CEP Sustainable Finance & ESG Investing 2

Question 1

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

Accepted Answer

United Nations

Answer

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

Question 2

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

Accepted Answer

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

Answer

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.

Question 3

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

Accepted Answer

TCFD Recommendations

Answer

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

Question 4

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

Accepted Answer

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

Answer

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.

Question 5

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

Accepted Answer

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

Answer

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.

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

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

CEP Sustainable Finance & ESG Investing 2