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Sustainable Investing Certificate(CFA-SIC) Questions 341–345 (page: 70)

Updated On: 10-Feb-2026

The World Bank's World Governance Indicators dataset includes rankings on:

  1. rule of law.
  2. credit rating.
  3. the government debt to GDP ratio.

Answer(s): A

Explanation:

The World Governance Indicators dataset by the World Bank provides information on six dimensions of governance, including rule of law, which reflects the confidence of a society in its institutions and the extent to which they enforce the law. (ESGTextBook[PallasCatFin], Chapter 5, Page 236)



A family office is best categorized as an:

  1. asset owner.
  2. intermediary.
  3. asset manager.

Answer(s): A

Explanation:

A family office is typically categorized as an asset owner, managing the wealth of a high-net-worth family. They often direct investment strategies, which may include ESG considerations.
(ESGTextBook[PallasCatFin], Chapter 7, Page 316)



The LEAP assessment framework developed by the Taskforce on Nature-Related Financial Disclosure (TNFD) stands for:

  1. learn, engage, adapt, protect.
  2. locate, evaluate, assess, prepare.
  3. listen, estimate, advocate, preserve.

Answer(s): B

Explanation:

The LEAP framework developed by TNFD stands for "Locate, Evaluate, Assess, Prepare." It is designed to help organizations evaluate nature-related risks and integrate them into financial disclosures.
(ESGTextBook[PallasCatFin], Chapter 3, Page 114)



With respect to infrastructure assets, externalities are best described as issues that may be:

  1. caused by the asset itself and impact its profitability.
  2. originated outside the asset and impact its profitability.
  3. caused by the asset itself and impact its surrounding environment.

Answer(s): C

Explanation:

Externalities refer to the unintended consequences of a project or asset, such as pollution, that affect its surrounding environment and society. These factors often have social or environmental impacts that are not reflected in the financial costs of the project. (ESGTextBook[PallasCatFin], Chapter 3, Page 114)



According to the consulting firm McKinsey & Company, which of the following is a dimension of sustainable investing applied by fund managers?

  1. Public reporting
  2. Security valuation
  3. Strategic asset allocation

Answer(s): C

Explanation:

Sustainable investing includes integrating ESG factors into strategic asset allocation. This allows managers to align portfolios with long-term sustainability goals while managing ESG risks and opportunities. (ESGTextBook[PallasCatFin], Chapter 8, Page 396)



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