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Free ESG-Investing Exam Braindumps (page: 3)

Page 2 of 118
PDF with 468 Questions

Which of the following greenhouse gases (GHGs) has the longest lifetime in the atmosphere?

  1. Methane
  2. Carbon dioxide
  3. Fluorinated gas

Answer(s): C

Explanation:

Among the greenhouse gases (GHGs) listed, fluorinated gases have the longest atmospheric lifetimes. Here's a detailed breakdown:

Methane (CH4):

Methane is a potent greenhouse gas with a significant impact on global warming. However, its atmospheric lifetime is relatively short, approximately 12 years.

Carbon Dioxide (CO2):

Carbon dioxide is the most prevalent greenhouse gas emitted by human activities, particularly from the burning of fossil fuels. CO2 can remain in the atmosphere for hundreds to thousands of years, but it is still not the longest-lived compared to fluorinated gases.

Fluorinated Gases:

Fluorinated gases, such as hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6), are synthetic gases that have extremely long atmospheric lifetimes, often ranging from a few years to thousands of years. For instance, SF6 can remain in the atmosphere for up to 3,200 years.

These gases are typically used in industrial applications and have a high global warming potential (GWP) due to their longevity and heat-trapping capabilities.

CFA ESG Investing


Reference:

The CFA Institute's ESG curriculum emphasizes understanding the different types of greenhouse gases, their sources, and their impacts on climate change. The curriculum specifically points out the longevity and high global warming potential of fluorinated gases, which makes them a critical focus in ESG assessments and climate risk evaluations.



Human rights violations are most likely to affect workers employed

  1. by first-tier suppliers to publicly traded companies
  2. by second-tier suppliers to publicly traded companies.
  3. deep within the supply chain of publicly traded companies.

Answer(s): C

Explanation:

Human rights violations are most likely to occur deep within the supply chain of publicly traded companies. Here's why:

First-tier Suppliers:

First-tier suppliers are those that directly supply products or services to a company. These suppliers are often under greater scrutiny from the company and external stakeholders, including auditors and regulatory bodies. Publicly traded companies typically enforce stricter compliance and monitoring mechanisms at this level.

Second-tier Suppliers:

Second-tier suppliers supply products or services to the first-tier suppliers.
While there is still some level of oversight, the scrutiny diminishes as the layers in the supply chain increase. Human rights violations can occur here, but they are less frequent compared to deeper levels in the supply chain.

Deep within the Supply Chain:

Suppliers deeper within the supply chain, such as third-tier and beyond, are the least visible and have the least amount of oversight. These suppliers often operate in regions with weaker regulatory frameworks and less stringent enforcement of labor laws. Consequently, they are more prone to human rights violations, including poor working conditions, forced labor, and child labor.

Companies may not have direct business relationships with these deeper-tier suppliers, making it challenging to enforce ethical practices and human rights standards.

CFA ESG Investing


Reference:

The CFA Institute's ESG curriculum highlights the importance of supply chain transparency and the risks associated with human rights violations at different levels of the supply chain. The curriculum emphasizes that deeper tiers within the supply chain are often where the most significant human rights risks are found, and it encourages investors to assess and address these risks in their ESG evaluations.



What is the underlying principle of the corporate governance code in most markets?

  1. If not, why not
  2. Apply or explain
  3. Comply or explain

Answer(s): C

Explanation:

The underlying principle of the corporate governance code in most markets is "comply or explain." This principle mandates that companies either comply with the established governance guidelines or explain why they have not done so. This approach allows for flexibility while encouraging transparency and accountability in corporate governance.

Flexibility and Adaptability: The "comply or explain" approach provides companies with the flexibility to adapt the guidelines to their specific circumstances. If a company believes that a certain recommendation is not suitable for its situation, it can choose not to comply, provided it explains the reasons for this decision.

Transparency: By requiring companies to explain their non-compliance, this approach promotes transparency. Stakeholders, including investors, can assess the company's governance practices and make informed decisions based on the explanations provided.

Encouragement of Best Practices: This principle encourages companies to strive towards best practices in governance, while allowing for deviations when justified. It balances the need for high standards with the recognition that one size does not fit all.


Reference:

MSCI ESG Ratings Methodology (2022) - Discusses the principles of corporate governance codes and highlights the "comply or explain" approach as a common standard in various markets.

ESG-Ratings-Methodology-Exec-Summary (2022) - Provides insights into how corporate governance codes are designed to promote transparency and accountability through the "comply or explain" principle.



Which of the following is an example of a bottom-up ESG engagement approach? An asset manager:

  1. joining the PRI Collaboration Platform
  2. sending out a letter to the CFOs of all investee companies
  3. initiating dialogue with an investee company's investor relations team

Answer(s): C

Explanation:

A bottom-up ESG engagement approach involves direct interaction with specific investee companies to address ESG issues. Initiating dialogue with an investee company's investor relations team is an example of this approach.

Direct Communication: Engaging directly with the investor relations team allows asset managers to discuss specific ESG issues relevant to the company. This direct line of communication can lead to more detailed and company-specific insights.

Targeted Engagement: This method focuses on individual companies, enabling asset managers to address specific concerns and influence company practices more effectively. It allows for a deeper understanding of how ESG issues are managed at the company level.

Active Ownership: By engaging with companies, asset managers exercise active ownership, encouraging companies to adopt better ESG practices. This can lead to improved ESG performance and, ultimately, better long-term investment returns.


Reference:

MSCI ESG Ratings Methodology (2022) - Highlights the importance of direct engagement with companies as part of an effective ESG strategy.

ESG-Ratings-Methodology-Exec-Summary (2022) - Discusses various engagement approaches and emphasizes the value of direct dialogue with investee companies in improving ESG practices.






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