HOT VALID ESG-INVESTING GUIDE FILES | PASS-SURE ESG-INVESTING CERTIFIED: CERTIFICATE IN ESG INVESTING

Hot Valid ESG-Investing Guide Files | Pass-Sure ESG-Investing Certified: Certificate in ESG Investing

Hot Valid ESG-Investing Guide Files | Pass-Sure ESG-Investing Certified: Certificate in ESG Investing

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Tags: Valid ESG-Investing Guide Files, ESG-Investing Certified, Related ESG-Investing Certifications, Pass4sure ESG-Investing Pass Guide, Reliable ESG-Investing Exam Tutorial

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CFA Institute ESG-Investing Exam Syllabus Topics:

TopicDetails
Topic 1
  • Environmental Factors: This section examines environmental elements, covering systemic links, material impacts, and major trends for ESG Consultants. This section also reviews techniques for evaluating environmental impacts at the national, sectoral, and organizational levels.
Topic 2
  • Understanding Governance Factors: This section includes governance elements for ESG Investment Consultants, including core characteristics, governance models, and material impacts. It discusses how governance factors influence investment choices.
Topic 3
  • Engagement and Stewardship: This section explores the foundations of investor engagement and stewardship, emphasizing their importance and practical application.
Topic 4
  • Overview of ESG Investing and the ESG Market: This section tests ESG Investment Managers and delves into responsible investment strategies, examining how environmental, social, and governance (ESG) elements shape the investment ecosystem.

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CFA Institute ESG-Investing Certified - Related ESG-Investing Certifications

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CFA Institute Certificate in ESG Investing Sample Questions (Q275-Q280):

NEW QUESTION # 275
A company reduces water usage and increases usage of more expensive resources after regulations become more stringent. This most likely impacts:

  • A. operating expenditure
  • B. provisions
  • C. revenues

Answer: A

Explanation:
When a company reduces water usage and increases the use of more expensive resources due to more stringent regulations, this directly impacts its operating expenditure (OPEX). Here's a detailed breakdown:
* Regulatory Compliance:
* As regulations become stricter, companies often need to adopt new technologies or practices that may be more costly. This increase in cost is directly related to the day-to-day operations of the company, affecting operating expenditures.
* For example, implementing water-saving technologies or switching to sustainable raw materials that are more expensive than traditional ones will raise the ongoing costs associated with production.
* Impact on Revenues:
* While reducing water usage and adhering to stricter regulations can have long-term benefits for the company, such as improved sustainability ratings and possibly higher market valuation, these changes do not typically have an immediate direct impact on revenues. Revenues are more directly influenced by sales and market demand.
* Impact on Provisions:
* Provisions are set aside for future liabilities or losses, such as environmental remediation costs or legal disputes. While stricter regulations might eventually lead to increased provisions, the immediate impact of switching to more expensive resources affects operating expenditure first.
CFA ESG Investing References:
* The CFA ESG Investing curriculum highlights the importance of understanding how regulatory changes can affect various aspects of a company's financials. Operating expenditure is often highlighted as the most immediately impacted area when companies adapt their operations to comply with new environmental standards.


NEW QUESTION # 276
A portfolio manager of an ESG fund attempting to outperform the general market is most likely to:

  • A. invest in companies that identify social trends early on and adapt their strategy.
  • B. apply a lower discount rate to companies that poorly manage social factors.
  • C. ignore non-financial risks.

Answer: A

Explanation:
To outperform the market, an ESG fund manager focuses on companies that not only meet financial criteria but also recognize and adapt to social trends, positioning themselves as long-term leaders in their industry. (ESGTextBook[PallasCatFin], Chapter 8, Page 406)


NEW QUESTION # 277
Exclusionary screening:

  • A. reduces portfolio tracking error and active share.
  • B. employs a given ESG rating methodology to identify companies with better ESG performance relative to its industry peers.
  • C. is the oldest and simplest approach within responsible investment.

