Use Sustainable Investing Dumps to Obtain CFA Institute Certification

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July 30, 2025

If you're serious about obtaining the Sustainable Investing Certificate certification, practicing with CFA Institute Sustainable Investing dumps questions is a must. By doing so, you'll become familiar with the exam format, identify knowledge gaps, develop time management skills, boost your confidence, and increase your chances of success. So, start practicing Sustainable Investing exam dumps today and give yourself the best chance of passing the Sustainable Investing exam! Test free Sustainable Investing Certificate(CFA-SIC) Exam Sustainable Investing exam dumps below.

Page 1 of 22

1. Information provided by ESG rating agencies is most likely:

relatively noisy.

subject to "group think.”

already reflected in stock prices.

2. A challenge for asset managers integrating ESG issues is most likely a lack of:

suitable benchmarks.

options outside equities.

options provided by consultants and advisers.

3. Suppose the average price-to-earnings (P/E) ratio for the financial industry is 10x. A financial institution with high ESG risk compared to its industry, is most likely assigned a fair value P/E ratio:

lower than 10x

of 10x

higher than 10x

4. The size of the discount rate adjustment to account for ESG risks most likely depends on:

Company-specific ESG risks.

The magnitude of the company’s cash flows.

The effectiveness of the company's ESG risk management.

5. Which of the following asset classes has the lowest degree of ESG integration?

Sovereign debt

Investment grade corporate debt

Emerging markets corporate debt

6. A company reduces water usage and increases usage of more expensive resources after regulations become more stringent. This most likely impacts:

revenues

provisions

operating expenditure

7. Brown divestment:

Screens out fossil fuels from portfolios

Invests only in companies with a positive environmental impact

Involves publicly traded firms exiting polluting businesses by sales to third parties

8. Compared to developed markets, ESG investing in emerging markets is most likely characterized by:

less data and greater variability between countries and companies.

easier portability of approaches and principles methods from developed markets.

fewer opportunities for investors to engage with companies and improve ESG performance.

9. According to a study by Berg, Koelbel, and Rigobon, the correlation of ESG ratings is:

High, and this can be a source of insight for investors

Low, and this poses a challenge for empirical research

Low, and this motivates companies to improve their ESG performance

10. Mass migration from developing countries to developed countries are most likely caused by:

desertification only.

scarcity of fresh water only.

both desertification and scarcity of fresh water.

Page 2 of 22

11. Impact investment funds most likely align their portfolios with:

Sustainable Development Goals.

ESG frameworks that are norms-based.

OECD Guidelines for Multinational Enterprises.

12. ESG offerings by asset managers generally began with:

fixed income funds.

infrastructure funds.

active-listed equities.

13. The role of auditors is to assess the financial reports prepared by management and to provide assurance that:

the numbers are correct

there is no fraud within the business.

the reports fairly represent the performance and position of the business

14. ESG datasets are best characterized by:

Extensive history.

Voluntary disclosure.

Common reporting standards.

15. Which of the following is a challenge in ESG integration?

ESG disclosures that lack comparability across companies

Excessive company-level ESG reporting that overwhelms investors

Standardized disclosures in audited financial statements that hinder differentiated analysis

16. Discretionary index-based ESG integration approaches tend to be:

rule based.

factor oriented.

process oriented.

17. Which type of return(s) would most likely be expected from an impact investment approach?

Social return only

Financial market return focused on long-term value

Social return along with an adequate financial market return

18. An ESG-contingent asset for a healthcare company may result from:

Acting as custodians of its customers' medical details.

Employee recruiting strategies that trail best practices.

Its data analytics business allowing the company to create cheaper healthcare options for governments.

19. A company's external auditor formally reports to the:

audit committee.

chair of the board of directors.

shareholders at the annual general meeting.

20. Alignment of an investment manager’s performance against a long-term ESG investor’s objectives is best achieved by which of the following?

Benchmarking against the market

Engaging in a monitoring dialogue frequently

Early reporting of deviations from the expected investment process or style

Page 3 of 22

21. Which of the following is a form of individual engagement?

Generic letter

Soliciting support

Informal discussions

22. All else equal, a higher discount rate applied to a company’s discounted cash flow (DCF) analysis will lead to:

a lower estimate of intrinsic value

the same estimate of intrinsic value

a higher estimate of intrinsic value

23. A potential challenge for an asset owner implementing responsible investment is:

A lack of suitable indices

Consultants assessing too many products with ESG characteristics

The inability of the asset owner to influence the way fund managers interpret fiduciary duty

24. According to an OECD Centre for Opportunity and Equality (COPE) 2015 report, the average income of the richest 10% of the population is about:

4 times that of the poorest 10% across the OECD

9 times that of the poorest 10% across the OECD

14 times that of the poorest 10% across the OECD

25. Compared to credit rating agencies, the time horizon consideration for ESG rating providers is most likely:

Shorter

Similar

Longer

26. The decision made by companies to reduce supply chain risk by transferring production of strategic importance back to high-wage countries is best described as:

reshoring.

offshoring.

just transition.

