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GARP SCR > Sustainability > Flashcards

Sustainability Flashcards

1
Q

What does ‘sustainability’ mean?

A

Humanity meeting its current needs without overburdening the natural environment or future generations

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2
Q

List 4 things

What does ‘environmental sustainability mean’?

A

1) Maintaining ecological integrity
2) Preserving biodiversity
3) Maintainng balance of natural systems
4) Natural resources are consumed by humans at a rate less than what can be replenished

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3
Q

True or false

Social sustainability refers to the minimum standard that every person is afforded good pay and a decent livelihood.

A

False

It is the minimum standard of basic necessities and human rights that is afforded to all people and have sufficient resources to keep themselves, their families and their communities healthy and secure

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4
Q

What is economic sustainability?
1. The minimum standard to ensure that everyone has access to income
2. Having economic systems that are accessible to everyone and to generate prosperity globally
3. Having economic systems that enable the fair access to the market

A

(2) Having economic systems that are accessible to everyone and to generate prosperity globally

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5
Q

When did the first major UN meeting on environmental issues take place?

A

1972

Also saw the release of “The Limits to Growth” report commissioned by the Club of Rome. BUT neither of these had a major part in policymaking.

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6
Q

What did the Brundtland Commission establish in 1987?

A

Coined the term ‘sustainable development’

‘Sustainable development’ means development that meets the needs of the present wihtout compromising the ability of future generations to meet their own needs

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6
Q

When did the term Corporate Social Responsibility emerge?

A

1990s

Predominantly undertaken by corporations

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7
Q

True or false

Governments use the terminology of ESG to convey their climate policies to the public.

A

False

Although climate policy falls under sustainable development, government policies don’t usually use ESG terms. Typically, it is used by FIs and corporations

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8
Q

When and where did the term ESG arise from?

A

2005 by UN Global Compact, which was endorsed by ABN Amro, Goldman Sachs, and Westpac

When the definition was finalised, it was implemented in the UN Principles for Responsible Investment

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9
Q

Why is ESG scores important?
1. Screening compnaies for incluison in ESG investment funds
2. Insight into banks’, insurers’ and investors’ firm-lvel ESG policies that are integrated into their lending, underwriting, and investment practices
3. To prioritise, restrict or exclude clients/ projects over others
4. To determine whether a project should be given financial backing
5. All of the above

A

(5) All of the above

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10
Q

True or false

ESG metrics is typically used for internal purpose within the company

A

False

They are used in investor relations capacity

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11
Q

How can ESG metrics be used on a country level?

A

Sovereign bond portfolios

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12
Q

When was the UNFCCC established?

A

1992 at the Earth Summit in Rio

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13
Q

What was the purpose of the UNFCCC?

A

To coordinate communication between regarding scientific consensus from the IPCC with the governments

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14
Q

What was the main goal of the Millennium Development Goals?

A

To eradicate poverty

Wasn’t achieved

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15
Q

What was an issue of the MDGs?
1. They did not include any environmental sustainbility goals
2. MDGs didn’t engage with the Governments
3. MDS didn’t engage with the private-sector
4. There were not enough Signatories.

A

(3) MDGs didn’t engage with the private sector

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16
Q

What was the purpose of the SDGs in 2015?

A

To build on the Millennium Development Goals and complete what they did not achieve

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17
Q

What is another advantage that the SDGs have over the MDGs?
1. Drafted to be applicable across all countries, not just the richer ones
2. It has a more holistic set of targets that cover more issues
3. Emphasises a bottom-up approach, taking into account the country specific issues
4. The SDGs provide a better framework for the public sector
5. 1 & 2
6. 1 & 3
7. 2 & 3
8. 2 & 4

A

(6) 1 & 3

Incidentally, the SDGs are increasingly used by the private sector to define their entity-level sustainability aims and monitor progress

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18
Q

True or false

Companies can implement projects that hit several goals at the same time, such as the NbS.

A

True

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19
Q

What does natural capital mean?

A

All the world’s natural assets

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20
Q

List 4 items

What are the types of ecosystem services?

