QUESTION: 93

When searching for an asset manager with an ESG approach, in the request for proposal (RFP) an institutional asset owner would most appropriately ask:

which broad market index the asset manager tracks
detailed questions on specific portfolio holdings of the asset manager
if the asset manager aims for positive, measurable ESG outcomes beyond financial returns

Answer(s): C

Explanation:

When searching for an asset manager with an ESG approach, it is essential for an institutional asset owner to understand whether the asset manager's strategy aligns with their sustainability objectives. The most appropriate question to ask in the RFP is whether the asset manager aims for positive, measurable ESG outcomes beyond financial returns. This question assesses the commitment to achieving concrete ESG results, which is a critical factor in evaluating the manager's integration of ESG factors into their investment process. Detailed questions about portfolio holdings or which broad market index the manager tracks are less relevant to assessing the ESG integration.

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QUESTION: 94

Companies may be excluded from the UK Modern Slavery Act on the basis of:

size only
sector only.
both size and sector

Answer(s): A

Explanation:

Under the UK Modern Slavery Act, companies are required to publish a statement on the steps they have taken to ensure that slavery and human trafficking are not taking place in their business or supply chains. The Act applies to businesses with a turnover of £36 million or more, making size the primary basis for exclusion. There are no sector-specific exclusions mentioned in the Act.

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QUESTION: 95

Which of the following is most likely a reason for concern regarding the quality of a company's ESG disclosures?

The inclusion of audited ESG data
Competitors have stronger disclosure standards
There is written commitment to improve future ESG disclosure

Answer(s): B

Explanation:

A reason for concern regarding the quality of a company's ESG disclosures would be if competitors have stronger disclosure standards. This indicates that the company may be lagging in transparency and accountability compared to its peers, potentially hiding risks or missing opportunities to improve ESG performance.
While audited data and commitments to future improvements are positive signs, lagging behind competitors is a significant red flag.

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QUESTION: 96

Norms-based screening is the largest investment strategy in

japan
europe
the united states

Answer(s): B

Explanation:

Norms-based screening is the largest investment strategy in Europe. This approach involves screening investments against specific social, environmental, and governance criteria based on international norms and standards. Europe has a strong regulatory and cultural emphasis on responsible investing, which is reflected in the widespread adoption of norms-based screening.

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