27. Which of the following statements about engagement escalation is most accurate?

Disinvestment is not considered a form of escalation.

Litigation is an escalation tool that should be used frequently.

Collective engagement is often the most powerful form of escalation.

28. With regard to screening, exclusionary preferences are usually adopted by:

asset owners.

asset managers.

sell#side practitioners.

29. Which of the following ESG risks is most likely to impact sovereign debt?

Cybersecurity risks

Political stability and governance risks

Executive compensation structures

30. Which of the following is best referred to as secondary ESG data?

Bloomberg ESG Disclosure Score.

Survey results on employee satisfaction provided by Glassdoor.

A transcript of an interview with a company's chief financial officer (CFO).

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31. ESG philosophy can be embedded within an investment mandate to determine:

the asset owner's tactical asset allocation only

the asset owner’s strategic asset allocation only

both the asset owner's tactical and strategic asset allocations

32. Under the UK listing regime, Class 1 transactions:

must be approved via shareholder vote.

can be completed at management's discretion.

require additional disclosures to shareholders but no approval via shareholder vote.

33. Which of the following would most likely be the initial step when drafting a client’s investment mandate?

Defining how to measure ESG performance

Clarifying the client's ESG investment beliefs

Defining how to measure financial performance

34. Which of the following statements about quantitative ESG analysis is most accurate?

Quantitative ESG analysis is only based on third-party data

The length of the timeseries for ESG data is shorter than for financial data

Application programming interfaces (APIs) are used to bring structure to the ESG dataset

35. Which of the following would most likely be the initial step when drafting a client’s investment mandate?

Clarifying the client's ESG investment beliefs

Defining how ESG performance will be measured

Reflecting the client's investment beliefs operationally in the fund manager’s investment approach

36. Passive investors typically start engagement by:

Identifying investment underperformers.

Seeking a direct discussion with senior management.

Identifying an issue impacting a specific economic sector.

37. Regarding ESG engagement, debt and equity investors' interests are most likely aligned when the investee:

Faces insolvency risk.

Is engaged in capital restructuring.

Has a high investment-grade rating.

38. Which of the following represents the majority of the largest asset owners?

Pension funds.

Insurance companies.

Sovereign wealth funds.

39. Which of the following sectors receives the highest investment from the Inflation Reduction Act of 2022 (IRA)?

Clean energies

Clean transport

Clean electricity

40. Scores used to construct ESG index benchmarks can be

data based, but not rating based

rating based, but not data based.

both data based and rating based

Page 5 of 22

41. When screening individual companies, a practice of avoiding the worst ESG performers best defines:

positive screening

negative screening

norms-based screening

42. Corporate engagement and shareholder action is the predominant investment strategy in:

Japan

Europe

the United States

43. Which of the following statements is aligned with the Pensions and Lifetime Savings Association (PLSA) Stewardship checklist?

Statement 1: Investors should seek to ensure that fund managers deliver effective separation of long-term ESG factors from their investment approach.

Statement 2: Investors should work with their advisers to consider the level of resource available for stewardship activities.

Statement 1 only

Statement 2 only

Both Statement 1 and Statement 2

44. Which of the following reporting practices by an investee company is most likely a red flag for an investor?

Limited disclosure of ESG information due to cost constraints in reporting

Non-disclosure of ESG data which management deems commercially sensitive

Non-disclosure of detailed information regarding the basis of long-term incentive plans for a new chief executive officer (CEO)

45. Norms-based screening is the largest investment strategy in

japan

europe

the united states

46. A situation in which a company making good strides toward more sustainable practices but is unwilling to reveal as much for fear of retribution or misinterpretation is best described as:

greenhushing.

scopewashing.

competence greenwashing.

47. Which of the following statements best describes Weitzman’s dismal theorem?

Moral concerns about future climate damages demand the use of a low discount rate.

Economic asset value should be assigned to biodiversity to reverse its treatment as a free resource.

Standard cost-benefit analysis is inadequate to account for the potential downside from climate change.

48. A discount retailer facing a consumer boycott due to its poor working conditions will most likely face:

significant liabilities

greater operating costs

an adverse impact on revenues

49. A challenge to quantitative approaches to ESG integration is that:

research from third-party data providers is relatively unsophisticated.

most available data is from third-party research and is undifferentiated.

ESG factors are correlated with existing factors such as value and momentum.

50. Which of the following most likely protects minority shareholders?

Dual-class shares

Pre-emption rights

Double voting rights

Page 6 of 22

51. After applying an upper and lower bound for an ESG variable, portfolio optimization:

must be done on an absolute basis.

must be done on a benchmark-relative basis.

may be done on either an absolute or a benchmark-relative basis.

