Practice Test Geeks(CEP) Certified Environmental, Social, and Governance (ESG) Planner Practice Test
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Sustainable Finance & ESG Investing Flashcards

7 cards from real CEP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. The Principles for Responsible Investment (PRI) was established under whose auspices?

    Answer: United Nations

    The UN-supported Principles for Responsible Investment (PRI) is the world's leading responsible investment initiative, launched in 2006 under United Nations auspices.

  2. What is 'greenwashing' in the context of sustainable finance?

    Answer: Misleadingly presenting an investment or company as more environmentally friendly than it actually is

    Greenwashing is the deceptive practice of making misleading claims about the environmental benefits of a financial product, service, or company to attract sustainability-focused investors.

  3. Which framework structures climate-related disclosures around Governance, Strategy, Risk Management, and Metrics & Targets?

    Answer: TCFD Recommendations

    The TCFD Recommendations are structured around four core elements — Governance, Strategy, Risk Management, and Metrics & Targets — for consistent climate-related financial disclosures.

  4. What is a 'sustainability-linked bond' (SLB)?

    Answer: A bond whose financial characteristics change based on whether the issuer achieves predetermined sustainability performance targets

    Sustainability-linked bonds tie the bond's financial terms (such as coupon rate) to the issuer achieving specific ESG key performance indicators, incentivizing improved sustainability performance.

  5. In ESG investing, what does 'best-in-class' screening mean?

    Answer: Selecting companies with the highest ESG performance within each sector or industry group

    Best-in-class screening selects companies with the best ESG performance relative to their sector peers, allowing investment across all industries while favoring sustainability leaders.

  6. What is the primary purpose of the EU Taxonomy Regulation for sustainable finance?

    Answer: To provide a classification system that defines which economic activities qualify as environmentally sustainable

    The EU Taxonomy Regulation provides a science-based classification system defining which economic activities are environmentally sustainable, giving investors and companies a common language.

  7. Which characteristic most distinguishes ESG investing from traditional socially responsible investing (SRI)?

    Answer: ESG factors are analyzed as financially material risk and opportunity metrics, not solely as ethical screens

    ESG investing treats environmental, social, and governance factors as financially material inputs for risk assessment, evolving beyond SRI's values-based ethical exclusion approach.