ESG Investing Certificate ESG-Investing Syllabus Exam Questions Answers

ESG tilting is an investment approach applicable when investing in sovereign debt. It involves adjusting the weightings of sovereign bonds in a portfolio based on ESG scores, thereby favoring countries with better ESG performance. This method aligns investment decisions with ESG criteria while maintaining diversification and managing risk within sovereign bond portfolios​​​​.

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In the United States, exclusionary screening remains the largest sustainable investment strategy, where companies or sectors are excluded from portfolios based on certain criteria, such as involvement in tobacco or firearms. (ESGTextBook[PallasCatFin], Chapter 2, Page 61)

The adoption of ESG investing by retail investors has generally been slower than its adoption by institutional investors. Institutional investors have led the way in integrating ESG factors into their investment decisions due to their larger resources and regulatory pressures. In contrast, retail investors have been slower to adopt ESG investing, though interest is growing, especially among younger generations​​​​​​​​.

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UK Listing Regime:

Under the UK listing regime, significant transactions by listed companies are categorized into different classes based on their size relative to the company.

Class 1 Transactions:

Class 1 transactions are substantial transactions that exceed 25% of any of the class tests (assets, profits, value, or capital).

These transactions are significant enough to potentially alter the company's risk profile and financial position materially.

Approval Requirements:

Due to their significance, Class 1 transactions require shareholder approval.

The company must seek approval through a shareholder vote before proceeding with the transaction.

This requirement ensures that shareholders have a say in major corporate decisions that could impact their investment.

Additional Disclosures:

Companies must provide detailed justifications and information about the transaction to shareholders to facilitate informed voting.

This includes comprehensive disclosures about the nature and terms of the transaction, its strategic rationale, and its financial impact.

Conclusion:

The requirement for shareholder approval of Class 1 transactions is a key aspect of shareholder protection under the UK listing regime, ensuring that significant changes to the company's structure or operations are subject to shareholder scrutiny.

References:

The requirement for shareholder approval of Class 1 transactions is outlined in the UK listing regime, which mandates that any transaction affecting more than 25% of a company’s assets, profits, value, or capital must be approved via a shareholder vote​​.

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