A
  1. Supporting services
  2. Provisioning services
  3. Regulating services
  4. Cultural services

  1. Supporting services = Refers to the fundamental conditions that enable the existence of other services (eg: species habitat, genetic diversity)
  2. Provisioning services = Refers to the ability to generate resources that can be used to trade in markets
  3. Regulating services = The regulation of valuable natural processes like carbon sequestration and pollination
  4. Cultural services = Refers to the non-material benefits and enjoyment humans derive from ecosystems
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21
Q

List 3 organisations

Which organisations offer methodologies to track the organisational effects and dependencies of natural capital and ecosystem services?

A
  1. Natural Capital Protocol
  2. WRI
  3. Ecosystem Services Review
22
Q

When was the notion of the ‘triple bottom line’ established?

A

1980 - 1990s

23
Q

What does the ‘triple bottom line’ refer to?

A

When environmental and social impact ‘bottom lines’ are placed on the same importance as financial performance

24
Q

True or false

Corporate social responsibility refers to the corporations’ broader obligation to society

A

True

25
Q

What does ‘decoupling’ mean?
1. When organisations hide unsustainable practrices from stakeholder attention and prepare selective and inaccurate disclosures
2. When organisations backtrack on their sustainability goals like decoupling away from RE projects
3. When organisations give misleading claims of sustainbility
4. When organisations claim to fulfill stakeholders’ expectations for action on sustainability, without making those changes in practice

A

(4) When organisations claim to fulfill stakeholders’ expectations without making those changes in practice

Eg: Joining voluntary sustainability initiatives by NGOs to gain credibility by association
Eg2: Promotion of empty green claims and policies

26
Q

True or false

Attention deflection refers to the practice where companies try and mislead investors by pointing out the bad practices of other companies

A

False

  • When organisations hide unsustainable practices from stakeholder attention
  • When companies prepare selective and inaccurate disclosures
  • When companies make incomplete comparisons with other products and services
  • When organisations use vague and irrelevant statements
27
Q

Which of these are NOT considered a greenwashing category?
1. Greencrowding
2. Greenlighting
3. Greenhushing
4. Greenwishing
5. Greenhiding

A

(5) Greenhiding

  1. Greencrowding = when companies hide themselves in a crowd and rely on safety in numbers to evade detection
  2. Greenlighting = When companies spotlight small green features of their operations or products to distract customers from the wider more damaging activites
  3. Greenhushing = When companies under-report or hide sustinability credentials to avoide investor scrutiny #
  4. Greenwishing = When compnaies make efforts to tackle sustainability challenges, but they are not significant enough to make a difference or encourage a structural change
28
Q

How have regulators, like the FCA, tried to address greenwashing?

A

Placing restrictions on the way that labels and terms like ‘ESG’, ‘Green’, ‘Sustainable’ can be used as well as prodct sustainability labels

29
Q

True or false

Educating people and companies to combat greenwishing has no negative repercussions.

A

False

By educating them, they may end up feeling disempowered given the scale of the sustainability challenge and thus, disengage from doing further action

30
Q

What are the four main stages of a Life-cycle Assessment (LCA)?

  1. Defining the functionla unit, collecting data, analysing data, and presenting results
  2. Developing a list of stakeholders, analysing data, assessing impact, and presenting results
  3. Defining the scope, identifiying impact categories, assessing impact, and interpreting results
  4. Defining the scope, collecting data, analysisng data, and presenting results
A

(3) Defining the scope, identifying impact categories, assessing impact, and interpreting results

31
Q

List 4 things

How can LCAs help organisations in the long-run?

A
  1. Can determine organisation’s water, land, energy use, and carbon footprints
  2. Help identify energy efficiency improvements
  3. Enhance supply chain purchase decisions
  4. Compare environmental impacts of similiar products within a company or competitors
32
Q

What is the purpose of the Business for Social Responsibilty?
1. To encourage businesses to adopt sustainable practices
2. To provide a set of voluntary and aspirational social principels that offer different actions for incorporation
3. To offer a framework for sustainble businesses and help them make a positive contribution to society
4. To help develop resilient business strategies and connect member companies with sustainable business experts

A

(4) To help develop resilient business strategies and connect member companies with sustainable business experts

33
Q

What does the UN Global Compact do?