52. Which issue was most similar in the governance challenges faced by Enron and WeWork?

Auditor lapses

Related-party deals

Dominance of the chief executive officer (CEO)

53. Which of the following statements regarding ESG screening is most accurate?

There is limited availability of sustainability ratings for collective funds

ESG screening does not consider stewardship and engagement activities

Only collective funds with a high level of ESG integration have a high sustainability rating

54. Increased investment crowding into more ESG-friendly sectors is most likely to increase:

valuations.

expected returns.

materiality thresholds.

55. Thematic funds are most likely characterized by:

Poor cash flow profiles

Limited portfolio diversification

Outperformance during economic expansions

56. The quality of a company's ESG disclosures is most likely affected by:

its size only.

its location only.

both its size and its location.

57. Using the “shades of green" methodology developed by the Center for International Climate Research (CICERO), a project that does not explicitly contribute to the transition to a low carbon and climate resilient future is given the shading of:

red

yellow

light green

58. Over the last several years a company has traded at an average price-to-earnings ratio (P/E) of 12x, compared to a peer group range of 11x to 13x. If the company implements a new risk management framework to better manage material ESG risks relative to its peers, it would most likely justify a P/E ratio of:

11x

12x

13x

59. Which of the following ESG approaches is an investor in sovereign debt most likely to apply?

Active engagement

Exclusionary screening

Stewardship interaction

60. Which of the following challenges is most likely related to the attribution of returns to ESG factors?

Difficulty to demonstrate the value added by a programme of engagement

Difficulty to assess the performance drag that comes from excluding an industrial sector

Performance attribution to ESG factors is still in its early stages and may well need further assurance and consistency for it to have real power

Page 7 of 22

61. Stock exchanges can contribute to the growth of ESG market by:

supporting companies to issue more ESG-oriented bonds.

increasing the disclosure requirements on ESG data by listed companies.

considering ESG factors when voting on behalf of shareholders at companies' annual general meetings.

62. An investor uses relative screening for 20 sustainable funds. In the sequence of steps outlined by the Principles for Responsible Investment (PRI), which step immediately follows publicizing clear screening criteria?

Introducing oversight

Reviewing portfolio implications

Adapting the investment process

63. An analyst reads the following statements about wastewater treatment plants:

Statement I: Wastewater treatment plants are capital intensive.

Statement II: Wastewater treatment plants are difficult to maintain.

Which of the following is correct?

Statement I only

Statement II only

Both Statement I and Statement II

64. Formal corporate governance codes are most likely to

be found in all major world markets

call for serious consequences for non-comphant organizations.

be interpreted by proxy advisory firms when corporate compliance is assessed

65. By 2050, the percentage of the global population that is expected to live in urban environments is:

34%.

50%.

68%.

66. The social factor most widely incorporated by institutional investors in their analysis is:

executive pay.

trade association.

health and safety.

67. A meat-processing company does not sell its pork products in predominantly Muslim countries. Investing in the company on this basis would be considered an example of:

faith-based investing.

norms-based exclusion.

considering religion as a social factor.

68. Growing income inequality most likely leads to:

Less social mobility.

More educational opportunities.

Higher purchasing power among the middle class.

69. According to market reviews conducted by the Global Sustainable Investment Alliance at the start of 2020, the largest sustainable investment strategy in the United States is:

ESG integration.

exclusionary screening.

corporate engagement and shareholder action.

70. Which of the following actions is best categorized as an escalation of engagement?

Arranging a meeting with the investor relations team

Engaging management through an operational site visit

Submitting resolutions and speaking at general meetings

Page 8 of 22

71. Which of the following is an example of quantitative ESG analysis?

Analyzing issuer-reported and third-party ESG-related measures and metrics

Evaluating a company’s executive compensation policies linked to progress on ESG-related goals

Assessing a company’s culture, ESG attitudes, and the “tone at the top" from management and the board

72. According to the McKinsey framework which of the following elements of sustainable investing is allocated to the investment dimension of tools and processes?

Proactive engagement

Review of external managers

Integration with investment teams

73. Single-tier boards dominated by executive directors are commonly seen in:

Japan

Germany

The Netherlands

74. Which of the following is most likely to cast doubt on a director’s independence?

Holding cross-directorships

Receipt of director's fees from the company

Serving as a director for a relatively short period of time

75. Which of the following events typically increases the discount rate in an investor's discounted cash flow (DCF) model? The investee company:

Launches a new product to reduce customers' electricity usage

Is subject to a newly established carbon tax applied sector-wide

Faces an environmental litigation cost related to a specific project

76. If an index excludes companies that earn revenues from gambling, the index is most likely using:

Faith-based exclusions.

Idiosyncratic exclusions.

Conduct-related exclusions.

77. Competition and corruption within the general business environment is most likely a material governance factor for investments in:

Infrastructure.

Private equity.

Sovereign debt.

