CFA Institute ESG-Investing Actual Questions

McKinsey & Company emphasizes transparency as part of an asset manager’s tools and processes. Effective tools and processes help ensure that ESG data is accurately collected, analyzed, and reported, making the decision-making process clear and accountable.ESG Reference: Chapter 7, Page 325 - ESG Analysis, Valuation & Integration in the ESG textbook.

Both the EU Paris-Aligned Benchmarks and the EU Climate Transition Benchmarks allow for limited investment in fossil fuels. However, these benchmarks include strict criteria to ensure that such investments contribute to the transition to a low-carbon economy and are aligned with long-term decarbonization goals.ESG Reference: Chapter 8, Page 406 - ESG Integrated Portfolio Construction & Management in the ESG textbook.

Scope 3 carbon emissions, which include indirect emissions throughout the value chain (e.g., suppliers and consumers), are accounted for under both the UK Task Force on Climate-related Financial Disclosures (TCFD) and the European Union’s Sustainable Finance Disclosure Regulation (SFDR). These frameworks encourage comprehensive reporting of all emissions sources.ESG Reference: Chapter 3, Page 133 - Environmental Factors in the ESG textbook.

Reporting in the ESG textbook.

Good corporate governance recognizes that no single model is universally better than others. Corporate governance practices vary by region and industry, and what works best in one context may not be suitable for another. Effective governance practices are those that fit the specific needs and challenges of the company.ESG Reference: Chapter 5, Page 236 - Governance Factors in the ESG textbook.

The OECD Guidelines for Multinational Enterprises aim to provide voluntary principles and standards for responsible business conduct, including remedying business-related human rights abuses. These guidelines encourage companies to address and prevent violations, especially in areas such as labor rights and environmental protection.ESG Reference: Chapter 4, Page 211 - Social Factors in the ESG textbook.