CFM ESG & Sustainable Investing 3

Question 1

Which organization publishes the annual Global ESG benchmark that many US institutional investors use as a reference for stewardship?

Accepted Answer

Principles for Responsible Investment (PRI)

Answer

PRI produces annual signatory assessments and stewardship benchmarks that guide institutional investors on responsible ownership practices.

Question 2

The Task Force on Climate-related Financial Disclosures (TCFD) recommends disclosures in all of the following categories EXCEPT:

Accepted Answer

Social Impact Scores

Answer

TCFD's four pillars are Governance, Strategy, Risk Management, and Metrics & Targets — social impact scores are not a TCFD category.

Question 3

A fund manager assessing 'transition risk' in climate investing is evaluating risk from:

Accepted Answer

Policy, technology, and market shifts during the move to a low-carbon economy

Answer

Transition risks arise from the economic adjustments needed to shift to a lower-carbon world, including policy changes, new technologies, and shifting consumer preferences.

Question 4

ESG-themed exchange-traded funds (ETFs) that track an index have faced criticism primarily because:

Accepted Answer

Index-based ESG ETFs cannot engage with companies on governance issues

Answer

Passive ESG ETFs track indices and rarely engage in active shareholder dialogue, limiting their ability to influence corporate behavior.

Question 5

Which metric is most commonly used to measure a portfolio's carbon footprint?

Accepted Answer

Scope 1 emissions per unit of revenue (weighted average carbon intensity)

Answer

Weighted Average Carbon Intensity (WACI) measures Scope 1 emissions normalized by revenue and portfolio weight, making it the standard portfolio-level carbon metric.

(CFM) Certified Fund Manager Practice Test

(CFM) Certified Fund Manager Practice Test

CFM ESG & Sustainable Investing 3