78. When undertaking an ESG assessment of a private equity deal ESG screening and due diligence will most likely take place during:

exit

ownership

deal sourcing

79. An ESG scorecard is best categorized as:

Purely qualitative analysis

Purely quantitative analysis

A hybrid of qualitative and quantitative analysis

80. Which of the following are most likely to raise the risks of greenwashing by private equity investors?

Investors that integrate ESG factors for the purposes of:

Value creation

Risk management

Attracting ESG-conscious capital allocators

Page 9 of 22

81. When using mean-variance optimization (MVO) models, ESG-related issues most likely:

Have the potential to add new sub-asset classes

Would be inappropriate for expanding regional asset mixes

Have no impact on model assumptions about expected return and volatility

82. The manager of a sovereign fund publishes a list of excluded companies with reasons for the divestments.

This is most likely a form of:

Escalation.

Concert party.

Collective engagement.

83. Investment in fossil fuels is permitted under:

The EU Paris-Aligned Benchmarks only

The EU Climate Transition Benchmarks only

Both the EU Paris-Aligned Benchmarks and the EU Climate Transition Benchmarks

84. In which of the following circumstances is Free, Prior, and Informed Consent (FPIC) most applicable?

Members agreeing to a social media platform’s privacy policy

Company constructing a fish farm next to a native waterfront community

Governments passing international standards against forced labor practices

85. The primarily used ESG indices:

use similar criteria and weightings.

are available for both equity and fixed income asset classes.

provide data to back test performance across multiple market cycles.

86. When integrating ESG analysis into the investment process, deriving correlations on how ESG factors might impact financial performance over time is an example of a:

passive approach.

thematic approach.

systematic approach.

87. An investor requires a social return and will tolerate a sub-market financial return. This best characterizes:

social investing.

impact investing.

sustainable and responsible investing.

88. The investor initiative FAIRR focuses on screening out companies

mining ancestral lands.

using suppliers that do not pay a living wage.

exhibiting poor antibiotic stewardship in animal farming

89. According to the Principles of Responsible Investment (PRI), which of the following is an example of a social issue?

Lobbying

Employee relations

Bribery and corruption

90. Which of the following statements about social trends is most accurate?

Social trends have similar impacts on different sectors

The importance of a social trend for a country is independent of the level of its economic development

The impact of a social trend on companies within the same sector may differ based on each company's culture

Page 10 of 22

91. Scope 3 carbon emissions are accounted for under:

The UK Task Force on Climate-related Financial Disclosures (TCFD) only

The European Union's (EU) Sustainable Finance Disclosure Regulation (SFDR) only

Both the UK Task Force on Climate-related Financial Disclosures (TCFD) and the European Union's (EU) Sustainable Finance Disclosure Regulation (SFDR)

92. In Australia, a managing director of a company is the:

executive chair.

only executive director.

former CEO of the company.

93. Which of the following would credit rating agencies (CRAs) most likely focus on in order to test how well an issuer’s management uses the assets under its control to generate sales and profit?

Efficiency ratios

Capital structure analysis

Profitability and cash flow analysis

94. According to the United Nations Principles for Responsible Investment (PRI), modern fiduciary duty would require investment managers to:

Support the stability and resilience of the financial system

Incorporate their own sustainability preferences into decision-making

Encourage high standards of ESG performance across the entire investment universe

95. Scorecards for ESG analysis are most likely used to translate:

Qualitative judgments on material ESG factors into numerical scores.

Quantitative judgments on material ESG factors into numerical scores.

Qualitative judgments on only the mandatory ESG factors into numerical scores.

96. EU regulators manage the independence of audits for public companies by:

requiring companies to rotate auditors after a maximum of ten years.

setting a monetary limit on advisory services provided to companies.

preventing audit partners from joining audit and risk committees as non-executive directors.

97. Active ownership most likely:

emphasizes negative screening.

prioritizes disinvestment activities.

uses a proxy voting strategy driven by a clear agenda.

98. Will including additional ESG constraints in a portfolio optimization model most likely affect tracking error?

Yes, it will reduce tracking error

Yes, it will increase tracking error

99. Under the disclosure guide for public equities published by the Pension and Lifetime Savings Association (PLSA). fund managers are expected to report on:

ESG integration only.

stewardship activities only.

both ESG integration and stewardship activities

100. Applying constraints in ESG portfolio optimization:

can be applied through exclusionary screening.

is currently confined to carbon data due to data limitations.

requires defining an upper and lower bound for a given variable.

Page 11 of 22

101. The International Corporate Governance Network's (ICGN) Model Mandate Initiative requests two areas of ESG-specific disclosure.

Which of the following is not one of the disclosures?

A comprehensive ESG-linked performance attribution analysis

A detailed disclosure of stewardship engagement and voting activity

The manager's assessment of ESG risks that are embedded in the portfolio

102. The Sustainability Accounting Standards Board's (SASB) Materiality Map:

Only covers equities as an asset class.

Assesses portfolio-level exposure to sustainability risks.

