QUESTION: 81

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

Answer(s): B

Explanation:

A discount retailer facing high employee turnover due to poor working conditions will most likely experience greater operating costs. High employee turnover can lead to several cost-related challenges that impact the overall efficiency and profitability of the business.

Recruitment and Training Costs: High turnover rates necessitate frequent recruitment and training of new employees. These activities incur significant costs in terms of time, resources, and money.

Productivity Losses: Frequent turnover can lead to disruptions in operations and lower productivity. New employees may take time to reach the productivity levels of their predecessors, leading to inefficiencies.

Quality and Customer Service: Poor working conditions and high turnover can negatively affect the quality of service and customer satisfaction. Consistent service quality is critical in retail, and turnover can result in inconsistent customer experiences, potentially reducing revenue.

Reference:

MSCI ESG Ratings Methodology (2022) - Discusses the financial impact of high employee turnover on operating costs and overall business performance.

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QUESTION: 82

To fall in scope of mandatory compliance with the EU's Corporate Sustainability Reporting Directive (CSRD), companies would need to meet which of the following conditions?

Condition 1 EUR40 million in net turnover

Condition 2 EUR20 million in assets

Condition 3 250 or more employees

Any one of these conditions
Any two of these conditions
All three of these conditions

Answer(s): B

Explanation:

The EU's Corporate Sustainability Reporting Directive (CSRD) mandates that companies need to meet at least two of the following three criteria to fall under its scope of mandatory compliance:

EUR 40 million in net turnover

EUR 20 million in assets

250 or more employees

This requirement is designed to ensure that significant entities are subject to sustainability reporting, reflecting their potential impact on and responsibility towards environmental, social, and governance (ESG) factors.

Reference:

The CSRD directive outlines the scope and criteria for mandatory sustainability reporting within the

EU.

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QUESTION: 83

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

Answer(s): C

Explanation:

Negative externalities refer to the adverse effects or costs that are incurred by third parties due to the actions or activities of a company, without these costs being reflected in the company's financial statements. These are costs borne by society or the environment rather than the company itself. Examples include pollution, health costs due to emissions, and environmental degradation.

Reference:

MSCI ESG Ratings Methodology emphasizes understanding externalities, including environmental impacts, as significant ESG risks that can translate into financial risks over time.

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QUESTION: 84

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

age
gender
thought

Answer(s): C

Explanation:

Diversity of thought is crucial for a board's success as it brings in varied perspectives, innovative ideas, and a holistic approach to problem-solving.
While age and gender diversity are important, diversity of thought ensures that the board benefits from a range of experiences and viewpoints, leading to better decision-making and governance.

Reference:

Emphasizing the importance of diverse perspectives in governance and decision-making is consistent with principles found in ESG and sustainable investing frameworks.

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Free ESG-Investing Exam Braindumps (page: 21)

QUESTION: 81

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QUESTION: 82

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QUESTION: 83

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QUESTION: 84

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