Module 2 Quiz

1. Question

Which of the following investors are most likely to be most concerned with the physical impacts of climate change?

Insurance companies
Pension funds
Sovereign wealth funds
Private equity

2. Question

Which of the following statements best describes the role of stewardship?

The responsible management of personal assets to maximise personal gain.
The responsible management of an individual's assets to guarantee there will be no loss in value.
The responsible management of an individual's assets to maximise personal gain.
The responsible management of an individual's assets in the best interests of that individual.

3. Question

The PRI has highlighted three ESG engagement dynamics that create value. Which of the following includes these three dynamics?

Financial dynamics, communicative dynamics, learning dynamics
Learning dynamics, political dynamics, financial dynamics
Communicative dynamics, learning dynamics, political dynamics
Political dynamics, financial dynamics, communicative dynamics

4. Question

Which of the following is not a barrier to effective engagement?

Resource limitations
Conflicts of interest
Reaching a consensus
Honesty and transparency

5. Question

Which of the following statements is true of an ethical/impact investor?

They never consider immaterial ESG factors
They always consider all ESG factors
They do not consider any ESG factors
They may consider immaterial ESG factors

6. Question

Seeking to improve access to clean water would be an example of which type of investing?

Best-in-class investing
Qualitative investing
Negative screening
Thematic investing

7. Question

Which of the following accurately describes the data challenges of ESG integration?

Data incompleteness and lack of audited data
Data scarcity
Data consistency
All of the above

8. Question

Critics tend to express four concerns about ESG integration. Which of the following is not one of those concerns?

Dubious assessment criteria
Quality of data
Too inclusive of poor companies
Potential over emphasis of long-term improvements

9. Question

Which of the following is false regarding company disclosures on ESG topics?

A lot of ESG data is not compulsory under typical reporting standards
Companies have variable disclosure policies and reporting
Management has a lot of flexibility in what it chooses to report
Listed companies must comply with minimum ESG reporting standards that apply internationally

10. Question

Green bond funds are an example of which form of investing?

Thematic
Exclusionary
Best-in-class
Active ownership

11. Question

Which of the following most accurately describes best-in-class investing?

Active ownership
Positive screening
Negative screening
Thematic investing

12. Question

Which of the following approaches to ESG integration requires the greatest resources?

Active ownership
Negative screening
Thematic investing
Best-in-class

13. Question

Which of the following types of fund managers are most likely to provide active stewardship for investors?

Index tracking equity fund managers
Broad bond index tracking fund managers
Long duration corporate bond fund managers
Fundamental active equity fund managers

14. Question

Why is responsible investing particularly compatible with infrastructure investing?

Because climate change is likely to cause extreme weather events that will impact infrastructure projects
Because infrastructure investing is long term in nature and focuses on essential services
Because government engage in infrastructure investing
Because infrastructure projects often address social issues

15. Question

Passive investment strategies that integrate ESG face which of the following challenges?

Quality of data – shorter time frames, lack of comparability and regional breadth of ESG data sets
A lack of consensus around criteria and methodology makes data sets and ESG passive products highly individualistic and incomparable
Potentially higher tracking error as a consequence of excluding meaningful industries or sectors
All of the above

16. Question

Which of the following ESG rating agencies measures a company’s resilience to long-term, industry material environmental, social and governance (ESG) risks?

Sustainalytics
MSCI
Morningstar
Real Impact Tracker

17. Question

The Investor Forum identifies 5 barriers to engagement, which of the following is not one of those barriers:

Resourcing
Visibility
Concert party rules

18. Question

The Sustainalytics ESG Risk rating measures a company’s exposure to industry-specific material ESG risks and how well a company is managing those risks.

True
False

19. Question

Whilst much of the regulation being implemented by the European Union is coming into effect after Brexit, the UK has committed to onboarding all EU regulation that relates to sustainability.

True
False

20. Question

Under SFDR, Article 6 funds refer to which of the following?

Funds which do not integrate any kind of sustainability into the investment process and could include stocks currently excluded by ESG funds
Funds that promote environmental or social characteristics alongside other characteristics but can also include stocks currently excluded by ESG funds
Funds that promote environmental or social characteristics alongside other characteristics and do not include stocks currently excluded by ESG funds
Funds that have sustainable investment as their primary objective and do not hold stocks currently excluded by ESG funds

21. Question

The EU taxonomy defined funds as being ‘environmentally sustainable’ if the portfolio meets four conditions. Which of the following is not one of those conditions?

Contributes sustainably’ to one of more environmental objectives, or enables other activities to make a sustainable contribution
Does not significantly harm any of the environmental objectives
Is investing in compliance with the Taxonomy regulations minimum safeguards
Has a carbon footprint that is less than the Taxonomy defined benchmark

22. Question

When reviewing firms claiming to engage in ESG investing, the SEC will typically focus on:

Portfolio management
Performance advertising and marketing
Compliance programmes
All of the above

23. Question

The main focus of SFDR is which of the following?

The provision of information to investors, clients and other stakeholders
The classification of investment products/ funds into three categories: Article 6, Article 8 and Article 9
To revise the system and control changes required by investment firms
To extend Europe Union regulation around sustainability to the UK after Brexit

24. Question

From Jan 2022, Article 9 products are required to disclose which of the following?

Information on the environmental characteristics to which the underlying investments contribute
A description of how/ to what extent the underlying investments are made in economic activities that qualify as ‘environmentally sustainable’
What proportion of investments are ‘environmentally sustainable’
All of the above

25. Question

The United States has chosen to take what approach to countering greenwashing in financial products?

Consulting with the SEC to implement new legislation by September 2022 to tackle greenwashing in financial disclosures
Enforcing existing disclosure rules and identifying examples of both good and poor ESG practice
Delegating power to the state level to monitor the validity and suitability of financial disclosures
No action has been taken to date

Quiz Summary

Information

Results