Identifies material issues and weights them for individual companies.

103. Which of the following social trends is more relevant to developed markets than emerging markets?

Digital disruption

Aging population

Controversial sourcing

104. The first step in the effective design of an investment mandate is determining the:

client's ESG investment beliefs

impact of ESG factors on risk and return characteristics

fund manager's investment approach to reflect ESG issues

105. Which of the following statements regarding governance is most accurate?

Governance helps to effectively manage environmental and social risks at the company level

All governance risks are eliminated in private equity because investors are directly represented in the board

Negative governance characteristics are recognized by increasing the level of confidence about future earnings

106. ESG rating providers:

Use information reported by companies only if it is audited

Use public documents obtained from nonprofit organizations

Do not use the same sets of CDP (formerly Carbon Disclosure Project) carbon data as an input

107. Which of the following strategies is most consistent with an investment mandate focusing on risk management?

Monitoring company managers

Tilt the portfolio towards desired ESG factors

Exclude certain companies with respect to ESG factors

108. Which of the following is most likely the easiest to demonstrate in attributing returns to ESG-related actions?

The value added by an engagement program

The performance drag or enhancement from excluding an industrial sector

The contribution of a particular ESG driver to the overall investment decision

109. Which of the following ESG screening methodologies is most likely to result in a well-diversified portfolio?

a relative basis only

an absolute basis only

both a relative basis and an absolute basis

110. Active ownership most likely:

Emphasizes negative screening.

Prioritizes disinvestment activities.

Uses a proxy voting strategy driven by a clear agenda.

Page 12 of 22

111. Which of the following statements about good corporate governance is most accurate?

No one model of corporate governance is better than another

A single-tier board structure is preferred over a two-tier board structure

A two-tier board structure is preferred over a single-tier board structure

112. Which of the following is an example of a stranded asset?

A coal power plant forced to close due to new carbon regulations

A technology company that loses market share to a competitor

A stock that experiences a short-term price decline

113. Which of the following statements is most accurate? The Kyoto Protocol was created to:

Encourage companies to make climate-related disclosures

Mobilize private sector finance for sustainable development

Commit industrialized countries to limit and reduce greenhouse gas emissions

114. In ESG integration, model adjustments are typically performed at the:

research stage

valuation stage.

portfolio construction stage

115. Among ESG data and research providers, traditional providers tend to:

Be highly automated.

Focus on small and less-covered companies.

Have a broader product offering and research focus.

116. In contrast to engagement, monitoring is more likely to result in:

changed company behaviors.

a two-way sharing of perspectives.

efficient capital allocation by investors.

117. Engagement is best described as a dialogue:

To inform incremental buy/hold/sell decisions

With a specific and targeted objective to achieve change

To understand a company’s stakeholders and its performance

118. For sovereign debt, the predominant approach to ESG investing is most likely:

Screening

Integration

Stewardship/Engagement

119. Which of the following is most likely the primary driver of ESG investment for a life insurer?

Reputational risk

Recognition of lengthy investment time horizons

Awareness of financial impacts of climate change

120. A challenge to ESG integration for investment managers is the:

Narrow range of possible ESG data.

Inherently subjective nature of ESG analysis.

High correlation among third-party ESG ratings.

Page 13 of 22

121. For a pension plan, the primary driver of ESG investment is most likely:

Fiduciary duty.

Loss aversion.

Personal ethics of its members.

122. Which of the following projects are most likely to be financed in the green bond market?

Real estate projects

Manufacturing projects

Communications technology projects

123. Considering ESG integration, an advantage relevant to private real estate markets but not equities and fixed income is most likely:

majority ownership

coverage of assets by ESG rating agencies

adherence to the Global Real Estate Sustainability Benchmark (GRESB) rather than the Sustainability Accounting Standards Board (SASB) framework

124. One of the mam principles of stewardship codes calls for institutional investors to:

regularly monitor investee companies

avoid considering conflicts of interest regarding stewardship matters.

act independently of other investors when escalating stewardship activity

125. Which of the following organizations is not a provider of both ESG-related and non-ESG-related products and services?

S&P

Factset

RepRisk

126. Green bonds funding projects with short-term environmental benefits but not long-term climate-resilient solutions are classified by the Center for International Climate Research as:

Yellow.

Light Green.

Medium Green.

127. Which of the following statements about corporate governance is most accurate?

Most markets lack an official corporate governance code

The Sarbanes-Oxley Act was the world's first formal corporate governance code

Corporate scandals have been a powerful driver for the development of corporate governance codes

128. Which of the following asset classes is most sensitive to climate-related transition risk?

Equity

Fixed income

Alternative investments

129. Competition and corruption within the general business environment is most likely a material governance factor for investments in:

infrastructure.

private equity.

sovereign debt.

