QUESTION: 265

Which of the following scenarios best illustrates the concept of a `just' transition?

A region transitioning to solar power subsidizes businesses to install solar arrays
A region transitioning to a smaller public sector workforce funds outplacement programs for displaced office workers
A region transitioning away from iron ore mining helps displaced miners to work in the safe decommission of abandoned mines

Answer(s): C

Explanation:

The concept of a `just' transition refers to ensuring that the shift towards a sustainable and low- carbon economy is fair and inclusive, addressing the social and economic impacts on workers and communities.

Just transition (C): Helping displaced miners transition to safe decommissioning of abandoned mines ensures that these workers are provided with new employment opportunities that utilize their skills, while also addressing environmental remediation. This approach highlights the social responsibility of managing the transition's impacts on workers and communities.

Subsidizing businesses for solar arrays (A): While beneficial for promoting renewable energy, this does not directly address the social impacts on displaced workers.

Funding outplacement programs for public sector workers (B): While important, this example does not specifically address the environmental aspects of a just transition, which encompasses both social and environmental justice.

Reference:

CFA ESG Investing Principles

Just Transition Centre and International Labour Organization (ILO) guidelines on just transition

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QUESTION: 266

As policies on ESG issues and financial regulation across countries reach maturity, which of the following is least likely to occur?

Changing from voluntary to mandatory disclosures
Moving from policy to implementation and reporting
Moving away from "comply and explain" regulation to "comply or explain" regulation

Answer(s): C

Explanation:

As policies on ESG issues and financial regulation across countries reach maturity, the least likely occurrence is moving away from "comply and explain" regulation to "comply or explain" regulation.

Current Trend: The current trend in ESG policies and regulations is toward more stringent requirements, often moving from voluntary to mandatory disclosures (A) and from policy formulation to implementation and reporting (B).

Regulatory Frameworks: "Comply or explain" regulation typically requires companies to either comply with the set regulations or explain why they have not done so. This approach is generally seen as a flexible yet accountable method, encouraging adherence to ESG standards while allowing for some flexibility.

"Comply and Explain" Approach: Moving away from "comply and explain" to "comply or explain" would reduce this flexibility. As regulations mature, the trend is towards ensuring more stringent compliance rather than offering more leniency, making it unlikely that there would be a shift away from the more rigorous "comply or explain" approach.

CFA ESG Investing

Reference:

The CFA Institute's discussions on regulatory developments highlight the evolution of ESG regulations towards more accountability and transparency. The trend is towards enhancing compliance mechanisms rather than loosening them.

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QUESTION: 267

Which of the following UK Stewardship Code principles is not addressed in the European Fund and Asset Management Association (EFAMA) Code? The principle that institutional investors should:

monitor their investee companies
report periodically on their stewardship and voting activities
have a robust policy on managing conflicts of interest in relation to stewardship

Answer(s): C

Explanation:

The principle that institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship is not addressed in the European Fund and Asset Management Association (EFAMA) Code.

UK Stewardship Code: This code includes principles that address monitoring investee companies (A), reporting periodically on stewardship and voting activities (B), and having robust policies on managing conflicts of interest in relation to stewardship (C).

EFAMA Code: While the EFAMA Code covers monitoring and reporting on stewardship activities, it does not explicitly address the need for a robust policy on managing conflicts of interest.

CFA ESG Investing

Reference:

The CFA Institute's resources on stewardship codes and principles provide a detailed comparison of various stewardship codes globally, including those by the UK and EFAMA. The UK Stewardship Code is noted for its comprehensive approach, including conflict of interest management, which is less emphasized in the EFAMA Code.

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QUESTION: 268

According to the Stockholm Resilience Centre, which of the following planetary boundaries have already been crossed as a result of human activity?

Climate change only
Loss of biosphere integrity only
Both climate change and loss of biosphere integrity

Answer(s): C

Explanation:

According to the Stockholm Resilience Centre, both climate change and loss of biosphere integrity are planetary boundaries that have already been crossed as a result of human activity.

Planetary Boundaries Framework: The Stockholm Resilience Centre's planetary boundaries framework identifies critical thresholds in Earth system processes that should not be crossed to avoid catastrophic environmental changes.

Crossed Boundaries: Both climate change and loss of biosphere integrity (biodiversity loss) are identified as boundaries that have already been transgressed due to human activities, leading to significant environmental and ecological disruptions.

CFA ESG Investing

Reference:

The CFA Institute's discussions on environmental risks highlight the importance of understanding planetary boundaries in assessing long-term sustainability risks and integrating these considerations into investment decisions.

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Free ESG-Investing Exam Braindumps (page: 67)

QUESTION: 265

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QUESTION: 266

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QUESTION: 267

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QUESTION: 268

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