA Level 2 > Part I-2 Understanding Sustainability Issues > Flashcards

Part I-2 Understanding Sustainability Issues Flashcards

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1
Q

SASB sustainability topics are organized under 5 broad sustainability dimensions:

A

Environment, Social Capital, Human Capital, Business Model & Innovation, Leadership & Governance

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2
Q

What sustainability topics are organized under Environment?

A 
GHG Emissions
Air Quality
Energy Management
Water & Wastewater Management
Waste & Hazardous Materials Management
Ecological Impacts
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3
Q

What sustainability topics are organized under Social Capital?

A 
Human Rights & Community Relations
Customer Privacy
Data Security 
Access & Affordability
Product Quality & Safety
Customer Welfare
Selling Practices & Product Labelling
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4
Q

What sustainability topics are organized under Human Capital?

A

Labor Practices
Employee Health & Safety
Employee Engagement, Diversity and Inclusion

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5
Q

What sustainability topics are organized under Business Model & Innovation?

A 
Product Design & Lifecycle Management
Business Model Resilience
Supply Chain Management
Materials Sourcing & Efficiency
Physical Impacts of Climate Change
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6
Q

What sustainability topics are organized under Leadership & Governance?

A 
Business Ethics
Competitive Behavior
Management of the Legal & Regulatory Environment
Critical Incident Risk Management
Systemic Risk Management
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7
Q

What are GHG emissions?

A

Emissions that contribute to global warming - from both stationary (factories, power plants) and mobile (delivery vehicles and airplanes), whether as a result of fuel combustion or non-combusted direct releases during activities such as natural resource extraction, power generation, land use, or biogenic processes.

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8
Q

What is one guiding principle of disclosure topics in the SASB standards?

A

One guiding principle for the selection of disclosure topics in the SASB standards , is that the topic must be “actionable” by companies - and fall under the direct control or influence of the entity

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9
Q

For the purposes of disclosure, SASB accounts for indirect emissions by capturing (blank)…

A

operational and/or strategic factors (or actionable “levers”) that give rise to such emissions

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10
Q

What is Air Quality?

A

Air Quality - captures data on the management of airborne pollutants that harm the health of humans and other living creatures - may result from stationary , mobile and industrial sources

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11
Q

The issue of air quality tends to be relevant to companies involved in (blank)

A

extraction activities, manufacturing and transportation

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12
Q

T/F - Emissions abatement measures can be incredibly costly and evolving regulations on air quality have the potential to add to a company’s compliance costs

A

True

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13
Q

Unlike GHG emissions, which captures emissions as an operational by-product, this issue captures a company’s management of energy as a key input

A

Energy Management

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14
Q

Users may derive value-related insights on energy management by looking at topics such as (blank)

A

energy efficiency and intensity, energy mix, and grid reliance

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15
Q

Scope 1 GHG emissions disclosure applies to companies in industries that (blank) - such as Transportation sector (airlines, cruise lines) and those that produce energy (coal operations, oil and gas services)

A

own or control direct emissions sources

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16
Q

Emissions-limiting regulations that impact energy (blank) can result in financial impacts for energy (blank) when additional costs of compliance are passed down to customers

A

producers - users

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17
Q

T/F - Potential increases in the cost of energy due to regulation of energy producers are an important financial risk for companies that heavily rely on energy as an input for value creation

A

True

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18
Q

What information about energy management provides users with a view of a company’s management of the financial risks posed by indirect emissions and demonstrates how a company mitigates indirect emissions by managing its energy and use mix?

A

Total energy usage
Percentage of energy purchased (Scope 2)
Energy by source

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19
Q

What is Water & Wastewater Management?

A

Water & Wastewater Management - addresses a company’s water use, water consumption, wastewater generation and other impacts

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20
Q

What is Waste & Hazardous Materials Management?

A

Waste & Hazardous Materials Management - addresses environmental management associated with hazardous and non-hazardous waste generated by companies

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21
Q

What is an example of waste from a company in the Food Retailers & Distributors Industry?

A

Food waste represents a loss of natural resources and inventory where edible or otherwise useful food does not reach consumers

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22
Q

T/F - food waste contributes to methane emissions in landfills - and indirect form of emissions from the company

A

True

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23
Q

What are Ecological Impacts?

A

Ecological Impacts - the productivity of our natural environment is directly linked to natural biodiversity levels, and therefore must be protected and sustainably managed to ensure these goods and service can continue to be provided in the long-term

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24
Q

Which issue is often relevant to companies that use and modify significant areas of land as a main input for value creation (i.e.natural resource extraction, cultivation, construction)) ?

A

Ecological Impacts

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25
Q

What is Social Capital?

A

Social Capital - expectation that a business will contribute to society in return for a social license to operate

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26
Q

What are Human Rights & Community Relations?