130. A discount retailer facing high employee turnover due to poor working conditions will most likely experience:

significant liabilities

greater operating costs.

an adverse impact on revenues

Page 14 of 22

131. With regard to screening, exclusions that are not supported by global consensus are best described as:

universal exclusions

idiosyncratic exclusions

conduct-related exclusions

132. Which of the following does not explain why the attribution of returns of ESG factors is challenging?

It is difficult to demonstrate the value added by a program of engagement

It is difficult to assess the performance drag or enhancement from excluding a single sector

There is significant range of investment approaches included within the realm of ESG investing

133. Shocks around pay levels at newly privatized utilities led to the:

Dodd-Frank Act

Greenbury Report

Sarbanes-Oxley Act

134. Primary ESG data can be sourced:

Only from public documents.

Only directly from companies.

Both from public documents and directly from companies.

135. Compared to older, more established companies, start-up companies most likely:

have better systems in place to manage social risks in their supply chain.

find it harder to respond when a company with a disruptive business model enters their market.

have less effective systems in place to manage social risks in their supply chain and find it easier to respond when a company with a disruptive business model enters their market.

136. The change that occurs when new digital technologies and business models affect the value proposition of existing goods and services best describes:

automation.

digital disruption.

artificial intelligence.

137. A hurdle to adopting ESG investing is most likely a:

lack of suitable benchmarks.

focus on short-term performance.

lack of options outside of equities.

138. Compared to developed markets, a challenge of ESG investing in emerging markets is less:

Data disclosure

Data variability between countries

Data variability between companies

139. Regrowing previously logged forests is most likely an example of climate:

resilience.

change mitigation.

change adaptation.

140. Jurisdictions are most likely to impose extraterritorial laws in relation to:

bribery and corruption

paying suppliers appropriately and promptly.

upholding high standards in health and safety

Page 15 of 22

141. Are the following statements relating to investor engagement accurate?

Statement 1: Investors need to frame the engagement topic into a broader discussion around strategy and long-term financial performance with the management team.

Statement 2: Active investment houses are working to ensure that their portfolio managers can deliver stewardship alongside their regular monitoring of investee companies.

No, only Statement 1 is accurate

No, only Statement 2 is accurate

Yes, both statements are accurate

142. An investment in a fund developing low-cost community housing is best categorized as:

impact investing.

positive alignment.

thematic investing.

143. A materiality assessment to identify ESG issues impacting a company's financial performance is most likely measured in terms of:

likelihood only.

magnitude of impact only.

both likelihood and magnitude of impact.

144. Which of the following principles is most likely understated in stewardship codes drafted by the fund management industry? The principle requiring investors to:

regularly monitor investee companies.

have a public policy regarding stewardship.

manage their conflicts of interest regarding stewardship matters.

145. Is the following statement accurate? "Engagement is meant to preserve and enhance long-term value on behalf of the asset owner by focusing on factors such as capital structure and lobbying."

Yes

No, because engagement does not focus on lobbying

No, because engagement does not focus on capital structure

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

Are comparable

Only use data from audited data sources

Are performed using different methodologies

147. Considering the climate-related impacts on a company's financials and the impacts of a company on the climate best describes:

double materiality.

financial materiality.

dynamic materiality.

148. According to Mercer Consulting, which of the following asset classes has the highest availability of sustainability-themed strategies compared to its asset-class universe?

Real estate

Private debt

Infrastructure

149. Which of the following is an example of collaborative engagement?

Follow-on dialogue

Active public engagement

Housekeeping engagement

150. An asset manager considering environmental risks would most likely use:

qualitative analysis only

quantitative analysis only

both qualitative and quantitative analyses

Page 16 of 22

151. Which of the following is an example of the internalization of negative externalities?

A car manufacturer receiving subsidies for electric car production

A farmer paying taxes based on the level of soil degradation on its farmland

An electronics manufacturer retaining more employees after improving working conditions

152. The Kyoto Protocol established emissions targets that are:

binding on all countries.

voluntary for all countries.

binding only on developed countries.

153. The goal of limiting global warming to 1.5 °C was first set out in the:

Kyoto Protocol.

Paris Agreement.

Glasgow Climate Pact.

154. The potential impacts of climate risk on asset allocation strategies are:

local but not systemic.

systemic but not local.

both local and systemic.

155. Which of the following is an advantage of using ESG index-based strategies?

Slightly lower fee structures compared to other index-based strategies

Lower costs compared to discretionary, actively managed ESG strategies

More focused stewardship activities with companies compared to actively managed ESG strategies

156. Tools that evaluate companies, countries, and bonds based on their exposure or involvement-specific factors, sectors, products, or services are referred to as:

ESG data.

ESG ratings.

ESG screening.

157. Which of the following principles of the UK Stewardship Code could be considered controversial?

Proxy voting

Collective engagement

Monitoring of investee companies

158. Excluding tobacco from the investment universe is an example of which of the following ESG screening approaches?

Universal exclusion

Idiosyncratic exclusion

Conduct-related exclusion

159. The United Nations Sustainable Development Goals (SDGs) are particularly aimed at

investors

corporations.

governments

160. An advantage of the carbon footprinting approach to environmental risk analysis is that it allows for:

comparisons to global benchmarks.

measuring and valuing nature's role in decision-making.

measuring potential investment risks related to the physical impacts of climate change.

