CPA X KPMG ESG Quiz

What is the purpose of ESG ratings?

• ESG ratings are used by investors to evaluate a company's performance on environmental, social, and governance factors.

• ESG ratings are used by governments to regulate companies on environmental, social, and governance factors.

• ESG ratings are used by companies to evaluate their own performance on environmental, social, and governance factors.

• ESG ratings are not used for any particular purpose.

How can individuals incorporate ESG investing into their portfolio?

• By selecting funds that specialize in ESG investing.

• By investing only in companies that prioritize ESG factors.

• By actively engaging with companies on ESG issues.

• All of the above.

What does the “S” in ESG refer to?

• Sustainability

• Societal

• Social

• None of the above

Are ESG investments more or less risky than traditional investments?

• ESG investments can be both more or less risky than traditional investments, depending on the specific investments being made. However, some studies have suggested that companies that prioritize ESG factors may have lower risk profiles over the long-term.

• ESG investments are always more risky than traditional investments.

• ESG investments are always less risky than traditional investments.

• ESG investments are not investments at all.

What is thematic investing?

• Investments are screened out based on ESG risks

• Targeting themes and financial returns drive the investment selection

• Seeks financial return regardless of ESG

• Utilising ESG themes to screen out investment choices

According to Bolsego, which of the following statements correctly captures the ESG performance paradox?

I. The best investment strategy may be to buy the worst performers on ESG measures

II. Embracing ESG can lower a firm’s discount rate

III. There is a low correlation between ESG ratings across providers

IV. Existing strong ESG credentials could already be incorporated into the price of stocks

• I and II only

• II and IV only

• III only

• All of the above

What is the difference between ESG and impact investing?

• ESG investing involves considering environmental, social, and governance factors in addition to financial returns, while impact investing focuses specifically on investing in companies or projects that have a positive social or environmental impact.

• ESG and impact investing are the same thing.

• ESG investing focuses solely on financial returns, while impact investing prioritizes social and environmental outcomes over financial returns.

• Impact investing involves considering environmental, social, and governance factors in addition to financial returns, while ESG investing focuses specifically on investing in companies or projects that have a positive social or environmental impact.

In the article written by Orsagh, which of the following is NOT a difference between exclusionary screening and ESG integration?

• Exclusionary screening reduces the investment universe while ESG integration does not

• ESG integration fully embeds financial information and ESG information into the investment analysis while exclusionary screening does not

• Exclusionary screening takes places before investment analysis whereas ESG integration takes place after investment analysis

• ESG integration is used as a risk management tool whereas exclusionary screening is not

Which of the following is NOT an example of governance risk?

• An executive with a role of the CEO and chairman of the board

• Low diversity of employees within the organisation

• Little to no engagement with employees in the decision-making of companies regarding union participation.

• Employees with different compensation structure for similar roles within an organisation

How do companies benefit from prioritizing ESG factors?

• Companies that prioritize ESG factors can benefit from improved brand reputation, better risk management, and enhanced long-term financial performance.

• Companies that prioritize ESG factors can benefit from lower taxes and higher government subsidies.

• Companies that prioritize ESG factors can benefit from short-term financial gains and improved shareholder returns.

• Companies that prioritize ESG factors do not benefit in any way.