CEA Climate Change & Sustainability Metrics 5 — Questions and Answers
Question 1: An auditor reviews a company's net-zero commitment. According to the SBTi Corporate Net-Zero Standard, by what year must companies achieve net-zero emissions?
- No later than 2040
- No later than 2050 (Correct answer)
- No later than 2035
- No later than 2060
Correct answer: No later than 2050
The SBTi Corporate Net-Zero Standard requires companies to achieve net-zero emissions no later than 2050, consistent with 1.5°C pathways.
Question 2: Which index is widely used to measure a company's exposure to physical climate risks based on geographic location and asset vulnerability?
- Dow Jones Sustainability Index (DJSI)
- S&P Physical Risk Score
- Four Twenty Seven Climate Risk Score (Correct answer)
- Carbon Disclosure Project (CDP) Score
Correct answer: Four Twenty Seven Climate Risk Score
Four Twenty Seven (now part of Moody's) provides asset-level physical climate risk scores covering heat, flood, hurricane, sea level rise, and water stress.
Question 3: What does 'double materiality' mean in the context of the EU's ESRS sustainability reporting?
- Reporting on both Scope 1 and Scope 2 emissions simultaneously
- Assessing both how sustainability issues affect the company and how the company affects society and the environment (Correct answer)
- Disclosing sustainability information in both financial and non-financial statements
- Conducting materiality assessments twice per reporting period
Correct answer: Assessing both how sustainability issues affect the company and how the company affects society and the environment
Double materiality requires companies to assess both financial materiality (impacts on the company) and impact materiality (company's impacts on society/environment).
Question 4: A facility calculates its Scope 1 emissions from a natural gas boiler. Which emission factor source is most appropriate for a US-based environmental audit?
- IPCC Fifth Assessment Report global averages
- US EPA Emission Factors for Greenhouse Gas Inventories (Correct answer)
- IEA World Energy Outlook emission intensities
- UK DEFRA Conversion Factors for Company Reporting
Correct answer: US EPA Emission Factors for Greenhouse Gas Inventories
The US EPA's Emission Factors for Greenhouse Gas Inventories provides country-specific factors for stationary combustion, making it the most appropriate source for US facilities.
Question 5: Which climate scenario developed by the International Energy Agency (IEA) describes a pathway consistent with limiting warming to 1.5°C with no carbon capture overshoot?
- Sustainable Development Scenario (SDS)
- Net Zero Emissions by 2050 Scenario (NZE) (Correct answer)
- Announced Pledges Scenario (APS)
- Stated Policies Scenario (STEPS)
Correct answer: Net Zero Emissions by 2050 Scenario (NZE)
The IEA's Net Zero Emissions by 2050 (NZE) scenario maps a 1.5°C-consistent pathway that does not rely on large-scale carbon capture to compensate for overshoot.
Question 6: An organization wants to set an internal carbon price to guide investment decisions. Which approach assigns a cost to emissions based on the social cost of carbon?
- Shadow carbon price (Correct answer)
- Cap-and-trade permit price
- Carbon offset spot price
- Regulatory fine per ton
Correct answer: Shadow carbon price
A shadow carbon price (or internal carbon price) is an internally assigned cost that reflects the social cost of carbon, used to evaluate investments without actual cash transactions.
Question 7: Which sustainability framework introduced the concept of the 'Triple Bottom Line' — people, planet, and profit?
- John Elkington's Cannibals with Forks (1997) (Correct answer)
- Brundtland Commission Report (1987)
- The Natural Step Framework (1989)
- UN Global Compact (2000)
Correct answer: John Elkington's Cannibals with Forks (1997)
John Elkington coined the Triple Bottom Line concept in his 1997 book 'Cannibals with Forks,' framing sustainability around three pillars: social, environmental, and economic performance.
CEA Climate Change & Sustainability Metrics 5
An auditor reviews a company's net-zero commitment.
According to the SBTi Corporate Net-Zero Standard, by what year must companies achieve net-zero emissions?