Selected ESG-Investing ESG Investing Certificate Questions Answers

Company management often has wide discretion over ESG disclosures. While certain jurisdictions have mandatory ESG reporting requirements, much of the reporting remains voluntary, allowing management to choose which ESG factors to disclose and how to report on them. This discretion can lead to inconsistencies in the quality and comparability of ESG disclosures.ESG Reference: Chapter 9, Page 501 - Investment Mandates, Portfolio Analytics & Client Reporting in the ESG textbook.

Dual-class share structures favor the founders of a company by granting them superior voting rights, often allowing them to retain control even if they hold a smaller economic interest in the company. (ESGTextBook[PallasCatFin], Chapter 5, Page 236)

 Negative Screening Definition:

Negative screening is the practice of excluding companies or sectors that perform poorly on ESG criteria from an investment portfolio.

It focuses on avoiding the worst performers in terms of environmental, social, and governance practices.

 Application in ESG Investing:

Investors use negative screening to mitigate risks associated with poor ESG performance, such as regulatory penalties, reputational damage, and financial losses.

Common exclusions include industries like tobacco, fossil fuels, and weapons manufacturing.

 Comparison with Other Screening Methods:

Positive screening involves selecting the best-performing companies on ESG criteria.

Norms-based screening applies international standards and norms to exclude companies that do not comply.

 References:

The concept of negative screening is detailed in ESG investment frameworks and is widely recognized as a primary method for integrating ESG considerations into investment processes​​.

=================

Collective engagement can be seen as controversial because it involves multiple investors working together to influence a company, which may raise concerns about coordinated actions and their regulatory implications. However, it is an important tool in addressing significant ESG issues across industries.ESG Reference: Chapter 6, Page 280 - Engagement and Stewardship in the ESG textbook.