ESG issues for finance and investing

What does ESG stand for?

• Environmental, Social and Governance

• Energy, Social and Green

• Energy, Social and Green

• Environmental, Sustainable and Governance

Which of the following is not an example of an issue included in the "S" of the ESG (i.e., social issues)?

• Executive compensation

• Human rights

• Customer satisfaction

• Data Protection and Privacy

Answer explanation

Executive compensation is considered a Governance ("G") issue.

When referring to the short-termism issue in the context of ESG investing, how does an excessive focus on quarterly earnings conflict with the nature of ESG issues?

• Quarterly earnings provide the most accurate measure of a company's adherence to ESG principles.

• ESG issues tend to manifest and affect financial performance over longer periods, unlike the short-term focus on quarterly earnings.

• Companies that focus on quarterly earnings are more likely to invest in ESG initiatives.

• Quarterly earnings are aligned with ESG goals as they reflect immediate environmental benefits.

The Paris Agreement is a legally binding international treaty on climate change. Its goal is to limit global warming to ____ degrees Celsius, compared to pre-industrial levels.

• well below 1.5, preferably to 1

• well below 2.5, preferably to 1.5

• well below 3, preferably to 2.5

• well below 2, preferably to 1.5

Which of the following is a controversial problem in Climate Finance?

• D&I

• Whistleblowing

• Window dressing

• Greenwashing

Answer explanation

Greenwashing: disinformation disseminated by an organization so as to present an environmentally responsible public image.

Which country withdrew from the Paris Agreement in 2020?

• Russia

• China

• United States

• Iran

Answer explanation

In 2017, United States President Donald Trump announced that the U.S. would cease all participation in the 2015 Paris Agreement on climate change mitigation.

The United States officially withdrew from the Agreement in 2020, but rejoined in 2021.

Iran never ratified the Agreement.

76% of white people (in their working age) were employed in England, Scotland and Wales in 2021.

What was the % of employed people from all other ethnic groups?

• 72%

• 75%

• 67%

• 79%

Answer explanation

76% of white people were employed, compared with 67% of people from all other ethnic groups combined.

However, the difference in the employment rates between the white ethnic group and all other ethnic groups combined went down by 7 percentage points between 2004 and 2021.

Which of the following is an example of climate adaptation measure that a company may adopt?

• Reducing GHG emission

• Buying insurance

• Adopting 100% renewable energy

• Writing off inventory

Answer explanation

Adaptation means increasing our ability to recover from specific disasters; reducing vulnerability and promoting resilience (both physical and financial) to catastrophe. Insurance can be a key tool in both these aspects of adapting to climate change.

The other 3 options were examples of "mitigation" finance.

A policy shift towards higher taxes on carbon is an example of...

• Transition risk

• Physical risk

• External risk

• Endogenous risk

Where is the 2023 United Nations Climate Change Conference (COP28) taking place (30 Nov 2023 - 12 Dec 2023)?

• Glasgow, Scotland (UK)

• Sharm El Sheikh, Egypt

• Dubai, UAE

• Madrid, Spain