A

To encourage businesses to adopt sustainble practices

Includes a framework that revolves around 10 principles on human rights, labour, the environment, and anti-corruption

34
Q

True or false

The Principles for Responsible Investment are designed to guide better management of ESG issues and strengthen investment for a resilient, inclusive and sustainable society

A

False

The PRI follows 6 principles that provides voluntary and aspirational set of investment principles that offer potential actions to incorporate in investment practice

35
Q

What is the difference between Global Reporting Standard and Sustainability Accounting Standards Board?
1. GRI provides disclosure for wide variety of sustainability issues, not just environmental. SASB provides disclosure for sustainability issues that are financially material to investors.
2. GRI only looks at environmental issues whilst SASB is only for accountants
3. GRI provides disclosure for a wide range of sustainability issues whilst SASB only looks at environmental issues
4. GRI is more focused on societal issues, rather than environmental issues whilst SASB looks at both environmental and social issues

A

(1) GRI provides disclosure for a wide variety of sustainabilty issues, not just environmental. SASB provides disclosure for sustainability issues that are financially material to investors

36
Q

True or false

The IFRS S1 looks at General Requirements for Disclsoures of Sustainbility-related Financial Information whilst the IFRS S2 looks at specifically Climate-related Disclosures

A

True

S1 standard is more overarching on all material sustinability-related financial informaiton
S2 builds upon this and provides a more granular discloure for climate-related risks and opportunities.
The ISSB standards have incorporated the recommendations of the TCFD

37
Q

Who is PRI targeted to?

A

Asset managers and owners

Stands for Principles for Responsible Investment

38
Q

Who is PRB targeted to?

A

Global Banks

Stands for Principles for Responsible Banking

39
Q

Who is GIIN targeted to?

A

Asset owners, asset managers, service providers

Stands for Global Impact Investing Network

40
Q

True or false

The World Business Council for Sustainable Development is targeted for FIs and banking institutions only

A

False

it’s a cross-sectoral and is comprised of >200 global firms, spanning from consumer goods, chemicals, and the oil & gas industry

41
Q

List 6 things

What are the principles for responsible banking?

A
  1. Alignment
  2. Impact and target setting
  3. Client and customers
  4. Stakeholders
  5. Governance and culture
  6. Transparency and Accountability
42
Q

Which of these actions can help banks integrate PRB’s principle of alignment into their operations?

  1. Board and relevant departments that deal with strategy need to have a comprehensive underrstanding of the SDGs, Paris Agreement and UN Guiding Principles
  2. Identify and focus on the social and environmetnal issues that are most relevant to the company
  3. Using the climate targets and SDGs as a guideline to adapt their own strategy, identifying areas of malalignment and areas of opportunity
  4. All of the above
A

(4) All of the above

43
Q

2 definitions

What does PRB’s Principle of Impact and Target Setting mean?

A
  • Identifying, assessing and improving the impact on the people and the environment
  • Reducing the negative impacts whilst increasing the positive impacts

Impact analysis should be based on
(1) scope of the bank’s core businesses
(2) the scale of exposure tof the banks’ activities
(3) context and relevance
(4) scale and intensity of potential impacts

44
Q

What can banks do to better incorporate impact analysis into their business strategy?
1.Undertake a forward-looking assessment that analyses bank’s dependencies on nature and their associate risks
2. Assess, monitor and be transparent about the bank’s portfolio exposure to technologies, business models and sectors that have signficant sustainability impacts
3. Develop strategies, policies and KPIs to address and mitigate the negative impacts
4. Build capacity and expertise on sustainbility issues and risks, with relevant committees and client
5. Harness better technology to mitigate the impacts and monitor impacts
6. All of the above

A

(6) All of the above

(3) can also think about
* integrating impact analysis results in to strategy decisions and portfolio allocation decisions
* defining overarching lending policies with portfolio adjustments
* establishing management and monitoring systems and processes
* integrating environmental and social risk into bank’s overall risk assessment

45
Q

Which of these are NOT considered a relevant action to improve target setting in banks?

