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ESG Analyst > Level 1 Introduction > Flashcards

Level 1 Introduction Flashcards

1
Q

Name ESG strategy classifications

A

Eurosif

GISA Equivilant

PRI Equivilant

EFAMA Equivilant

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2
Q

How many times have the ESG google search volume increased in the past 5 years

A

20 times

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3
Q

Investor commitment. How many of Total AUM have signed the PRI. Both fixed income and equity

A

close to 50%

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4
Q

EUROSIF- PROMOTING SUSTAINABILITY THROUGH EUROPEAN FINANCIAL MARKETS Rank the strategies

A

Exclusion

Engagement and voting

ESG intergration

Normbased screening

Best in class

Sustainability themed Impact investing

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5
Q

Terminology and Definitions What is sustainable development

A

Development that meet the need sof the present without compromising for future generations to meet their needs

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6
Q

Terminology and Definitions What is the Triple bottom line

A

It focuses corporations not just on economic value they add but also on environmental and social value they add- or destroy

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7
Q

Terminology and Definitions What is Corporate social responsibility.

A

The responsibility of enterprises for the impact on society

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8
Q

ESG Investment. 85tr committed but how is the actual AUM

A

A lot smaller

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9
Q

What is Value based exclusions?

A

Exclusion of companies derivion a significan portion of their revenues or profit from activities seen as negative for society

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10
Q

Name the most common type of value based exclusions?

A

Controversioal weapons

TObacco

All weapons gambling

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11
Q

What is normes based exclusions?

and what are the most common conventions

A

Exclusion of companies that violate internationally or natinally regognized norms or conventions

UN Global Compact principles

Universal declaration of human rights

International labour declaration

Unitied nation convention against corruption

etc..

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12
Q

Explain te best in class strategy?

And what are the main characteristics

A

The selection of companies with the best environmental, social and governance practices,

Main caracterictics

Mainly active equity strategies

Bias towards large cap companies

Increasingly used in fixed income strategies

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13
Q

If you wnat to exclude based on Environmental, What can you look for?

A

CO2 emissions

Use of water

Waste

data quality

enivironmental management

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14
Q

If you wnat to exclude based on Social, What can you look for?

A

Repitational risk

Diversity

Health and saftey

stakeholder relations

Human rights

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15
Q

If you wnat to exclude based on Governance, What can you look for?

A

Shareholder rights

Renumeration

Transparency

Internal controls

reporting

Business ethics

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16
Q

What are the main themes of the sustanability themed strategy?

And what are their main characteritics

A

Main themes are

Reneable energies

Water

Mobility

Resource-efficiency

demographics and aging

Main characteristics are

Mainly acitve equity strategies

Bias towards small and mid cap companies

17
Q

What is the definition of ESG intergration?

What are the common motives and main barriers

A

ESG intergration defines practices by traditional financial management that take envirionmental, social and corporate governance aspects into accounts troughout the investment decision-making process.

Seek primary a fincnial advantaeg from the intergration
Reputational risk management

Main barriers are

General knowledge about aout goals and possibilties
Related direct and indirect cost
ESG data and availaility

18
Q

What is the ESG strategy engagement and voting?

A

Engagement are all interaction between investors and investees to adress ESG related topics or strategy.
Teh objective can be to monitor performance or exercise influence of a comanies ESG practice.

Proxy voting is the investors practive to actively exert the votin right on the annual meetin

19
Q

What is the shareholders right direcive 2017/828 EC?

A

A dircetive to strengten the sharehodlers rights and facilitate cross border voting.

Encouraging long term engagement of inst investors.

Increased transparency

20
Q

Explain the motives behind proxy voting

A

Comply with fiduciary duty (institutions)

Comply with regulatory framework (inst)

Seek strategic changes, particulary if passive investment strategies are employed

21
Q

What are the main challanges in proxy voting?

A

Cost and benefits

Free rider problem

Conflict of interest

Lack of transperancy

22
Q

Explain the strategy impact investing

A

Investment made in companies or organization and fund with the intention to generate social and envirionmental impact alongside financial return.

Investment are often project specific.

23
Q

Impact investing

What are the characteristics?

A

Intentionally- The intentis ti generato social ond or environmental impact trough investment is and essential component.

Return expectation- investments are expect to reutn at least on minimum Retunr on capital.

Impact measurement- The hallmark of impact investing is to measure and report the performance and progress of underlying investments

24
Q

The ESG investment Spectrum
What are the focus of Impact investing/Concessionary rate

What are the Impact intention

A

Investments that target social and environmental impact and deliver BELOW market rate financial returns

Impact intention is benefit stakeholders and contributes to solutions

25
Q

The ESG investment Spectrum
What are the focus of Impact investing/Market rate

What are the Impact intention

A

Investments that target social and environmental impact and deliver market rate financial returns

Impact intention is benefit stakeholders and contributes to solutions

26
Q

The ESG investment Spectrum
What are the focus of thematic/sustainablity themes investments

What are the Impact intention

A

Investments that specifically target sustanabilty themes.

like clearn energy, green property etc

Impact intention is benefit stakeholders

27
Q

The ESG investment Spectrum
What are the focus of Negative screening(&norms based)

What are the Impact intention

A

industry sectors or companies are excluded/divested to avoid risk or better align with values.

Impact intention is to avoid harm

28
Q

The ESG investment Spectrum
What are the focus of ESG intergration

What are the Impact intention

A

Focus is consideration and analysis fo ESG factors as part of investment decision making

Impact intention is to avoid harm

29
Q 
The ESG investment Spectrum
What are the focus of Postive or best in class screening

What are the Impact intention

A

Investment targets companies or industries with better ESG performance

Impact intention is tp benefit stakeholders

30
Q

The ESG investment Spectrum
What are the focus of Traitional investment

What are the Impact intention

A

Focus is limited or no regard for ESG factors

Impact intention is Agnostic

31
Q

What is the primary and secondary sustainablity motive

A

Primary motive is the generate impact trough sustanable and responsible investment practices. eg helth improvement, sustanable land use etc

Secondary motive the to earn at leeat market return

32
Q

Takeaways from Chapter 1

A

ESG/RI to become market standard

Dynamic market with high growth rates

Differnet startegies for differnet objectives

Profit and purpose are not conflicting goals

ESG Analyst (9 decks)

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