Mixed Deck — All ESG Topics Flashcards

The term 'greenwashing' in the regulatory context most precisely refers to:

Answer: Misleading claims or disclosures that overstate a company's environmental performance or commitments

Greenwashing refers to deceptive or misleading communications about environmental performance, making a company, product, or policy appear more sustainable than it actually is.

Which global framework guides companies on sustainability reporting?

Answer: Global Reporting Initiative (GRI)

The Global Reporting Initiative (GRI) provides standards for organizations to disclose environmental, social, and governance impacts.

What is the result of poor governance structures?

Answer: Legal issues and reputation damage

Poor governance structures lead to a lack of oversight, accountability, and transparency within an organization. This can result in unethical behavior, non-compliance with regulations, and mismanagement of resources. Consequently, companies face significant legal penalties, regulatory fines, and severe damage to their public reputation, which can erode stakeholder trust and negatively impact long-term viability.

A company's carbon intensity metric is best defined as:

Answer: GHG emissions per unit of economic or physical output

Carbon intensity normalizes emissions against a unit of output (e.g., revenue or production volume), enabling performance benchmarking across companies of different sizes.

An ESG consultant is helping a mid-size US public company prepare its first sustainability report aligned with GRI Standards. Which document should the company reference to select the correct GRI reporting option?

Answer: GRI 1: Foundation 2021

GRI 1: Foundation 2021 sets out the purpose of the GRI Standards, key concepts, and the requirements for reporting in accordance with GRI, making it the starting point for any GRI-aligned report.

What is 'value chain mapping' in ESG due diligence?

Answer: Identifying ESG risks and impacts across all stages from raw material sourcing through product end-of-life

Value chain mapping traces ESG risks and opportunities through upstream suppliers, operations, distribution, use, and end-of-life disposal to provide a complete risk picture.

In sustainable finance, what does 'negative screening' mean?

Answer: Excluding companies or sectors that fail to meet minimum ESG standards from a portfolio

Negative screening (exclusionary screening) removes companies involved in activities deemed harmful—such as tobacco, weapons, or coal—from investment consideration.

What is 'stewardship' in the context of institutional investor ESG responsibilities?

Answer: Active ownership activities by investors to influence corporate behavior through engagement and voting

Stewardship refers to institutional investors using their ownership rights—engagement, proxy voting, and escalation—to promote sustainable long-term value.

What is an important outcome of successful community engagement?

Answer: Stronger relationships and loyalty

Stronger community relationships lead to higher employee satisfaction and customer loyalty.

Which international framework specifically addresses human rights due diligence in supply chains and aligns with the UN Guiding Principles on Business and Human Rights?

Answer: OECD Guidelines for Multinational Enterprises

The OECD Guidelines for Multinational Enterprises include chapters on human rights that align with the UN Guiding Principles (UNGPs) and provide guidance on supply chain due diligence.

Under ISO 14001:2015, what is the primary purpose of environmental aspect identification?

Answer: To determine significant interactions with the environment for EMS prioritization

ISO 14001 requires organizations to identify environmental aspects and determine which are significant, driving the priorities of the environmental management system.

What document outlines a company's governance principles?

Answer: Corporate governance policy

A corporate governance policy outlines the company's structure, ethical guidelines, and responsibilities.

What should companies do to strengthen ethical practices?

Answer: Provide ethics training and enforce standards

To strengthen ethical practices, companies must proactively educate employees on expected behavior through ethics training. This training, coupled with clear policies and consistent enforcement of standards, creates a culture of accountability and integrity. It ensures that ethical guidelines are understood, adhered to, and that violations are addressed, thereby preventing misconduct and fostering a trustworthy environment.

What is 'portfolio temperature alignment' in climate-aware investing?

Answer: Estimating the global temperature rise consistent with the emissions pathway of portfolio companies

Portfolio temperature alignment estimates the implied temperature rise (e.g., 2.5°C) if all companies held adopted the same emissions trajectory as those in the portfolio.

The ISSB's IFRS S1 standard requires companies to disclose sustainability-related risks and opportunities over which time horizons?

Answer: Short-, medium-, and long-term

IFRS S1 requires disclosure of sustainability-related risks and opportunities across short-, medium-, and long-term time horizons as defined by the entity.

What is the key principle behind 'responsible communication' of ESG data?

Answer: Presenting ESG information accurately, without selectivity or omission that could mislead stakeholders

Responsible ESG communication requires balanced presentation—including setbacks, missed targets, and uncertainties—not just cherry-picking positive data points.

Which body issues the U.S. framework most commonly used for ESG risk disclosure in financial filings?

Answer: TCFD (adopted by SEC rules)

The SEC's climate disclosure rules adopt a TCFD-aligned structure, making TCFD the de facto framework for climate risk disclosure in U.S. public company filings.

What is a risk of poor environmental management?

Answer: Legal penalties and reputational damage

Neglecting environmental risks can lead to legal penalties, fines, and reputational damage.

What is the primary difference between 'carbon neutral' and 'net-zero' claims?

Answer: Carbon neutral typically involves offsetting residual emissions; net-zero requires deep absolute reductions with only minimal residual offsetting

Carbon neutrality often relies heavily on carbon offsets to balance residual emissions, while genuine net-zero (per SBTi/IPCC) requires 90-95% absolute emission reductions before any residual neutralization.

Why should companies disclose environmental risks to stakeholders?

Answer: To build trust and meet regulations

Transparency builds trust, improves investor confidence, and meets regulatory expectations.