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161. Commodity price volatility resulting in profits vulnerability for companies is most likely an example of financial risk transmission by:

micro-channel

macro-channel

company actions

162. Which of the following is an example of a bottom-up ESG engagement approach? An asset manager:

joining the PRI Collaboration Platform

sending out a letter to the CFOs of all investee companies

initiating dialogue with an investee company's investor relations team

163. The planet’s largest carbon reservoir is the:

Ocean

Rainforest

Atmosphere

164. What order should investors follow when implementing social factors in their investment decisions?

Process 1: Assess the critical social factors in the supply chain

Process 2: Assess how exposed companies are to sector-specific social factors

Process 3: Assess which social factors are most financially material in a particular industry

Process 1, followed by Process 2, and then Process 3

Process 2, followed by Process 1, and then Process 3

Process 3, followed by Process 2, and then Process 1

165. Advantages of investing in ESG indexes include:

A standardized methodology for ESG performance.

Identifying firms or countries that prioritize sustainability.

High transparency and disclosure of precise methodologies.

166. Which of the following is a success factor characteristic of investor collaboration? Investors should have:

an engagement approach that is bespoke to the target company.

clear leadership with appropriate relationships, skills, and knowledge.

objectives that are linked to material strategic and governance issues.

167. Which of the following statements about integrating corporate governance into the investment decision-making process is most accurate?

When talked about as the quality of management, corporate governance refers to a company's culture of not taking excessive risk

As a risk assessment tool, analysis of corporate governance may represent the level of confidence about a company's future earnings

When directly built into a valuation model, analysis of corporate governance improves the accuracy of the investment thesis but does not affect the discount rate applied

168. With reference to data security and customer privacy issues, a technology company in the research and development stage with no commercially marketed products is most likely to have:

low risk exposure to this factor in the short run

medium risk exposure to this factor in the short run

high risk exposure to this factor in the short run

169. 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:

Impact investing.

Best-in-class investing.

Norms-based screening.

170. Company reporting and transparency are led by the:

board

auditor

management team

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171. Determining which ESG issues are material:

Involves judgment

Excludes impacts on short-term financial performance

Is a process that is independent of a company's industry and business model

172. ESG integration is most likely enforced by regulating:

Stewardship

Asset owners

Corporate disclosure

173. Interest by retail investors in responsible investing has:

been declining over time

remained stable over time

been growing over time

174. A company is accused of surveying employees to prevent them from forming a union. The decision of an asset manager to divest from holding shares in the company is an example of:

universal exclusion.

idiosyncratic exclusion.

conduct-related exclusion.

175. The Corporate Sustainability Reporting Directive (CSRD):

applies to all entities with principal activities in the E

requires that reported sustainability issues are audited.

pre-dates the Non-Financial Reporting Directive (NFRD).

176. According to the Taskforce on Nature-Related Financial Disclosures (TNFD), which of the following drivers of nature change can directly translate into a positive impact on circular economy principles?

Pollution

Resource use

Climate change

177. ESG integration should be considered as part of:

systematic strategies only.

discretionary strategies only.

both systematic strategies and discretionary strategies.

178. In the context of effective corporate governance, the use of alternative performance metrics (APMs) most directly raises questions about:

Board structure

Director independence

Reporting and transparency

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

Life insurers

Foundations

General insurers

180. A challenge for the positive alignment ESG approach is the:

relative complexity of implementation

diversity of ESG ratings methodologies

reliance on stewardship and engagement activities

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181. Which of the following is an example of secondary data?

A news article

A letter to shareholders

A Bloomberg Disclosure score

182. According to the consulting firm McKinsey & Company, which of the following is a dimension of sustainable investing applied by fund managers?

Public reporting

Security valuation

Strategic asset allocation

183. Pension funds are most likely classified as:

asset owners

fund promoters

asset managers

184. Stewardship teams with a governance heritage tend to:

be organized by sector.

focus first on individual companies.

start the dialogue with investor relations and then escalate upward.

185. The adoption of ESG investing by retail investors has generally been:

slower than its adoption by institutional investors.

at the same pace as its adoption by institutional investors.

faster than its adoption by institutional investors.

186. A portfolio manager of an ESG fund attempting to outperform the general market is most likely to:

ignore non-financial risks.

apply a lower discount rate to companies that poorly manage social factors.

invest in companies that identify social trends early on and adapt their strategy.

187. Which of the following private equity investors is most susceptible to allegations of greenwashing? An investor that views ESG integration as a way of:

Adding value

Managing risk

Attracting clients

188. When accounting for a critical weakness in a company's environmental management process, an analyst using a discounted cash flow (DCF) valuation model should:

decrease the cost of capital.

not change the cost of capital.

increase the cost of capital.

