CEP Governance Structures & Ethical Practices 5

Question 1

What is the key difference between a code of conduct and a code of ethics in corporate governance?

Accepted Answer

A code of conduct specifies behavioral rules; a code of ethics articulates core values and principles

Answer

A code of conduct provides specific behavioral rules for situations, while a code of ethics articulates the underlying values and principles guiding those rules.

Question 2

Which governance structure best describes a company where the CEO and board chair roles are held by the same person?

Accepted Answer

Combined leadership structure

Answer

A combined leadership structure (or CEO duality) occurs when one person holds both the CEO and board chair positions, which critics argue reduces board independence.

Question 3

What is 'proxy voting' in the context of shareholder governance?

Accepted Answer

Shareholders authorizing a representative to vote their shares at a company meeting

Answer

Proxy voting allows shareholders to authorize another party to vote their shares at annual or special meetings when they cannot attend in person.

Question 4

ESG governance requires 'materiality assessments.' Which statement best describes a double materiality assessment?

Accepted Answer

Evaluating both how ESG issues affect the company financially and how the company affects society and environment

Answer

Double materiality (per EU CSRD) requires companies to assess ESG topics from both an 'impact materiality' perspective (company's effect on the world) and a 'financial materiality' perspective (world's effect on the company).

Question 5

A company's audit committee discovers management has been selectively disclosing ESG metrics to hide poor performance. This is an example of which unethical practice?

Accepted Answer

Greenwashing through omission

Answer

Greenwashing through omission occurs when companies deliberately exclude negative ESG data to create a misleadingly positive sustainability image.

(CEP) Certified Environmental, Social, and Governance (ESG) Planner Practice Test

(CEP) Certified Environmental, Social, and Governance (ESG) Planner Practice Test

CEP Governance Structures & Ethical Practices 5