QUESTION: 25

Which of the following is an environmental megatrend that has a severe social impact?

Urbanization
Globalization
Mass migration

Answer(s): C

Explanation:

Mass migration is an environmental megatrend that has a severe social impact. Environmental changes, such as climate change, natural disasters, and resource depletion, can force large populations to migrate, leading to significant social consequences.

Displacement and Refugees: Environmental degradation and climate-related events can displace millions of people, creating large numbers of refugees and internally displaced persons. This leads to humanitarian crises and puts pressure on host communities and countries.

Social and Economic Strain: Mass migration can strain social and economic systems in both the areas people migrate from and to. It can lead to increased competition for jobs, housing, and resources, and can also cause social tensions and conflicts.

Cultural Impact: Migration can impact cultural dynamics, leading to changes in community structures and potential conflicts over cultural integration and identity. The social fabric of both sending and receiving regions can be significantly affected.

Reference:

MSCI ESG Ratings Methodology (2022) - Discusses the social impacts of environmental megatrends, including mass migration, highlighting the challenges and risks associated with large-scale human displacement.

ESG-Ratings-Methodology-Exec-Summary (2022) - Provides insights into the social and economic implications of environmental changes and the resulting migration patterns.

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QUESTION: 26

What type of provider of ESG-related products and services is CDP (formerly known as Carbon Disclosure Project)?

Nonprofit
Large for-profit
Boutique for-profit

Answer(s): A

Explanation:

CDP (formerly known as the Carbon Disclosure Project) is a nonprofit organization. Here's a detailed explanation:

Nonprofit Organization:

CDP is a non-governmental organization (NGO) that supports companies, financial institutions, and cities in disclosing and managing their environmental impacts. It runs a global environmental disclosure system, which involves nearly 10,000 companies, cities, states, and regions reporting on their risks and opportunities related to climate change, water security, and deforestation.

CFA ESG Investing

Reference:

The CFA ESG Investing curriculum recognizes CDP as a key player in environmental disclosure and management, emphasizing its role as a nonprofit organization facilitating transparency and accountability in environmental impacts.

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QUESTION: 27

The investor initiative FAIRR focuses on screening out companies

mining ancestral lands.
using suppliers that do not pay a living wage.
exhibiting poor antibiotic stewardship in animal farming

Answer(s): C

Explanation:

The FAIRR initiative focuses on screening out companies exhibiting poor antibiotic stewardship in animal farming. Here's why:

FAIRR Initiative:

FAIRR (Farm Animal Investment Risk & Return) is an investor network that aims to address risks related to intensive livestock production. One of its key focus areas is antimicrobial resistance, which includes poor antibiotic stewardship in animal farming.

CFA ESG Investing

Reference:

The CFA ESG Investing curriculum highlights the FAIRR initiative's role in promoting responsible investment by addressing issues like antibiotic use in animal farming, emphasizing the health and environmental risks associated with poor practices in this area.

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QUESTION: 28

An ESG scorecard for sovereign debt issuers has the following information:

Country 1 No carbon policy and high corruption risk

Country 2 High-level carbon policy and low corruption risk

Country 3 Detailed carbon policy and low corruption risk

Based only on this information, the country with the lowest ESG risk is:

Country 1.
Country 2
Country 3

Answer(s): C

Explanation:

Based on the provided information, Country 3, with a detailed carbon policy and low corruption risk, has the lowest ESG risk. Here's the reasoning:

Carbon Policy and Corruption Risk:

A high-level or detailed carbon policy indicates a strong commitment to addressing climate change, which reduces environmental risk.

Low corruption risk indicates good governance, which further reduces overall ESG risk.

Therefore, Country 3, which has both a detailed carbon policy and low corruption risk, presents the lowest ESG risk compared to the others.

CFA ESG Investing

Reference:

The CFA ESG Investing curriculum emphasizes the importance of robust carbon policies and low corruption risks in assessing the ESG profiles of sovereign debt issuers. Strong environmental and governance practices are key indicators of low ESG risk.

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Free ESG-Investing Exam Braindumps (page: 7)

QUESTION: 25

Explanation:

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QUESTION: 26

Explanation:

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QUESTION: 27

Explanation:

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QUESTION: 28

Explanation:

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