Free Practice Questions for CFA Institute ESG-Investing Exam

Governance is particularly important in private equity investments, as governance structures directly influence the management and operation of portfolio companies. This helps ensure sustainable practices and mitigate risks. (ESGTextBook[PallasCatFin], Chapter 5, Page 236)

In the United States, exclusionary screening remains the largest sustainable investment strategy, where companies or sectors are excluded from portfolios based on certain criteria, such as involvement in tobacco or firearms. (ESGTextBook[PallasCatFin], Chapter 2, Page 61)

By 2030, the European Strategy for Plastics in a Circular Economy aims to ensure that all plastic packaging is reusable or recyclable. This initiative is part of the EU’s broader efforts to reduce plastic waste and promote sustainable materials management.ESG Reference: Chapter 3, Page 176 - Environmental Factors in the ESG textbook.

The systematic approach involves deriving correlations between ESG factors and financial performance, then weighting those factors accordingly within the portfolio. This method is quantitative and aims to integrate ESG factors into the overall risk and return analysis.ESG Reference: Chapter 7, Page 325 - ESG Analysis, Valuation & Integration in the ESG textbook.

A threshold assessment refers to setting a minimum criterion for governance practices that must be met before considering an investment in a company. (ESGTextBook[PallasCatFin], Chapter 5, Page 259)