Polishing knowledge from Mock tests Flashcards
4 possible risk responses under the standards COSO ERM framework
Avoid: eliminate the risk or prevent it from happening.
Reduce: lessen the likelihood or impact of the risk.
Share: Transferring or spreading the risk (e.g., through outsourcing, insurance, or hedging).
Accept: Acknowledging the risk and deciding to proceed without any mitigation, typically because the cost of mitigation outweighs the potential impact.
sus linked loan VS sus linked bond
Sustainability bonds need to combine environmental and social objectives to be considered sustainability bonds. Sustainability-linked loans are not required to have social and environmental performance targets.
Types of ecosystem services
Regulating services protect or enhance ecosystems, and depend on supporting services.
Supporting services, such as species habitat and genetic diversity, are fundamental conditions that enable the existence of all other services
Provisioning services generate resources,
Cultural services represent non-material benefits that humans enjoy,
Green vs climate vs sustainable finance
Green finance refers to sustainable finance that focuses on environment-related risks and opportunities that often include climate change but not necessarily.
Climate finance refers exclusively to financial flows relating to climate change, whether mitigation or adaptation.
shadow carbon price VS internal carbon price
A shadow carbon price uses an estimate of the cost of carbon to aid in project selection. Using this metric, a company may decide to select one project over a rival project with a higher carbon intensity
Halocarbons + example
Halocarbons are a powerful class of GHGs, with high GWPs. Though halocarbons exist in very small quantities, they have a disproportionately high influence on radiative forcing.
Map of how sus relates to climate, and other concepts
Climate finance falls under the ESG landscape per figure 1 (p.33)
green vs sustainability vs social bonds
Sustainability bonds are a combination of green and social bonds. Sustainability bonds must simultaneously address both environmental and social objectives.
Green bond proceeds are allocated for environmental projects
Social bonds are bonds with earmarked proceeds for projects that will bring social benefits.
Def of scope 3 emissions for a city
occur outside the city boundary as a result of activities taking place within the city boundary.
N2O, CO2, CH4, Halocarbons - sorted by their GWP
CO2 - 1
CH4 - 28
CO2 - 273
Halocarbons - 100s to 1000s
Who designed RCP scenarios
The RCP-based scenarios designed by the IPCC
Who designed transition risk scenarios
IEA
methane GWP
28
N2O GWP
roughly 265
Ozone gwp
N/A - Ozone depletes relatively rapidly and has no GWP
HalocRBONS gwp
from 100s to 1000s
Why do we use topographical / geolocation data
Understand exposure
5 transition risks
Policy risk – New climate laws, carbon taxes, bans on fossil fuels.
Technology risk – Obsolete tech due to greener alternatives.
Legal risk – Litigation over emissions or climate damage.
Market risk – Demand shifts away from carbon-heavy products.
Reputational risk – Public backlash for polluting behavior.
Indirect physical risks
Supply chain risk
Maybe others
Green loan principles
- Use of proceeds (eligibility for green projects)
- Process for project evaluation and selection
- Management of proceeds (funds must be tracked)
- Reporting (annually, on the use of proceeds, expected impact, description of green projects)
Ratchet mech
NDCs are reevaluated and strengthened every 5 years at COPs
COP 15 where it was and outcomes, when it was
2009
While COP15 (Copenhagen) ended with no binding treaty, it was the first COP to establish the aspirational goal that global warming be kept to below 2°C..
Bank of England case study read
.
4 TCFD disclosure pillars
- Govnance - oversight by management / board
- Strategy (scenario analysis)
- Risk Management
- Metrics & targets (ghg emissions, target setting)
5 key features of TCFD recommendations
- Forward-Looking Information**
- use of climate scenario analysis
- understand resilience of business strategies under different climate scenarios - Financial Impact Focus**
- Disclosures should link climate risks/opportunities to the company’s revenues, expenditures, assets, liabilities, and capital.
- Mainstream Financial Filings**
- including disclosures in annual reports or public financial filings, not separate sustainability reports. - Consistent and Comparable**
- Aims for disclosures that are:
- Standardized across industries
- Comparable across companies
- Sector-Agnostic but Scalable**
- The framework is:
- Applicable to all sectors
- Scalable for small to large companies
- Includes sector-specific guidance for high-risk industries (e.g., energy, transport, banking)
- Covers Risks and Opportunities**
- Goes beyond risk mitigation:
- Identifies growth, innovation, and investment opportunities from the low-carbon transition
CC and ESG relation
Climate change and ESG do share an interrelationship yet the correct and accurate description of this relationship is one climate change is not an exclusively ESG issue,
Debt costs def
It’s essentially the interest rate or yield the bank pays on its own debt.
Distribution of current emissions by continent
Of current (as of 2017) emissions at regional levels, Asia accounts for over half (53%), with North America at 18%, and Europe at 17%.
rel btw SSP and RCP
SSPs by themselves do not show emission pathways.
SSPs can combine with multiple RCPs.
SSPs have not previously been included in IPCC reports but will be from 2021 onwards.
Combined SSP-RCP trajectories (solid lines) follow similar paths as RCP trajectories
SASB founded in…
SASB it was founded in 2011,
LEAP approach
Framework of TNFD framework
Locate - identify where business interacts with nature
Evaluate dependencies and impacts on nature
Assess - R and opportunities from N related impacts
Prepare - for disclosure with TNFD framework
Double materiality + who introduced it
Double M = fin M + impact M
fin M - how sus issues impact fin performance of the company
impact M - how company’s activities impact society, env, economy
GRI introduced double materiality.
3 major gases of the atmosphere
Nitrogen (N₂) ~78.08%
Oxygen (O₂) ~20.95%
Argon (Ar) ~0.93%
CO2 - ~0.042% (~420 ppm, rising)
Deadline for Net 0
2050
Carb sink + example
environments or systems that absorb more carbon than they release
Forests
Undisturbed soils, wetlands, argicult lands
Grasslands
Urban green spaces
CCUS
Which scenario SSP RCP are we now on?
SSP2 (bus as us) + RCP 4.5 (2 -2.5 increase temp)
Orderly, disorderly transition, hothouse scen
Orderly - We start reducing emissions early and follow a predictable, steady path. LOW transition risk. Lower physical R
Disorderly - Delayed / inconsistent action, then drastic change later. HIGH transition risk, higher physical R
Hothouse: no transition. HIGH physical risk.
Hazards vs drivers
Hazard - event / process that can cause harm (heatwave, drought, rising sea level)
Driver - underlying factor that influences likelihood / intensity of a hazard (GHG emissions, deforestations, etc.)
Exposure vs vulnerability
Exposure - degree to which smth is exposed
Vulnerability - degree to which a system / community / asset can experience harm
A low-income community with poor infrastructure being more vulnerable to flooding, even if it’s exposed to the same flood hazard as wealthier areas.
Emission intensity f
GHG emissions / unit of output.
Where do Chinese green loans majorly go?
The vast majority of Chinese green loans went to clean transport (45%) and clean energy (29%) (section 5.3.2).
Nature Based solution def
“Actions to protect, sustainably manage, and restore natural or modified ecosystems, that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits.”
e.g. planting trees on rooftops
When was def of sus development offered
late 1980s by the Brundtland Commission. This definition became widely accepted
“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
