Presidential Address: Sustainable Finance and ESG Issues—Value versus Values --- Starks, 2023 Flashcards
Which of the following best represents the primary categories of motivation for ESG investing according to Starks (2023)?
A) Seeking financial returns and managing investment risks effectively.
B) Addressing ethical concerns and aiming to have a positive social impact.
C) Ensuring legal compliance and managing the reputation of the investment firm.
D) Focusing on environmental protection and promoting sustainability.
E) All of the above.
E
How does Starks (2023) describe the influence of cultural norms and country-specific characteristics on ESG investment preferences?
A) Cultural norms and country characteristics are deemed insignificant in shaping ESG investment preferences.
B) These factors are considered to primarily influence the investment decisions of value investors.
C) The influence of cultural norms and country characteristics is regarded as less impactful than the characteristics of individual firms.
D) Cultural norms and country-specific traits are seen as crucial in determining the size and nature of a country’s ESG fund industry and the types of ESG investments preferred.
E) It is argued that these factors solely influence governmental policies and regulations related to ESG, not the investment preferences of individuals or institutions.
D
How does Starks (2023) distinguish between ‘value’ investors and ‘values’ investors in the context of ESG investing?
A) Value investors are oriented towards long-term growth and sustainability, whereas values investors aim for short-term financial gains.
B) Value investors are mainly driven by the potential for financial returns, while values investors prioritize ethical considerations and the social impact of their investments.
C) Value investors prefer low-risk investments like government bonds, whereas values investors are inclined towards high-risk, high-reward stocks.
D) Value investors are typically large institutional investors, while values investors are usually individual or retail investors.
E) Value investors rely on quantitative financial analysis, whereas values investors base their decisions on qualitative assessments of a company’s ESG performance.
B
What does Starks (2023) suggest regarding the relationship between different ESG investment strategies and expected financial returns?
A) The paper posits that investments focusing on ESG factors are generally expected to underperform compared to traditional investment strategies.
B) There’s a consensus in the paper that ESG-focused investments consistently outperform traditional investments in the financial markets.
C) The paper indicates that there is a range of expectations; some investors are willing to accept lower returns for ESG investments, while others anticipate returns comparable to traditional market investments.
D) The stance of the paper is that ESG investments are predominantly suitable for investors with a low risk tolerance.
E) It is argued that ESG investments invariably lead to higher returns due to more effective risk management and improved company performance.
C
What is a key source of confusion surrounding ESG investing, according to Starks (2023)?
A) A lack of standardized ESG ratings and scoring models.
B) The overregulation of ESG funds, making them difficult to invest in.
C) The clear division between financial and ethical motivations among investors.
D) The universal agreement on what constitutes sustainable finance.
E) The absence of financial institutions promoting ESG investing.
A
How do Socially Responsible Investors (SRI) make investment decisions?
A) By prioritizing financial returns over ethical considerations.
B) By integrating ESG factors to reduce firm-level risks.
C) By avoiding companies that conflict with their ethical or societal principles.
D) By investing in high-growth companies, regardless of ESG performance.
E) By making investment choices solely based on governmental policies.
C
Which of the following best describes Impact Investors according to Starks (2023)?
A) Investors who seek only financial returns while minimizing risk.
B) Investors who use ESG criteria to screen out controversial industries.
C) Investors who target measurable social and environmental outcomes alongside financial returns.
D) Investors who invest only in funds with government sustainability certifications.
E) Investors who rely on third-party ESG rating agencies to select investments.
C
What does Starks (2023) suggest about the role of institutional investors in ESG investing?
A) Institutional investors are entirely driven by ethical concerns.
B) Institutional investors often balance financial motivations with societal expectations.
C) Institutional investors actively avoid ESG investments due to high costs.
D) Institutional investors engage in ESG only due to strict regulatory requirements.
E) Institutional investors always prioritize ESG over financial returns.
B
Why do some investors integrate both value and values perspectives in ESG investing?
A) They seek to balance financial returns with ethical considerations.
B) They are required to do so by financial regulations.
C) They are primarily focused on short-term profits.
D) They lack access to traditional investment strategies.
E) They believe ESG investments outperform in all cases.
A
How do European markets differ from U.S. markets in ESG investing trends?
A) European investors exhibit a stronger preference for ESG investments.
B) U.S. investors dominate the ESG investing space.
C) European investors avoid ESG funds due to regulatory constraints.
D) ESG investment patterns are identical across both regions.
E) U.S. investors have historically driven the ESG movement.
A
According to Starks (2023), what is one reason some investors are willing to accept lower returns for ESG investments?
A) A belief that ESG investing aligns with long-term global sustainability goals.
B) ESG investing is perceived to be lower risk in the short term.
C) Governments subsidize ESG investments to encourage participation.
D) ESG funds are guaranteed to outperform traditional investments.
E) ESG investments offer higher liquidity than traditional investments.
A
