Climate Change Sustainability Metrics & Reporting 3

Question 1

Under the Task Force on Climate-related Financial Disclosures (TCFD), which category includes risks from stricter carbon pricing policies?

Accepted Answer

Transition risks

Answer

Transition risks arise from the shift to a lower-carbon economy and include policy changes such as carbon taxes and emissions trading schemes.

Question 2

What distinguishes 'carbon neutral' from 'net zero' as used in corporate sustainability commitments?

Accepted Answer

Net zero typically requires deeper absolute emission reductions across the value chain, while carbon neutral can rely heavily on offsets

Answer

Net zero generally demands steep absolute reductions (especially under SBTi) before neutralizing residual emissions, whereas 'carbon neutral' often relies more on offsets.

Question 3

Which reporting framework is sector-specific and provides industry-based sustainability accounting standards used widely in the US?

Accepted Answer

SASB Standards

Answer

The Sustainability Accounting Standards Board (SASB) publishes industry-specific standards that identify financially material ESG topics for 77 industries.

Question 4

A company claims it is 'carbon neutral' by purchasing Renewable Energy Certificates (RECs). Which criticism is commonly raised about this approach?

Accepted Answer

RECs do not reduce actual fossil fuel combustion if additionality is lacking

Answer

Without additionality—where the renewable energy would not have been built without the REC purchase—the certificates may not represent genuine emission reductions.

Question 5

What is 'double materiality' as introduced in European sustainability reporting standards?

Accepted Answer

Assessing both how ESG issues affect the company financially and how the company impacts society/environment

Answer

Double materiality requires companies to report from two perspectives: the financial impact of ESG on the company, and the company's impact on people and planet.

Climate Change Practice Test

Climate Change Practice Test

Climate Change Sustainability Metrics & Reporting 3