Part III-7 Characterizing Financial Impact

Question 1

In which financial impacts does demand for core products and services as well as in intangible assets show up?

Answer 1

Revenue and growth

Question 2

Impacts on XX are typically related to operational efficiency and cost structure

Answer 2

impacts on cost

Question 3

Which financial impacts affect valuation?

Answer 3

Assets and liabilities

Question 4

This financial impact broadly addresses risk

Answer 4

Cost of capital

Question 5

What type of financial impact is usually associated with demand for core products and services?

Answer 5

Revenues

Question 6

What type of financial impact is usually associated with market share and long-term growth

Answer 6

Revenues

Question 7

What type of financial impact is usually associated with operational efficiency and cost structure ?

Answer 7

Expenses

Question 8

What type of financial impact is usually associated with tangible and intangible assets and liabilities ?

Answer 8

Assets and liabilities

Question 9

What type of financial impact is usually associated with governance , volatility and risk factors ?

Answer 9

Cost of capital

Question 10

Does this metric measure a sustainability risk or opportunity? Revenue from products third-party certified to environmental and/or social sustainability standards

Answer 10

Opportunity

Question 11

Does this metric measure a sustainability risk or opportunity?Area of forestland in endangered species habitat

Answer 11

Risk

Question 12

If higher metric values indicate improved economic performance, such as revenues, product sales, or employee engagement, is this metric measuring a risk or opportunity?

Answer 12

Opportunity

Question 13

If higher metric values indicate threats to economic performance, such as number of recalls, employee turnover, or total energy consumed, is this metric measuring a risk or opportunity

Answer 13

Risk

Question 14

T/F - the timing of sustainability impacts - when they will occur and for how long - can directly influence cash flow projections -

Answer 14

True

Question 15

T/F - the magnitude, or intensity, of sustainability impacts may directly influence a company’s risk profile and cost of capital

Answer 15

True

Question 16

Pending trends and regulations and competitive threats are all examples of what type of impact?

Answer 16

Potential impacts

Question 17

Which risk refers to the inherent factors that can negatively impact individual securities or a very specific group of assets.

Answer 17

Idiosyncratic risk

Question 18

The opposite of Idiosyncratic risk is a XX risk, which refers to broader trends that impact the overall financial system or a very broad market.

Answer 18

Systematic risk - Systematic risk is the risk inherent to the entire market, attributable to a mix of factors including economic, socio-political, and market-related events (more quantifiable and can be anticipated in some cases)

Systemic risk is the risk that a company- or industry-level risk could trigger a huge collapse.

Idiosyncratic risk can generally be mitigated within a portfolio via diversification

Question 19

What is important to consider in high-likelihood impacts?

Answer 19

Whether a company’s current conditions differ from those in the past, and if future conditions are likely to be different

Question 20

T/F - SASB metrics that measure operating efficiency will nearly always be associated with actual impacts -

Answer 20

True

Question 21

How does total energy consumed and the % of renewable energy measure a company’s actual impacts?

Answer 21

It tells a user the extent to which energy management practices currently impact operating costs and margins

Question 22

T/F - SASB metrics which capture compliance with existing laws and regulations, the frequency of anomalous adverse events, or crucial risk management and governance factors yield information relevant for interpreting the likelihood of an impact’s occurrence

Answer 22

True

Question 23

How does total recordable incident rate (TRIR) yield information relevant for interpreting the likelihood of an impact’s occurrence?

Answer 23

It tells a user how often adverse events have occurred in the past, thus providing information to estimate the likelihood of future occurrences

Question 24

How does description of strategy to manage opportunities for and risks to forest management yield information relevant for interpreting the likelihood of an impact’s occurrence?

Answer 24

It evaluates how well management handles risks related to the physical impacts of climate change - which can greatly affect timber production, and help a user interpret how likely the company is to capitalize on opportunities or experience identified risks

Question 25

What kinds of impacts currently occur or can occur at any time?

Answer 25

near-term impacts

Question 26

T/F - Near term impacts usually have an indirect financial or reputational impact on the company

Answer 26

False - Near-term impacts usually have direct financial or reputational impact on the company, usually in less than one year

Question 27

T/F - SASB topics that measure operating performance, those related to systemic risk, and those related to ESG “mega trends” will nearly always manifest in long-term impacts

Answer 27

True

Question 28

T/F - disclosure topics and metrics that capture past adverse events almost always manifest in the near-term -

Answer 28

True

Question 29

T/F - Issues related to operating efficiency (i.e. those that impact a company’s operating margins) most often manifest in low-magnitude impacts

Answer 29

True

Question 30

T/F - Events such as a major food recall due to food-borne illness, as well as stranded assets, or events that impact a social license to operate most often manifest in low magnitude events

Answer 30

False - high magnitude events

Question 31

SASB metrics related to everyday operations nearly always capture performance on what types of impact?

Answer 31

Lower magnitude impacts

Question 32

Revenue from renewable energy-related and energy efficiency related products, as well as the total amount of waste from manufacturing, and recycled - capture performance on what type of impacts?

Answer 32

Lower-magnitude impacts

Question 33

T/F - Actual impacts tend to be high magnitude -

Answer 33

False - Actual impacts tend to be low magnitude

Question 34

T/F - Low-likelihood impacts tend to be low magnitude

Answer 34

False - Low-likelihood impacts tend to be high magnitude

Question 35

What type of impact tend to be one-time events?

Answer 35

Acute

Question 36

What type of impacts are typically high magnitude and low likelihood, have direct and immediate impacts on a company’s financial statements, result in short- and long-term impacts on its market value, and may indicate a future risk of similar events?

Answer 36

Acute

Question 37

What type of impact tend to occur gradually over time?

Answer 37

Progressive impacts

Question 38

What type of impact is often high likelihood and medium to long-term, and are commonly considered operational costs of doing business?

Answer 38

Progressive impacts

Question 39

What type of impact is described as follows?
Likelihood - Low
Timing - Short term, with potential for lasting medium- to long-term side effects

Answer 39

Acute

Question 40

What type of impact is described as follows?
Likelihood - High
Timing - Short, medium and/or long-term
Magnitude - Low to high

Answer 40

Progressive

Question 41

What type of impact is this an example of - Internet Media company data breach resulting in fines and legal proceedings? (Acute or Progressive)

Answer 41

Acute

Question 42

What type of impact is this an example of - companies leading in energy efficiency will likely face lower current operating costs?

Answer 42

Progressive

Question 43

Disclosure on XX indicates exposure to risks from grid disruptions (due to poor infrastructure, increasing incidence of extreme weather events related to climate change, .) and electricity price increases as utilities internalize the costs of carbon -

Answer 43

Percentage grid electricity

Question 44

Disclosure on XX indicates how well a company is positioned to capture possible cost savings and ensure more stable energy prices from the use of renewables - as well as how well companies are protected from high energy costs and energy price and supply volatility associated with the use of fossil fuels for captive power generation

Answer 44

Percentage renewable electricity