QUESTION: 237

The United Nations Framework Convention on Climate Change (UNFCCC) aims to:

operationalize the Paris Agreement for the business world
promote material climate change disclosures in mainstream reporting
stabilize greenhouse gas (GHG) emissions to limit man-made climate change

Answer(s): C

Explanation:

The United Nations Framework Convention on Climate Change (UNFCCC) aims to stabilize greenhouse gas (GHG) emissions to limit man-made climate change.

UNFCCC Objectives: The primary objective of the UNFCCC is to stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. This goal is articulated in Article 2 of the convention.

Climate Stabilization: The stabilization of GHG emissions is crucial to mitigate the adverse effects of climate change, including extreme weather events, rising sea levels, and disruptions to ecosystems and agriculture.

International Cooperation: The UNFCCC provides a framework for international cooperation to combat climate change, involving commitments from countries to reduce GHG emissions and promote sustainable practices.

CFA ESG Investing

Reference:

The CFA Institute's materials on ESG investing emphasize the importance of understanding global frameworks like the UNFCCC in shaping climate-related policies and investment strategies. The stabilization of GHG emissions is a key aspect of global efforts to mitigate climate change risks and is fundamental to sustainable investing practices.

Conclusion: The UNFCCC's role in stabilizing GHG emissions aligns with global climate goals and supports the transition to a lower-carbon economy, making it a critical consideration for investors integrating ESG factors into their decision-making processes.

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QUESTION: 238

Based on the Sustainability Accounting Standards Board's (SASB) materiality map, which of the following is a material ESG risk for healthcare companies?

Customer welfare
Competitive behavior
Greenhouse gas (GHG) emissions

Answer(s): A

Explanation:

According to the Sustainability Accounting Standards Board (SASB) materiality map, certain ESG

issues are deemed material for specific industries. For healthcare companies, customer welfare is a significant material ESG risk. This includes aspects such as patient safety, quality of care, access to healthcare, and patient privacy. These factors are critical in the healthcare sector due to the direct impact on patients' well-being and regulatory scrutiny.

Customer welfare (A): This is a core material issue for healthcare companies as it directly impacts patient safety and quality of care, which are critical aspects of healthcare services.

Competitive behavior (B): While competitive behavior can be material in many industries, it is not the primary material ESG risk for healthcare companies according to SASB's materiality map.

Greenhouse gas (GHG) emissions (C): GHG emissions are more material for industries with significant energy consumption and environmental impact, such as utilities and manufacturing.
While healthcare companies do have environmental impacts, customer welfare is more directly relevant to their core operations.

Reference:

Sustainability Accounting Standards Board (SASB) Materiality Map

CFA ESG Investing Principles

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QUESTION: 239

As a result of an aging population, which of the following sectors is most likely to experience slower growth?

Healthcare
Consumer goods
Wealth management

Answer(s): B

Explanation:

An aging population affects various sectors differently. The sector most likely to experience slower growth as a result of an aging population is consumer goods.

Healthcare (A): This sector is likely to experience growth due to increased demand for healthcare services, products, and related support as the population ages.

Consumer goods (B): Consumer goods, particularly those targeted at younger demographics or non- essential items, may see slower growth. An aging population typically spends less on consumer goods and more on healthcare and services tailored to their needs.

Wealth management (C): This sector might experience growth as older populations often require wealth management services to handle retirement funds, estate planning, and other financial services.

Reference:

CFA ESG Investing Principles

Demographic studies on aging populations and economic impact

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QUESTION: 240

Analyzing a portfolio's social impact exposure is best achieved by first understanding material social topics at:

the company and country levels, then the sector level
the country and sector levels, then the company level
the company and sector levels, then the country level

Answer(s): B

Explanation:

Analyzing a portfolio's social impact exposure involves understanding the broader social context before drilling down to individual company specifics. The best approach is to first understand the material social topics at the country and sector levels, then the company level.

Country and sector levels, then the company level (B): Starting at the country level provides insight into the social issues prevalent in the region, influenced by local laws, regulations, and cultural norms. Next, analyzing at the sector level helps to identify sector-specific social risks and opportunities. Finally, understanding these issues at the company level allows for a more detailed analysis of how individual companies manage these social impacts.

Company and country levels, then the sector level (A): This approach might miss out on sector- specific social issues that are critical for a comprehensive analysis.

Company and sector levels, then the country level (C): This approach overlooks the broader country- level social context, which can significantly influence sector and company-level social impacts.

Reference:

CFA ESG Investing Principles

MSCI ESG Ratings Methodology (June 2022)

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Free ESG-Investing Exam Braindumps (page: 60)

QUESTION: 237

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QUESTION: 238

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QUESTION: 239

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QUESTION: 240

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