189. Which of the following is most likely associated with positive screening?

Green investing

Thematic investing

Best-in-class investing

190. According to the Principles for Responsible Investment, which of the following engagement dynamics creates value?

Political dynamics only

Learning dynamics only

Both political dynamics and learning dynamics

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191. Flooding, droughts, and storms are examples of severe weather events arising from:

Physical risk only

Transition risk only

Both physical risk and transition risk

192. A governance structure that features non-board members on the nominations committee is most likely present in:

Italy.

Sweden.

Australia.

193. The consulting firm McKinsey & Company includes transparency as part of which of the following dimensions of an asset manager's investment approach?

Public reporting

Tools and processes

Resources and organization

194. Integrating the impact of material ESG factors into traditional financial analysis for a company with strong ESG practices most likely.

leads to a lower estimate of intrinsic value

has no impact on intrinsic value

leads to a higher estimate of intrinsic value

195. Which of the following ESG integration techniques is an example of policy engagement? An investor:

Embedding ESG into their strategic asset allocation program

Responding to a regulator’s public consultation on ESG issues

Voting on resolutions at an investee company's annual general meeting

196. The divergence of ratings among ESG providers most likely.

enhances the credibility of empirical research

ensures that ESG performance is reflected in asset prices.

hampers the ambition of companies to improve their ESG performance

197. For a board to be successful the most important type of diversity needed is:

age

gender

thought

198. To address conflicts of interest and maintain the independence of audit firms, EU law requires firms to abide by:

A list of allowable non-audit services only.

A monetary limit on the overall value of non-audit services only.

Both a list of allowable non-audit services and a monetary limit on the overall value of non-audit services.

199. The process of ESG portfolio optimization requires:

targeting sustainability-aligned themes as means to construct a portfolio

applying a fixed decision on specific securities based on the ESG variable chosen

defining an upper and lower bound for a given ESG variable and applying it on an absolute or benchmark relative basis

200. Which of the following is most likely an example of a negative externality?

Impairment costs incurred by a company due to regulatory changes

Direct costs incurred by a company in reducing environmental damages

Indirect costs incurred by third parties due to environmental damages caused by a company

Page 21 of 22

201. Which of the following ESG factors has the clearest link to corporate financial performance?

Social

Governance

Environmental

202. A pension fund concerned about climate change will most likely:

Accept long-term returns below the benchmark.

Use screens to exclude fossil fuel investments.

Increase investments in sovereign debt of countries where the physical impacts of climate change are likely to be most acute.

203. When constructing net zero portfolios, investors:

Can follow a clearly accepted standard for netting exposures to carbon risk

Typically agree on how to best account for the role that derivatives and shorts play

Will tend to have overweight equity allocations in the technology sector if they exclude Scope 3 emissions

204. Compared to stewardship codes drafted by the fund management industry, stewardship codes with regulatory backing most likely place greater emphasis on:

Disclosure of voting activity.

Conflicts of interest management.

Escalation activities to protect and enhance shareholder value.

205. Which of the following initiatives is most closely associated with the increased prevalence of antimicrobial resistance?

The Bangladesh Accord

Access to Medicine Index

Farm Animal Investment Risk and Return

206. Assessing the alignment of local labor laws with International Labour Organization (ILO) principles is an example of social analysis at the:

sector level

country level.

company level

207. In ESG integration, which of the following best describes a data-informed analytical opinion designed to support investment decision-making?

ESG screening

Integrated research

Voting and governance advice

208. Which of the following most likely indicates strong corporate governance? A company board with:

gender diversity.

a chair who also serves as the company's CE

directors that have similar professional backgrounds.

209. Investors in a natural gas power plant identified a material risk that clients will switch to lower greenhouse gas (GHG) energy sources in the future.

This risk is best incorporated in the financial modeling of:

revenues

provisions

operating expenditures

210. The financial crisis of 2008 led to which of the following legislative changes?

The Cadbury Code

The Dodd-Frank Act

The Greenbury Report

Page 22 of 22

211. Which of the following is most likely an example of quantitative ESG analysis?

Issuer-reported carbon emissions

Executive compensation policies linked to progress on ESG-related goals

The presence and credibility of investments, policies, and commitments to ESG-related goals

212. Which of the following statements regarding corporate governance is most accurate?

Board appraisals are most effective when led by an internal facilitator.

A board should be independent of the decisions of the previous boards.

Gender is the most important type of diversity needed for a board to be successful.

213. Pension fund trustees are most likely to face fiduciary legal risks related to:

Climate change.

Choice of benchmarks.

A lack of clear signals from fund managers that they are interested in ES

214. Which of the following is one of the five main drivers of nature change described by the Taskforce on Nature-related Financial Disclosures (TNFD)?

Ecosystem services

Invasive alien species

Transmission channels

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