Answer: C

Explanation:
Exclusionary screening, also known as negative screening, is a responsible investment strategy where certain companies, sectors, or practices are excluded from an investment portfolio based on specific ethical guidelines or criteria. It is widely regarded as the oldest and simplest approach within the realm of responsible and sustainable investing.
1. Oldest and Simplest Approach: Exclusionary screening is indeed the oldest and simplest approach within responsible investment. This method has been used for decades, with early examples including the exclusion of companies involved in controversial activities such as tobacco, alcohol, or weapons production. The simplicity of this approach lies in its straightforward criteria: if a company or sector falls within the excluded category, it is not considered for investment.
2. Reducing Portfolio Tracking Error and Active Share: Contrary to option A, exclusionary screening does not necessarily reduce portfolio tracking error and active share. In fact, it can increase tracking error and active share by deviating from the benchmark index. This is because excluding certain companies or sectors means that the portfolio may differ significantly from the benchmark, potentially increasing both tracking error and active share.
3. ESG Rating Methodology: Option C describes a different approach known as positive or best-in-class screening, where a given ESG rating methodology is employed to identify and invest in companies with better ESG performance relative to their industry peers. This is distinct from exclusionary screening, which is based on predefined ethical or moral criteria rather than relative ESG performance.
References from CFA ESG Investing:
Exclusionary Screening: The CFA Institute describes exclusionary screening as the process of excluding certain sectors, companies, or practices from a portfolio based on specific ethical, moral, or religious criteria.
This method has historical roots and is considered the simplest and most traditional form of responsible investment.
Positive/Best-in-Class Screening: The CFA curriculum differentiates exclusionary screening from positive screening, where investments are made in companies with superior ESG performance within their sectors, using ESG rating methodologies to guide the selection process.
In conclusion, exclusionary screening is correctly identified as the oldest and simplest approach within responsible investment, making option B the verified answer.


NEW QUESTION # 278
In the transition to a low-carbon economy, a coal-powered utility without a mitigation strategy will most likely pose the highest risk to its:

  • A. Common shareholders.
  • B. Debtholders.
  • C. Preference shareholders.

Answer: A

Explanation:
In the shift to a low-carbon economy, a coal-powered utility without a mitigation strategy faces the highest risk to common shareholders (Option B) because:
Stock prices decline due to stranded asset risks, regulatory fines, and declining demand.
Common shareholders are last in the capital structure and bear the highest financial risk if the company struggles or faces bankruptcy.
Option A (Debtholders) face some risk, but they have priority in liquidation.
Option C (Preference shareholders) have fixed dividends and higher priority than common stockholders.
References:
PRI Guide to Climate Transition Risks in Utilities
TCFD Climate Transition Risk Reports
MSCI ESG Ratings: Fossil Fuel Transition Risk Analysis


NEW QUESTION # 279
Which of the following social factor scenarios is most likely to affect revenue forecasting?

  • A. Fines related to occupational health and safety failures
  • B. Consumer boycotts related to controversial sourcing
  • C. High employee turnover related to poor human capital management

Answer: B

Explanation:
Social Factor Scenarios Affecting Revenue Forecasting:
Revenue forecasting can be influenced by various social factors that impact a company's sales and customer base. Among the given options, consumer boycotts related to controversial sourcing are most likely to directly affect revenue forecasting.
1. Consumer Boycotts: Consumer boycotts occur when customers refuse to purchase a company's products or services due to disagreements with its practices or policies. In the case of controversial sourcing, if a company is perceived to engage in unethical or unsustainable sourcing practices, it can lead to significant public backlash and consumer boycotts. This directly affects the company's revenue as it loses sales and market share.
2. Fines Related to Occupational Health and Safety Failures: While fines due to occupational health and safety failures represent a financial cost and can damage a company's reputation, they typically have a more direct impact on expenses and liabilities rather than immediate revenue.
3. High Employee Turnover: High employee turnover due to poor human capital management affects operational efficiency and costs related to hiring and training. However, its impact on revenue is more indirect compared to consumer boycotts.
Reference from CFA ESG Investing:
Revenue Impact of Social Factors: The CFA Institute discusses how social factors, such as consumer perceptions and behaviors, can significantly impact a company's revenue. Consumer boycotts can lead to immediate and noticeable reductions in sales, making this scenario particularly relevant for revenue forecasting.
ESG Integration: Understanding the direct and indirect effects of social factors on financial performance is crucial for integrating ESG considerations into revenue forecasting and overall financial analysis.
In conclusion, consumer boycotts related to controversial sourcing are most likely to affect revenue forecasting, making option A the verified answer.


NEW QUESTION # 280
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