A

Human Rights & Community Relations - relationships between businesses and communities in which they operate, including the management of direct and indirect impacts on human rights and treatment of Indigenous people

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27
Q

T/F - Companies frequently need support from local communities to be able to obtain permits and leases and conduct their activities without disruptions

A

True

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28
Q

T/F - Environmental impacts (air pollution and waste which impact health and safety of communities) and human rights/community relations are more insightful when defined as a combined issue

A

False - when defined as a separate issue

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29
Q

What is customer privacy?

A

Customer Privacy - customer trust, where companies are expected to be transparent with customers about how their data is being used or sold to maintain the trust of customers

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30
Q

What is behavioral advertising?

A

Data generated from consumer activity can be used to better understand customer pain points and unmet needs, as well as to deliver more relevant products and services

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31
Q

The scope of risk in customer privacy includes:

A

social issues that may arise from a company’s approach to collecting data, obtaining consent, managing user and customer expectations of data use, and managing evolving regulations

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32
Q

(Blank) focuses on how customer data is collected, shared, and used; whereas the issue of (blank) lends insight into how a company protects data from being compromised by external threats

A

Customer privacy - data security

33
Q

T/F - Customer privacy includes social issues arising from cybersecurity risks

A

False - customer privacy excludes cybersecurity which is addressed in Data Security category

34
Q

What is Access & Affordability?

A

Access & Affordability - where companies provide products and services to meet universal needs, such as health care, financial services, utilities, education and telecommunications, their ability to ensure broad and equitable access to those products and services can significantly impact financial performance and perceived value

35
Q

What is Product Quality & Safety?

A

Product Quality & Safety - addresses a company’s ability to offer manufactured products and services that meet customer expectations with respect to their health and safety characteristics

36
Q

What is Customer Welfare?

A

Customer Welfare - concerns the benefits a person derives from consuming a particular good or services

37
Q

Customer welfare is most relevant for companies that (blank), such as good and beverages, controlled substances, or products subject to counterfeiting

A

provide goods for consumption

38
Q

Unlike (blank) which is defined by issues directly related to the quality and safety malfunctions or manufactured products and services, (blank) addresses qualities inherent to the design and delivery of products and services in which customer welfare may be in question

A

product quality and safety - customer welfare

39
Q

What is Selling Practices & Product Labelling?

A

Selling Practices & Product Labelling - relates to social issues that may arise from a company’s failure to manage the transparency, accuracy and comprehensibility of marketing statements, advertising and labeling of products and services

40
Q

(Blank) is often material where selling and advertising constitute a key operating activity

A

Selling practices & product labelling

41
Q

What are labor practices?

A

Labor Practices - a company’s ability to uphold legal and normative labor standards in the workplace, including compliance with labor laws and globally accepted norms and standards

42
Q

Labor practices may apply to company’s ability to ensure

A

basic human rights related to labor (child labor, forced or bonded labor, and exploitative labor) as well as compensation issues, fair wages and overtime pay, and other basic workers’ rights

43
Q

Employees in industries with inherently physically demanding, hazardous work conditions, such as Waste Management, Coal Operations and Metals & Mining, often participate in (blank)

A

collective bargaining agreements.

44
Q

What is Employee Health and Safety?

A

Employee Health and Safety - relates to a company’s ability to create and maintain a safe and healthy workplace that is free from injuries, fatalities and illness

45
Q

Interpreting performance on employee health and safety issues typically involves two key types of information:

A

The number and severity of health and safety incidents

The processes, plans and procedures used to minimize the number and severity of health and safety incidents

46
Q

What is Employee Engagement, Diversity & Inclusion?

A

Employee Engagement, Diversity & Inclusion - relates to a company’s ability to ensure that workplace culture and hiring and promotion practices embrace a diverse and inclusive workforce

47
Q

What is Business Model & Innovation?

A

Business Model & Innovation - explicitly addresses the integration of environmental, human and societal issues in a company’s value creation process

48
Q

Business Model & Innovation aims to

A

capture a company’s ability to drive innovation related to ESG issues that are relevant to long-term performance

49
Q

Stages of value creation can be defined by a four step evolution of:

A

Minimizing costs
Optimizing efficiencies
Developing new products and technologies
Developing new business models with differentiated value propositions

50
Q

What is Product Design & Lifecycle Management?

A

companies that sell products that require significant packaging or that generate significant environmental or social externalities upon disposal may be able to drive value through product design or lifecycle management

51
Q

What is Business Model Resilience?

A

Business Model Resilience - comprehensive and integrated understanding of what drives or erodes company value directly contributes to a company’s ability to endure shocks or stresses and to adapt in the face of dynamic sustainability issues

52
Q

Business Model Resilience tends to be particularly relevant to companies with

A

operations that will be impacted by the transition to a low-carbon and climate-constrained economy

53
Q

What is Supply Chain Management?

