ESG-Investing Exam Dumps - CFA Institute ESG Investing Certificate Questions and Answers

EU regulations limit the scope of non-audit services provided by audit firms to ensure that the independence of the audit process is maintained and that no conflicts of interest arise. (ESGTextBook[PallasCatFin], Chapter 5, Page 252)

A just transition with regards to climate change refers to ensuring that the shift to a low-carbon economy is fair and inclusive, particularly for workers and communities that are adversely affected by this transition. Here’s why option C is correct:

Just Transition:

A just transition involves measures that support workers and communities who are impacted by the transition to a sustainable economy. This includes creating new job opportunities, providing retraining programs, and ensuring social protections for those affected by changes such as the closure of coal mines.

Collaborating with labor unions to develop a social package for displaced workers is a clear example of this approach, as it directly addresses the social and economic challenges faced by workers during the transition .

Other Options:

Option A (financing a gas-fired power utility project) does not address the social aspects of the transition and is more focused on the financial and infrastructural changes.

Option B (designing reusable and recyclable products) is aligned with the circular economy but does not specifically address the social justice aspect of the transition .

CFA ESG Investing References:

The CFA Institute’s ESG curriculum includes discussions on the importance of a just transition, emphasizing the need for policies and initiatives that protect workers and communities during the shift to a sustainable economy .

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.

 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​​.

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