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ESG-Investing Practice Exam Questions and Answers

Certificate in ESG Investing

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Total Questions : 618

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Question # 1

According to the Sustainability Accounting Standards Board (SASB), GHG emission is material for more than 50% of the industries in which sector?

Options:

A.  

Health care

B.  

Technology and communications

C.  

Extractives and minerals processing

Discussion 0
Question # 2

For investors in corporate fixed-income securities, engagement is most likely to be effective if conducted:

Options:

A.  

Before the security is issued

B.  

Through the divestment process

C.  

At the annual general meeting via voting

Discussion 0
Question # 3

With respect to ESG integration in private equity, which of the following is most likely a challenge an investor may face?

Options:

A.  

Lack of strategy and long-term orientation from private equity managers

B.  

Lack of capacity within the investee company to fulfill ESG reporting requirements

C.  

Reporting frameworks that do not account for the relative lack of transparency found in private markets relative to public markets

Discussion 0
Question # 4

Which of the following investor types most likely have the shortest investment time horizon?

Options:

A.  

Life insurers

B.  

Foundations

C.  

General insurers

Discussion 0
Question # 5

Which of the following statements about externalities is most accurate?

Options:

A.  

Externalities are reflected in the prices of commercial goods and services

B.  

Private costs are higher than societal costs when externalities are negative

C.  

Measures to internalize externalities can be taken by corporates or governments

Discussion 0
Question # 6

When determining ESG investment mandates, an asset owner should consider:

Options:

A.  

Its tactical asset allocation only

B.  

Its strategic asset allocation only

C.  

Both its tactical asset allocation and its strategic asset allocation

Discussion 0
Question # 7

When aligning investments with client ESG beliefs, which of the following ESG considerations should be reflected in the investment mandate dimension of the investment process?

Options:

A.  

Material ESG factors

B.  

Rationale for ESG integration

C.  

Consideration of ESG factors, including prioritization

Discussion 0
Question # 8

Which of the following statements is most accurate? Assessments of the level of ESG capabilities of different fund managers:

Options:

A.  

Are comparable

B.  

Only use data from audited data sources

C.  

Are performed using different methodologies

Discussion 0
Question # 9

A company has an audit contract with one Big Four firm and non-audit contracts with two other Big Four firms. Which scenario is most likely to materialize when the company rotates its auditors?

Options:

A.  

The new auditor will be eligible for new non-audit contracts

B.  

There will be a sub-optimal level of competition for the audit

C.  

The new auditor will miss material issues that the existing auditor would have identified

Discussion 0
Question # 10

Which of the following countries has a joint audit requirement that all public interest entities must engage at least two independent accounting firms to perform an annual audit?

Options:

A.  

France

B.  

Germany

C.  

United Kingdom

Discussion 0
Question # 11

According to market reviews conducted by the Global Sustainable Investment Alliance at the start of 2022, the smallest sustainable investment strategy globally (in terms of assets) is:

Options:

A.  

Impact investing.

B.  

Best-in-class investing.

C.  

Norms-based screening.

Discussion 0
Question # 12

Scopewashing is best described as a situation in which a company’s management:

Options:

A.  

Uses hyperbole to highlight its sustainability-related skills and experience

B.  

Emphasizes positive action in one ESG area while negatively contributing to another

C.  

Keeps quiet about their environmental goals for fear of retribution or misinterpretation

Discussion 0
Question # 13

When employing an ESG integration strategy, asset managers are most likely to:

Options:

A.  

corroborate ESG data with multiple sources

B.  

include only verified ESG data that have been audited

C.  

use a multi-decade time horizon to backtest ESG data

Discussion 0
Question # 14

Which of the following is a form of individual engagement?

Options:

A.  

Follow-on dialogue

B.  

Informal discussions

C.  

Active public engagement

Discussion 0
Question # 15

Material ESG risks that could be managed by a company but which are not yet managed best describe:

Options:

A.  

Manageable risks

B.  

Unmanageable risks

C.  

The management gap

Discussion 0
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