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Sustainable Investing Certificate(CFA-SIC) Questions 361–365 (page: 74)

Updated On: 10-Feb-2026

With respect to ESG reporting:

  1. management has little discretion over ESG disclosures.
  2. larger companies face more resource constraints than smaller companies.
  3. business customers may receive ESG information that is not publicly available to investors.

Answer(s): C

Explanation:

Business customers often receive tailored ESG information directly from companies, which might not be included in public disclosures intended for investors. (ESGTextBook[PallasCatFin], Chapter 9, Page 499)



Primary data sources for ESG data include:

  1. ESG rating firms.
  2. surveys of company managers.
  3. assessments made by non-governmental organizations.

Answer(s): B

Explanation:

Surveys of company managers provide primary ESG data as they come directly from internal company sources, offering first-hand insights on ESG practices. (ESGTextBook[PallasCatFin], Chapter 7, Page 364)



Engagement is least appropriate for which of the following investment types?

  1. Private debt
  2. Infrastructure
  3. Sovereign debt

Answer(s): C

Explanation:

Engagement is least applicable in sovereign debt investments because investors have less influence over government policies and actions compared to corporate entities. (ESGTextBook[PallasCatFin], Chapter 6, Page 283)



In the revised 2020 version of the UK Stewardship Code, a significant change is that signatories are now required to:

  1. establish clear guidelines for escalating their activities.
  2. publicly disclose how stewardship is integrated into their investment process.
  3. report annually how stewardship activities have delivered practical results for clients.

Answer(s): C

Explanation:

The 2020 revision of the UK Stewardship Code requires signatories to annually report on how their stewardship activities have produced tangible outcomes that benefit their clients.
(ESGTextBook[PallasCatFin], Chapter 6, Page 280)



Which of the following statements about engagement escalation is most accurate?

  1. Disinvestment is not considered a form of escalation.
  2. Litigation is an escalation tool that should be used frequently.
  3. Collective engagement is often the most powerful form of escalation.

Answer(s): C

Explanation:

Collective engagement, where multiple investors collaborate to push for changes in a company, is typically the most powerful form of escalation as it brings greater pressure on the company to act.
(ESGTextBook[PallasCatFin], Chapter 6, Page 285)



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