A

Supply Chain Management - defined by the social and environmental externalities created by suppliers through their operational activities, such as environmental responsibility, human rights, labor practices, and business ethics

54
Q

T/F - the financial impacts of supply chain management correspond with the dominant ESG issues within the supply chain

A

True

55
Q

What is Materials Sourcing & Efficiency?

A

Materials Sourcing & Efficiency - aims to assess the resilience of materials supply chains to the impacts of climate change and other external environmental and social factors, which can affect the availability and pricing of key resources

56
Q

(Blank) captures performance on the environmental and social characteristics of products whereas (blank) captures the management of external risks that may threaten the provision of products and services

A

Product design and lifecycle management - materials sourcing & efficiency

57
Q

What are the Physical Impacts of Climate Change?

A

Physical Impacts of Climate Change - company’s ability to manage risks and opportunities associated with the direct exposure of owned or controlled assets to the physical impacts of climate change

58
Q

T/F - Physical impacts of climate change also captures social issues that may arise from physical operational disruptions

A

True

59
Q

What is the following an example of ? Insurance policies and mortgages failing to incorporate climate change considerations into their products and services, resulting in socioeconomic issues for customers

A

Social impact of the Physical Impacts of Climate Change

60
Q

Where climate change impacts are not systematically considered, mortgage finance institutions may experience higher/lower asset valuations and increased/decreased default rates

A

lower - increased

61
Q

SASB standards capture (blank) governance issues rather than (blank) governance factors

A

operational rather than traditional as the Standards are designed to produce information that companies do not already regularly report

62
Q

What are Business Ethics?

A

Business Ethics - tends to be relevant for companies with complex global operations or those that rely on sensitive or high-value resources as critical inputs

63
Q

T/F anti-competitive behaviors reduce/prevent market competition

A

True

64
Q

Companies in the Oil & Gas - Midstream industry transport and store natural gas, crude oil, and refined petroleum products - and tend to operate as (blank)

A

natural monopolies

65
Q

In the Software & IT Services industry, anti-competitive behavior centers on (blank)

A

intellectual property

66
Q

What is Management of the Legal & Regulatory environment?

A

Management of the Legal & Regulatory environment - relates to a company’s approach to engaging with regulators in cases where conflicting corporate and public interest may have long-term adverse environmental and social impacts

67
Q

To evaluate financial impacts in the management of legal and regulatory environment, users may asses:

A

(1) a company’s reliance on regulatory policy or monetary incentives - subsidies and taxes (2) actions taken to influence industry policy - lobbying, (3) overall reliance on a favorable regulatory environment for business competitiveness, and (4) a company’s ability to comply with relevant regulations

68
Q

Management of the legal and regulatory environment is particularly relevant for companies in

A

renewable and non-renewable resource-based industries

69
Q

Chemical companies have been observed to lobby against legislation that would adversely affect business in the (blank) despite its (blank) societal benefits (such as bans on specific substances)

A

short-term / long-term

70
Q

What is Critical Incident Management?

A

Critical Incident Management - an ability to use management systems and scenario planning to identify, understand and prevent or minimize accidents can translate directly to financial performance

71
Q

What is Systemic Risk Management?

A

Systemic Risk Management - this issue relates to a company’s contributions to , or management of, systemic risks resulting from large-scale weakening or collapse of economic and societal systems, including financial systems, natural resource systems and technological systems

72
Q

(Blank) in particular can cause systemic risk and are vulnerable to it

A

Financial institutions

73
Q

To evaluate the risk exposure of companies in the financial industry, users can look to banks’ (blank)

A

Global Systemically Important Bank (G-SIB) score, Stress tests, and
Long-term strategy

74
Q

What is Integrated Thinking?

A

Integrated thinking - making a deliberate and coordinated effort to connect the organization’s strategy, governance performance and prospects

75
Q

What is Integrated Reporting?

A

Integrated reporting - brings together material information about an organization’s strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates

76
Q

What is the difference between Labor Practices and Employee Health and Safety?

A

Labor Practices - company’s ability to uphold legal and normative labor standards in the workplace, including compliance with labor laws and globally accepted norms and standards
Employee Health and Safety - company’s ability to create and maintain a safe and healthy workplace that is free from injuries, fatalities and illness

77
Q

What does the issue of Ecological Impacts refer to?

A

Biodiversity - choices made to protect and manage natural biodiversity levels to ensure goods and services can be provided in the long-term

78
Q

What is the difference between Customer Privacy and Data Security?

A

Customer privacy - use of data

Data security - how you protect your data

FSA Level 2 (9 decks)

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