CFA Institute Updated Sustainable-Investing Exam Questions and Answers by jannat

Political stability and governance risksarecritical for sovereign debt, as they impact a country’screditworthiness, policy stability, and economic resilience.

Cybersecurity risks (A) are significant for corporates but less so for sovereigns.

Executive compensation (C) is a corporate governance issue, not a sovereign risk factor.

Thecircular economyfocuses onreducing waste and maximizing resource efficiency.Sustainable resource use (B)aligns directly with circular economy principles, as it promotesrecycling, renewable materials, and closed-loop production systems.

Pollution (A) and climate change (C) are environmental risks but do notdirectlysupport the transition to a circular economy.

Thelargest driverof global greenhouse gas (GHG) emissions iscarbon dioxide (CO₂) from fossil fuels and industry, accounting for approximately75% of total GHG emissions. This includes emissions from coal, oil, and natural gas combustion for energy, manufacturing, and transportation.

While land-use change (C) contributes significantly (~10–15%), and methane (A) is a potent GHG,CO₂ from fossil fuels remains the dominant factordriving climate change.

Universal exclusionapplies to sectors that investorscompletely exclude, such astobacco, weapons, or controversial industries.

Idiosyncratic exclusions (B)arecase-by-case exclusionsbased on specific client preferences.

Conduct-related exclusions (C)focus oncompanies violating ethical norms, rather than entire sectors.