  1. Targets need to align with the appropriate SDGs or goals of the Paris Agreement
  2. The bank needs to establish a baseline for areas to be prioritised
  3. Systems and processes need to be established to monitor and review the targets over time, ensuring that negative impacts have their corrective measures
  4. Link internal function, like marketing and communication, training, HR, compliance to the targets to ensure internal coherenece
  5. Link the achievement of targets and progress to remuneration and incentive systems
  6. All of the above
  7. None of the above
A

(6) All of the above

46
Q

True or false

The 3rd principle of PRB - clients and customers - refers to encouraging sustainable practices in their clientele base and accompanying their customers in their transition towards more sustainable business models, technologies, and strategies.

A

True

47
Q

Which of these actions will NOT help their customers and clients in their transition towards a sustainable economy?

  1. Identifying the most significant clients based on their impact and their relevance to the bank’s buisness
  2. Establish internal guidelines and protocols to support customers and clients
  3. Review specific products and services to ensure that the clients’ needs are met
  4. Consult and engage with relevant customers and clients to make use of their expertise and knowledge
  5. Incentivise sustainable investments for clients (eg: through preferential interest, reward programmes etc)
  6. Encourage clients to disclose their own social and environmental impacts
A

(4) Consult and engage with relevant customers and clients to make use of their expertise and knowledge

48
Q

Which of these are requirements for PRB’s 4th principle Stakeholders?

  1. To encourage stakeholders to take on sustainable business practices and aid them in their transition
  2. Parterning with relevant members of society (including suppliers, scientists, public sector, regulators, peers, academia etc) to increase the imapct of the bank’s actions and support the scale of change
  3. Engaging with relevant peers in the industry for knowledge sharing of best practices
  4. Engaging the bank’s employees as stakeholders
A

(2) Partnering with relevant members of society to incrase the impact of the bank’s actions and support the scale of change

49
Q

Which of these actions are ways that banks can engage with stakeholders in accordance to Principle 4?

  1. Identify areas where collaboration could help accomplish banks’ goals
  2. Develop policies to support sustainble behaviour amongst stakeholders
  3. Establish multi-disciplinary consultation channels to engage with stakeholders
  4. Map out stakeholders based on their material impact to the economy and the bank’s sustainbility strategy
  5. Engage with regulators and policy makers to advocate for regualtions and policies that align with the PRB
  6. 1, 2, 4
  7. 2, 5
  8. 3, 4, 5
  9. 1, 3, 5
A

(9) 1, 3, 5

50
Q

List 4/6 things

How can banks improve their governance and culture to be more sustainable?
1. Assessing C suite and governance bodies on their understanding of sustainability issues
2. Allocate the roles and responsibilities across all levels of the bank
3. Develop a strategy to teach Board level directors of sustainability issues
4. Embed sustainability targets into remuneration and performance management systems
5. Establish internal expertise to facilitate sustainable finance and implementation of the Principles on all levels of the bank
6. 1, 2
7. 1, 3
8. 2, 4, 5
9. 3, 4, 5
10. 1, 2, 4

A

(8) 2, 4, 5

51
Q

Which actions can help banks become more transparent and accountable?
1. Publish reports on a need-to-know basis in the bank, ensuring strategies are shared with the relevant departments
2. Integrate disclosures relating to the implementation of the Principles into the existing reports
3. Disclose disaggregated information with as much quantification as possible
4. Disclose at aggregated level strategic risks and opportunities and how these are integrated into the bank’s governance process and strategy
5. Aggregate department’s sustainability criteria and detail out the department sustainable KPIs
6. 1, 2, 5
7. 2, 3, 4
8. 3, 4, 5
9. 1, 3, 4
10. 2, 3, 5

A

(7) 2, 3, 4

52
Q

True or False

These are all apart of the Principles for Responsible Investment
1. We will incorporate ESG issues into investment analysis and decision-making processes
2. We will be active owners and incorporate ESG issues into our ownership policies and practices
3. We will seek appropriate disclosure on ESG issues by the entities in which we invest
4. We will work together to enhance our effectiveness in implementing the Principles
5. We will each report on our activities and progress towards implementing the Principles

A

True

GARP SCR (10 decks)

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