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

The UK Stewardship Code (2020) sets principles for asset owners, asset managers, and service providers (Option B) to enhance corporate governance and sustainable investing.

Signatories must demonstrate active ownership and engagement.

Reporting is annual, not quarterly (Option A is incorrect).

Signatories must show evidence of stewardship in practice, not just publish policies (Option C is incorrect).

Quantitative ESG analysis involves analyzing measurable data such as issuer-reported metrics, third-party ESG scores, and other numerical ESG indicators to assess performance. (ESGTextBook[PallasCatFin], Chapter 7, Page 374)

One of the biggest challenges in ESG integration is the subjective nature of ESG analysis due to varying methodologies, inconsistent reporting, and differing interpretations of materiality.

ESG factors are qualitative and require judgment to assess their financial impact.

Different ESG rating agencies (e.g., MSCI, Sustainalytics, Refinitiv) use different scoring models, leading to low correlation among ESG scores (not high correlation).

There is no single standardized ESG dataset, making it difficult for managers to compare companies objectively.

As populations age, older individuals generally spend less on consumer goods (Option A) because:

They shift spending toward healthcare, services, and retirement-related expenses.

They buy fewer durable goods (e.g., cars, electronics).

Option B is incorrect because the ratio of active to inactive workers decreases as the proportion of retirees grows.

Option C is incorrect because older people typically have higher accumulated savings than younger individuals.