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Free ESG-Investing Exam Braindumps (page: 47)

Page 46 of 118
PDF with 468 Questions

During the decommissioning phase of a company's mining project, the government tightens regulations on land restoration.
Which of the following is most likely impacted?

  1. taxes
  2. revenue
  3. provision

Answer(s): C

Explanation:

During the decommissioning phase of a mining project, tightening regulations on land restoration impact the financial provisions that a company must set aside. These provisions are financial reserves allocated to cover the costs associated with decommissioning activities, including environmental restoration and compliance with regulatory requirements.

Provisions for Land Restoration: Provisions represent the estimated costs a company anticipates needing to restore land to its original state or meet regulatory standards once mining operations cease. Tightening regulations typically increase the required provision amount, as more stringent standards necessitate greater restoration efforts and costs.

Financial Impact: While taxes and revenue might be indirectly affected, provisions are directly impacted as they must be adjusted to reflect the increased costs of compliance with the new regulations. This adjustment ensures that the company is financially prepared to meet its legal and environmental obligations during the decommissioning phase.



Which of the following is an example of collaborative engagement?

  1. Follow-on dialogue
  2. Active public engagement
  3. Housekeeping engagement

Answer(s): B

Explanation:

Collaborative engagement in ESG investing involves multiple stakeholders, including investors, companies, and sometimes the public, working together to address ESG issues. This approach amplifies the impact of engagement efforts by pooling resources and influence.

Definition of Collaborative Engagement: Collaborative engagement typically involves investors coming together to engage with companies on specific ESG issues. This collective effort can be more effective in driving change compared to individual engagements.

Active Public Engagement: Active public engagement is a form of collaborative engagement where stakeholders publicly support ESG initiatives, campaign for policy changes, or collectively pressure companies to improve their ESG practices. This can include public statements, campaigns, or coordinated voting at shareholder meetings.



ESG screens embedded within portfolio guidelines can be used as:

  1. a risk management tool only.
  2. a source of investment advantage only.
  3. both a risk management tool and a source of investment advantage.

Answer(s): C

Explanation:

ESG screens embedded within portfolio guidelines serve multiple purposes, including managing risks and identifying investment opportunities. By integrating ESG criteria into the investment process, investors can achieve better risk-adjusted returns and align their portfolios with long-term sustainability goals.

Risk Management Tool: ESG screens help in identifying and mitigating risks related to environmental, social, and governance factors. This includes avoiding investments in companies with poor ESG practices that could lead to financial losses or reputational damage.

Source of Investment Advantage: ESG screens also identify companies with strong ESG performance, which are often better positioned for long-term success. These companies may benefit from regulatory advantages, operational efficiencies, and stronger stakeholder relationships, providing an investment edge.



With respect to exclusion policies, which of the following falls outside of the traditional spectrum of responsible investment?

  1. Indices
  2. Listed equities
  3. Corporate debt

Answer(s): A

Explanation:

Exclusion policies in responsible investment typically focus on specific asset classes, such as listed equities and corporate debt, where investors can directly apply ethical and ESG criteria to exclude certain companies or sectors from their portfolios. Indices, however, fall outside of this traditional spectrum as they represent broader market benchmarks.

Exclusion Policies: These policies are applied to directly exclude investments in certain sectors or companies that do not meet the ethical or ESG criteria set by the investor. Common exclusions include tobacco, firearms, and fossil fuels.

Indices: Indices are used to benchmark the performance of portfolios and are typically not subject to exclusion policies. They represent a broad market or sector and include a range of companies regardless of their ESG performance.
While ESG indices do exist, traditional exclusion policies do not typically apply to standard market indices.






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