CFM ESG & Sustainable Investing 2

Question 1

Which international framework established Principles for Responsible Investment (PRI) that fund managers commonly sign onto?

Accepted Answer

United Nations

Answer

The UN-backed PRI was launched in 2006 and provides six principles for incorporating ESG factors into investment decisions.

Question 2

In ESG integration, 'engagement' refers to:

Accepted Answer

Active dialogue with company management on ESG issues

Answer

Engagement means investors communicate directly with company leadership to encourage improved ESG practices rather than divesting.

Question 3

A fund manager evaluating 'stranded asset risk' is most concerned about:

Accepted Answer

Assets that may lose value due to environmental regulatory changes

Answer

Stranded assets are those whose economic value is impaired ahead of end of expected life due to policy, regulatory, or market changes related to sustainability.

Question 4

The EU Sustainable Finance Disclosure Regulation (SFDR) classifies 'dark green' funds under which article?

Accepted Answer

Article 9

Answer

Article 9 funds under SFDR have sustainable investment as their explicit objective, making them the most stringent category.

Question 5

Which ESG data challenge is most commonly cited by institutional fund managers?

Accepted Answer

Lack of corporate ESG disclosure and inconsistent data

Answer

Inconsistent reporting standards and voluntary disclosure make ESG data quality and comparability a persistent challenge for fund managers.

(CFM) Certified Fund Manager Practice Test

(CFM) Certified Fund Manager Practice Test

CFM ESG & Sustainable Investing 2