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

Organizations thatmonitor and report ESG-related risks and opportunities(such ascontroversies, litigation, regulatory changes, and activism) are classified asESG news and alerts providers.

Examples includeBloomberg ESG News, Sustainalytics Controversy Reports, and MSCI ESG Alerts.

Achange in investment style (A) is least concerningif the manager remainsaligned with the long-term ESG mandate. In contrast:

Underperformance (B)raises questions aboutwhether ESG integration is effective.

Portfolio turnover (C) outside the expected rangecould indicatea misalignment with ESG strategy.

The management teamis responsible fordeveloping ESG reports, financial disclosures, and corporate transparency efforts.

The audit committee (B) reviews and ensures compliance with reporting standards.

The board (A) provides oversight but does not directly lead reporting.

Comparing ESG performance across corporate bond issuers is challengingbecausedata disclosure isinconsistent, particularly inprivate marketsandnon-listed companies. Unlike equities, where ESG disclosures are oftenregulated, bond issuers arenot always requiredto providedetailed ESG reporting.

Option A is incorrect becauseESG data for municipal bonds is often incomplete or unreliable. Option B is incorrect because while some ESG data for corporate bonds ispublicly available, it isnot standardizedacross issuers, making analysis difficult.