Selected ESG-Investing ESG Investing Certificate Questions Answers

Income inequality is a major economic issue, with the richest 10% earning significantly more than the poorest 10%.

Why C (14 times) is correct:

The OECD 2015 report found that, on average, the wealthiest 10% earn 14 times more than the bottom 10% across OECD countries.

Inequality varies by country—Nordic nations have lower disparities, while the US and UK have higher income gaps.

Why not A or B?

A (4 times) significantly underestimates the disparity.

B (9 times) is closer but still lower than the reported figure.

References:

OECD COPE Report on Income Inequality (2015)

Escalation occurs when an investor, after attempting engagement, takes further steps such as divestment, public disclosures, or shareholder resolutions to address ESG concerns.

Why A (Escalation) is correct:

Publishing a list of exclusions signals that prior engagement efforts failed or that the fund has decided to divest based on ethical or financial grounds.

Example: Norway’s Government Pension Fund Global regularly excludes companies due to environmental and human rights concerns.

Why not B or C?

B (Concert party) refers to coordinated investor actions to influence corporate decisions, often in takeovers.

C (Collective engagement) involves multiple investors engaging together but does not necessarily result in exclusions.

References:

Norges Bank’s Exclusion Policy (2023)

PRI: Guide to Investor Escalation Strategies (2022)

Greenhushing occurs when a company is reluctant to publicly share its sustainability achievements or goals due to fears of backlash or misunderstanding from stakeholders. (ESGTextBook[PallasCatFin], Chapter 7, Page 364)

Exclusion-based screening involves removing investments from a portfolio based on ESG criteria (e.g., fossil fuels, tobacco, weapons).

Why C (continue to evolve) is correct:

New regulations and investor preferences lead to updates in exclusion lists.

Example: Coal exclusions have expanded from pure-play coal miners to companies with indirect coal exposure.

Why not A or B?

A (Expanding investable universe) is incorrect—exclusionary screening narrows the universe.

B (Dominant strategy) is incorrect—ESG integration and engagement are now more widely used.

References:

PRI: ESG Screening and Evolving Exclusion Strategies (2023)